2013 (12) TMI 1444 - HC - VAT and Sales Tax

Levy of penalty - lorry driver obtained the endorsement from the RTO on the invoices, he has not obtained any endorsement from the check-post of Karnataka - Held that - When it is clear from the material on record that the documents carried in the lorry was not tendered at any check-post in Tamil Nadu en-route to Karnataka and in Karnataka also it was not tendered at the check-post, the motive behind the same is very clear. The assessing authority rightly held that it is a clear case of non-compliance of the mandatory requirements of law and therefore, it attracts penalty. The first appellate authority was not justified in setting aside the said order solely on the ground that there was no liability of paying tax. The Additional Commissioner of Commercial Taxes, invoked suo motu proceedings and set aside the appeal order and restored the order of penalty passed by the assessing authority. We do not find any justification to interfere with the order. - Decided against assessee.

Summary

Issues:
Violation of mandatory requirements under the Karnataka Value Added Tax Act, 2003 leading to penalty imposition for non-compliance.

Analysis:
The judgment pertains to an appeal against an order passed by the Additional Commissioner of Commercial Taxes under section 64(1) of the Karnataka Value Added Tax Act, 2003. The case revolves around the failure of a lorry driver to obtain the necessary endorsements from check-posts when transporting goods from Tamil Nadu to Karnataka. Despite having endorsements from the RTO on the invoices upon entry into Karnataka, the driver did not obtain endorsements from Karnataka check-posts, nor were the documents checked at any en-route Tamil Nadu check-posts. The appellant argued that the omission was due to the driver's inexperience and claimed it was a bona fide mistake as the number of invoices was consistent in all documents. However, the assessing authority deemed this a clear case of non-compliance with the law, justifying the penalty imposition.

The appellant contended that since it was a consignment transfer, there was no tax liability, and the penalty should not have been imposed due to a genuine mistake made by the inexperienced driver. The first appellate authority had set aside the penalty order based on the absence of a tax liability. Still, the Additional Commissioner of Commercial Taxes reinstated the penalty, emphasizing the mandatory nature of compliance with the law. The High Court upheld the decision, stating that the failure to tender documents at check-posts in both Tamil Nadu and Karnataka clearly indicated non-compliance, justifying the penalty. The court found no reason to interfere with the Additional Commissioner's decision, leading to the dismissal of the appeal.

In conclusion, the judgment underscores the importance of adhering to mandatory requirements under tax laws, emphasizing the significance of proper documentation and compliance with check-post procedures during inter-state transportation to avoid penalties for non-compliance. The court's decision highlights the need for strict adherence to legal provisions, even in cases of inadvertent errors, to ensure the integrity and enforcement of tax regulations.