2009 (8) TMI 1148 - HC - VAT and Sales Tax

Summary

Issues involved: The judgment involves a revision under Section 11 of the U.P. Trade Tax Act against the penalty imposed under Section 15-A(1)(o) of the Act for the assessment year 1998-99.

Details of the Judgment:

1. Background and Inspection: The applicant, a registered dealer engaged in the manufacture and sale of exempted cloths, faced a penalty under Section 15-A(1)(o) of the Act due to an inspection at a check post where certain documents were found to be missing. The applicant claimed to be a 100% export-oriented unit and explained the procurement of Glacial Acetic Acid, a raw material, from M/s. Dhampur Alco Chem. Ltd., New Delhi. Despite producing some documents, the goods were detained, leading to the penalty proceedings.

2. Contentions and Proceedings: The applicant argued that there was no intent to evade tax as evidenced by the advance payment made for the acid, the nature of their manufacturing business, and the submission of necessary documents post the show cause notice. The Tribunal had accepted the books of account and disclosed turnover, indicating compliance. However, the assessing authority and the Tribunal upheld the penalty.

3. Court's Analysis and Decision: The Court noted the pre-payment made by the applicant, submission of relevant documents, and the acceptance of books of account by the Tribunal. It emphasized that no attempt to evade tax was evident, as the goods were raw materials for exempted goods and proper documentation was provided. Citing precedent, the Court held that penalty under Section 15-A(1)(o) cannot be levied without proving an attempt to evade tax. Consequently, the Court set aside the Tribunal's order and quashed the penalty under Section 15-A(1)(o) of the Act.

4. Conclusion: The Court allowed the revision, emphasizing that no case of tax evasion was established, leading to the annulment of the penalty imposed under Section 15-A(1)(o) of the U.P. Trade Tax Act for the assessment year 1998-99.