2004 (11) TMI 584 - HC - VAT and Sales Tax

Summary

Issues:
Challenge against penalty under Section 15-A (1) (o) of U.P. Trade Tax Act for Assessment Year 1991-92.

Analysis:
The case involved a challenge against a penalty imposed under Section 15-A (1) (o) of the U.P. Trade Tax Act for the Assessment Year 1991-92. The applicant, a registered dealer involved in manufacturing perfumes, had ordered goods from a supplier in Bombay. The goods were dispatched with necessary documentation, including Form-31, which was left blank by the seller. When the vehicle carrying the goods was intercepted en route, the blank form led to the seizure of the goods and initiation of penalty proceedings. The Assessing Authority upheld the penalty, which was subsequently confirmed by the first Appellate Authority and the Tribunal.

The Tribunal justified the penalty by pointing out the blank Form-31 and lack of the seller's signature, suggesting a potential intent to evade tax. However, the High Court disagreed with this reasoning. It held that the applicant, as a bonafide purchaser, had sent the Form-31 to the seller for filling, as required. The mistake of leaving it blank was attributed to the seller, absolving the applicant of responsibility. Moreover, when the vehicle was inspected, all necessary documents were provided promptly, indicating no attempt to evade inspection.

The High Court emphasized that the facts did not support any intention to evade tax, a crucial element for seizing goods and imposing penalties under Section 15-A (1) (o) of the Act. Citing precedent, the court highlighted that the penalty cannot be levied without evidence of an attempt to evade tax. Referring to previous judgments, including one by the Apex Court, the High Court ruled in favor of the applicant, setting aside the Tribunal's order and quashing the penalty.

In conclusion, the High Court allowed the revision, quashing the penalty imposed by the Tribunal. The judgment clarified the responsibilities of the seller and purchaser regarding documentation, emphasizing the absence of intent to evade tax as a key factor in penalty assessments under the U.P. Trade Tax Act.