2011 (8) TMI 1033 - HC - VAT and Sales Tax

Penalty - contravention of provisions of section 53(2) of the KVAT Act, 2003 - no documents for movement of goods - Held that - lorry receipt or consignment note indicates the movement of PVC flooring from Navaseva, Mumbai to Bangalore. The invoice of M/s. Kumar Distributor, Chennai, in favour of consignee at Bangalore indicated the transaction of sale as inter-State in PVC flooring. Thus, the goods are under movement from Mumbai whereas invoice is issued by consignor at Chennai. There is no statutory document from Mumbai to Bangalore connected with the sale invoice of the consignor at Chennai. Movement of goods was from one direction whereas transaction of sale was effected from a different destination. Consequently, it was considered that the movement of goods was one without document and hence it was no document case . The assessing authority imposed double the rate of tax as penalty. In the suo motu revision, the penalty was reduced from double the rate of tax to the rate of tax leviable. On this ground also we do not find any reason to interfere with the reasoned order of the revisional authority. The tax levied is due to the violation of law and hence, the revisional authority has rightly passed the impugned order. The penalty imposed has been reduced in revision. A minimal penalty has been imposed. Due to contravention of law, penalty is attracted. Hence there is no good ground to interfere. - Decided against Assessee.

Summary

Issues:
1. Imposition of penalty on the assessee for contravention of provisions of section 53(2) of the KVAT Act, 2003.
2. Validity of the revisional authority's order restoring the penalty.
3. Interpretation of the documents and transactions related to the movement of goods.

Analysis:
1. The case involved the imposition of a penalty on the assessee, a partnership firm engaged in trading flooring items, for a contravention of provisions of the KVAT Act, 2003. The penalty was imposed due to discrepancies in the documents related to the movement of goods. The goods were supposed to be procured from Tamil Nadu, but it was found that the goods were actually coming from Mumbai. The assessing authority imposed double the rate of tax as a penalty, which was later reduced to the amount of tax leviable by the revisional authority.

2. The appellant contended that there was no intention to avoid tax, and hence, the penalty was unjustified. The appellant argued that the State needed to demonstrate the loss of revenue to justify the penalty. However, the court upheld the revisional authority's decision, stating that the penalty was justified due to the improper documents submitted by the assessee to avoid tax. The court differentiated this case from a previous judgment where documents were produced but not scrutinized by authorities.

3. The court analyzed the documents and transactions related to the movement of goods, highlighting discrepancies between the lorry receipt indicating movement from Mumbai and the invoice issued by a Chennai-based consignor for goods supposedly coming from Mumbai. The court concluded that the movement of goods without proper documentation constituted a "no document case," justifying the imposition of a penalty. The revisional authority's decision to reduce the penalty was upheld as appropriate due to the violation of law.

In conclusion, the court dismissed the appeal, finding no error in the revisional authority's order and upholding the imposition of a minimal penalty on the assessee for contravening the provisions of the KVAT Act.