2012 (8) TMI 878 - HC - VAT and Sales Tax

Penalty levy - inter-State sale v/s intra-State sale - whether the Tribunal was justified in upholding the levy of penalty under section 51(7)(c) of the Act holding that there was an attempt to evade tax by the appellant-dealer? Held that - The finding of the Tribunal that the document were not genuine and proper could not be demonstrated to be perverse or erroneous in any manner. The appellant has failed to substantiate the transaction of sale in favour of M/s. Madan Lal Bansal and Company at Bareta.. In view of the above, no question of law much less a substantial question of law arises in this appeal. Accordingly, the appeal being meritless is hereby dismissed.

Issues:
1. Whether the penalty order based on assumptions and presumptions is sustainable in law?
2. Whether the penalty order based on the admission of the driver recorded under threat and pressure is sustainable?
3. Whether the penalty imposed treating the transaction as inter-State sale is upheld correctly?
4. Whether imposing penalty for changing the nature of transaction without inquiry is lawful?
5. Whether the penalty imposed without bringing on record the alleged consignee's details is sustainable?
6. Whether the Tribunal wrongly upheld the penalty order?
7. Whether the Tribunal's order is sustainable in law?

Analysis:

1. The appellant challenged the penalty under section 68 of the Punjab Value Added Tax Act, 2005, questioning the sustainability of the penalty order based on assumptions and presumptions. The appellant argued that the penalty should not be upheld solely on the driver's admission recorded under pressure. The court examined the facts and found that the route taken by the appellant for transporting goods raised suspicions about the genuineness of the transaction. The court upheld the penalty, stating that the appellant failed to substantiate the sale transaction, distinguishing this case from previous judgments where penalties were based solely on driver statements.

2. The appellant contended that the penalty order based on the driver's admission under pressure was not sustainable. However, the court found that the appellant's actions, including the abnormal route taken for transportation and discrepancies in documents, supported the suspicion of tax evasion. The court held that the penalty was justified based on the overall circumstances of the case and not solely on the driver's statement.

3. The issue of treating the transaction as an inter-State sale and imposing a penalty under section 51(7)(c) of the Act was raised. The appellant argued that the transaction was an intra-State sale, supported by documents and the Assessing Authority's acceptance during assessment. The court, after considering various factors such as route deviation and lack of proper documentation, upheld the penalty, concluding that the transaction was not genuine.

4. The legality of imposing a penalty for changing the nature of the transaction without proper inquiry was questioned. The court found that the appellant failed to provide sufficient evidence to prove the legitimacy of the transaction, leading to the imposition of the penalty. The court held that the penalty was justified based on the lack of verifiable details and suspicious circumstances surrounding the transaction.

5. The appellant raised concerns about the penalty being imposed without recording the alleged consignee's details from outside the State. The court examined the evidence presented, including discrepancies in documents and the absence of a verifiable consignee at the stated location. The court upheld the penalty, emphasizing the lack of evidence supporting the appellant's claims and the suspicious nature of the transaction.

6. The appellant challenged the Tribunal's decision to uphold the penalty order. The court reviewed the Tribunal's findings, which highlighted inconsistencies in the appellant's actions and documentation. The court concluded that the Tribunal's decision was reasonable based on the evidence presented, dismissing the appeal due to the lack of merit.

7. The court, after thorough analysis, concluded that no substantial question of law arose in the appeal. The court found the appellant's arguments unsubstantiated and upheld the penalty based on the suspicious circumstances surrounding the transaction. Consequently, the court dismissed the appeal, stating it lacked merit.

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