2013 (4) TMI 719 - HC - VAT and Sales Tax

no penalty under section 76(6) of the Act deserves to be imposed, since relevant documents in the form of bills and bilty accompanied the said goods and defect of not furnishing VAT-47 was removed by furnishing of the same on the very same day.

Summary

Issues Involved:
1. Imposition of penalty under section 76(6) of the Rajasthan VAT Act, 2003.
2. Compliance with the requirement of furnishing declaration form VAT 47.
3. Interpretation and application of Supreme Court judgments in Guljag Industries and D. P. Metals.
4. Validity and impact of departmental circulars dated August 30, 2008, and February 27, 2009.
5. Principles of natural justice and the opportunity of hearing.

Issue-wise Detailed Analysis:

1. Imposition of Penalty under Section 76(6) of the Rajasthan VAT Act, 2003:
The core issue revolves around the imposition of a penalty of Rs. 2,41,140 on the petitioner-assessee by the Assessing Authority under section 76(6) of the Rajasthan VAT Act, 2003, due to the non-production of form VAT 47 during the transportation of goods. The penalty was initially set aside by the Deputy Commissioner (Appeals) but later restored by the Rajasthan Tax Board.

2. Compliance with the Requirement of Furnishing Declaration Form VAT 47:
The facts reveal that the goods were checked on March 5, 2009, and the driver did not produce the required form VAT 47. However, the petitioner-assessee submitted the form the very next day, arguing that the defect was rectified promptly, and thus, no penalty should be imposed.

3. Interpretation and Application of Supreme Court Judgments in Guljag Industries and D. P. Metals:
The petitioner-assessee argued that the Tax Board erroneously applied the Supreme Court's decision in Guljag Industries, which pertains to cases where blank or incomplete forms accompanied the goods. The petitioner contended that their case should be governed by the D. P. Metals judgment, which allows for the opportunity to rectify the defect unless the documents are found to be false or forged.

4. Validity and Impact of Departmental Circulars Dated August 30, 2008, and February 27, 2009:
The Tax Board discussed departmental circulars which indicated that during the period from August 30, 2008, to February 27, 2009, the requirement of form VAT 47 was suspended, and penalties should not be imposed for its non-furnishing. The check occurred on March 5, 2009, shortly after the circular's withdrawal, raising questions about the applicability of the penalty.

5. Principles of Natural Justice and the Opportunity of Hearing:
The court emphasized that the imposition of penalties should not be automatic and must adhere to the principles of natural justice. The opportunity to rectify the defect should be meaningful, and penalties should only be imposed if the documents are found to be false or forged after a thorough and fair inquiry.

Conclusion:
The court concluded that the Tax Board erred in applying the Guljag Industries judgment without considering the specific facts of the case. The petitioner-assessee promptly rectified the defect by submitting form VAT 47 the next day, and there was no finding that the documents were false or forged. The court restored the order of the Deputy Commissioner (Appeals), setting aside the penalty imposed under section 76(6) of the Act, and allowed the revision petition of the assessee.