2014 (9) TMI 912 - HC - VAT and Sales Tax

Seizure of goods - penalty proceeding was initiated against the respondent-assesee under Section 54(1)(14) of U.P. Value Added Tax Act, 2008 - Held that - Undisputedly, the respondent-assessee is engaged in processing of frozen meat.The goods in question were imported by the assessee as capital goods for installing it in its unit for the purpose of doing job work/processing of meat. These goods were not for sale by the assessee. These goods were purchased against Form-C and the payment was made on 11.9.2008 and 25.3.2009, i.e. before import of goods. When the goods were intercepted, the assessee replied that Form-38 was sent in advance to the selling dealer, but inadvertently, it was not handed over by them to the driver of the truck. The said Form-38 was obtained by the assessee from the selling dealer and was submitted before the assessing authority prior to the seizure of goods. The assessing authority has also not recorded any finding that the goods in question were for sale. The first appellate authority and the Tribunal have recorded a finding of fact that the goods in question were capital goods which were purchased by the assesee against Form-C and the same were not for sale, but for installing it in its unit. A finding of fact based on consideration of relevant materials available on record has been recorded by the first appellate authority and the Tribunal, that there was no intention to evade payment of tax. The findings so recorded are findings of fact. In the absence of any cogent reason or basis for intention to evade payment of tax, penalty under Section 54 (1) (14) of the Act, was not leviable and as such the first appellate authority has lawfully set aside the penalty. The Tribunal has committed no error of law or facts to uphold the order of the first appellate authority. - no infirmity in the order of the Tribunal - decided against Revenue.

Summary

Issues:
Penalty imposition under Section 54(1)(14) of U.P. Value Added Tax Act, 2008 due to absence of Form-38 with intercepted goods.

Analysis:
The case involved the interception of a truck loaded with air-cooling unit and parts, accompanied by a tax invoice and bilty but lacking Form-38. The goods were seized and later released on deposit of security. Subsequently, a penalty of Rs. 4,40,000 was imposed under Section 54(1)(14) of the Act. The first appellate authority set aside the penalty, stating the goods were capital goods not for sale but for the assessee's processing of frozen meat. The goods were imported against Form-C, purchased before import, and Form-38 was obtained and submitted to the assessing authority before the seizure. Both the first appellate authority and the Tribunal found no intention to evade tax, as the goods were not for sale but for installation in the assessee's unit. The Tribunal upheld the first appellate authority's decision, concluding no error of law or facts in setting aside the penalty.

The High Court concurred with the findings of the first appellate authority and the Tribunal, emphasizing that the goods were capital goods purchased against Form-C for internal use, not for sale. The Court noted the absence of any intention to evade tax and the lawful setting aside of the penalty by the first appellate authority. It was held that the Tribunal did not err in upholding the first appellate authority's decision. Consequently, the Court dismissed the revision, stating no question of law arose from the Tribunal's order.

In conclusion, the High Court upheld the decisions of the lower authorities, emphasizing the nature of the goods as capital goods not for sale, the absence of intent to evade tax, and the lawful setting aside of the penalty. The Court found no infirmity in the Tribunal's order, leading to the dismissal of the revision.