2013 (1) TMI 766 - HC - VAT and Sales Tax

If the deficiency/ contravention is removed, with the filing of the requisite document by the assessee imposition of penalty ought to be eschewed.

Summary

Issues:
- Interpretation of Section 76(2)(b) of the RVAT Act
- Application of penalty under Section 76(6) of the RVAT Act
- Compliance with statutory requirements for goods in transit
- Judicial precedent in D.P. Metals case regarding submission of requisite documents

Interpretation of Section 76(2)(b) of the RVAT Act:
The case involved a dispute regarding the interpretation of Section 76(2)(b) of the Rajasthan Value Added Tax Act, 2003 (RVAT Act). The petitioner company, engaged in manufacturing and trading, was penalized for non-compliance with this section due to the absence of Form VAT 47 during a vehicle check by the tax authority. The petitioner argued that the form was indeed present but not presented due to the driver's illiteracy. The Dy. Commissioner (Appeals) initially ruled in favor of the petitioner, citing the Supreme Court's judgment in the State of Rajasthan Vs. D.P. Metals case, which emphasized the importance of timely submission of required documents to avoid penalties.

Application of penalty under Section 76(6) of the RVAT Act:
The primary issue revolved around the imposition of a penalty under Section 76(6) of the RVAT Act on the petitioner for the alleged contravention of Section 76(2)(b). The tax authority detained the goods-carrying vehicle and issued a show cause notice, leading to the imposition of a penalty. The petitioner contended that the submission of Form VAT 47 on the same day as the notice absolved them of any violation. The Rajasthan Tax Board, however, upheld the penalty, disagreeing with the petitioner's defense and emphasizing the need for all requisite documents to accompany goods in transit to avoid penalties.

Compliance with statutory requirements for goods in transit:
The court analyzed whether the petitioner's actions complied with the statutory requirements for goods in transit under the RVAT Act. It was noted that while the Form VAT 47 was submitted promptly after the notice, the tax authority still imposed a penalty, considering the absence of the form during the initial inspection. The court emphasized the importance of timely submission of required documents and the need for strict compliance with statutory provisions to avoid penalties.

Judicial precedent in D.P. Metals case regarding submission of requisite documents:
The judgment extensively referenced the D.P. Metals case, where the Supreme Court emphasized that the submission of requisite documents promptly upon notice of deficiency should absolve the assessee from penalties. The court reiterated that the timely submission of Form VAT 47, along with other supporting documents, indicated the petitioner's good faith and compliance with the law. The court criticized the Rajasthan Tax Board for overlooking these crucial aspects and focusing on perceived improbabilities rather than the legal requirements and precedents.

In conclusion, the High Court allowed the revision petition, quashing the Rajasthan Tax Board's order and setting aside the penalty imposed on the petitioner. The court emphasized the importance of timely submission of required documents to demonstrate compliance with statutory provisions and avoid penalties, in line with established judicial precedents.