2006 (5) TMI 501 - HC - VAT and Sales Tax

Summary

Issues:
Penalty under Section 78(5) of the Act imposed on the assessee for discrepancies in documents produced during checking of vehicle.

Analysis:
The Assessing Authority imposed a penalty on the assessee under Section 78(5) of the Act due to discrepancies in the documents presented during a vehicle check. The documents included an invoice dated 29.9.2000 and a delivery challan dated 3.9.01, which raised concerns about the authenticity of the transaction. The Assessing Authority held that the invoice date being earlier than the delivery challan date indicated non-compliance with Section 78(2)(a) of the RST Act, 1994, and imposed a penalty of Rs. 1,36,200 (30% of the goods' value) on the assessee.

The assessee explained that the discrepancy arose because the consignee's site was not ready for goods' manufacture by Sept. 2001. The goods were purchased under an invoice dated 16.2.2000, but due to delays, they were received after about a year. The Appellate Authorities and Tax Board found this explanation satisfactory, leading to the penalty being set aside. However, the revenue challenged this decision in revision before the High Court under Section 86 of the Act, alleging a legal question, which the court found unsubstantiated.

Upon reviewing the case records, the High Court found the transaction genuine, supported by documents and declarations from Sales Tax Authorities of both states involved. The court criticized the Assessing Authority's hasty judgment, emphasizing that the penalty hindered trade flow, violating the constitutional right under Article 19(1)(d) of the Constitution of India. The court highlighted the burden of unnecessary litigation on the assessee due to unjustified penalties, urging accountability for authorities imposing such penalties without proper grounds.

The court condemned the authorities' actions as unjust, noting that the provision for good faith protection under Section 91 of the RST Act, 1994 should not shield officers who act without genuine good faith. In this case, despite the proper documentation accompanying the goods during the check, the penalty was deemed illegal, and the revision petition was dismissed. The court ordered the cost of Rs. 5,000 to be borne by the C.T.O., Anti Evasion, Bharatpur, who issued the penalty order, emphasizing the need for compliance with the decision.