2015 (3) TMI 1218 - HC - VAT and Sales Tax

Imposition of penalty under section 22A(7) of CST Act - inter-state sale - goods sent from Jaipur to Mumbai - statement of driver that goods sent to Jaipur - discrepancy in the documents as well as version of the driver of the respondent - principles of natural justice - Held that - Principles of natural justice demand that not only the report of the Assistant Commercial Taxes Officer dt.07/06/1991 before imposing of the penalty or before passing of an order ought to have been provided to the assessee-respondent and thereafter appropriate order could have been passed. The Assessing Officer without confronting the report given by the Assistant Commercial Taxes Officer on 07/06/1991 without further verification or without bringing the same to the notice of the assessee-respondent, had imposed the penalty on 10/06/1991 within three days and therefore, the Tax Board, has rightly deleted the penalty. The contention of the counsel for the petitioner was that the matter may be restored for providing an opportunity now, but, it is too late to remand the matter since penalty was imposed in the year 1991 and almost 24 years have passed and, it is not appropriate to restore the matter back to the Assessing Officer to grant a fresh opportunity now. Even otherwise it is essentially a finding of fact and no question of law can be said to arise out of the order of the Tax Board - No illegality, infirmity or perversity in the order impugned - petition dismissed - decided against petitioner.

Summary

Issues:
Imposition of penalty under section 22A(7) for alleged tax evasion based on discrepancy in documents and driver's statement; Validity of Tax Board's decision to delete the penalty; Compliance with principles of natural justice in penalty imposition process.

Analysis:
The Sales Tax Revision Petition challenged an order by the Rajasthan Tax Board imposing a penalty under section 22A(7) for suspected tax evasion. The case involved the interception of a vehicle transporting goods, where discrepancies in documents and the driver's statement raised suspicions. The Assessing Officer concluded that the goods were being transported with the intent to evade tax, imposing a penalty of Rs. 27,673. Subsequent appeals led to the Tax Board deleting the penalty, prompting the current petition.

The revenue's argument centered on the Assessing Officer's justifications for the penalty, emphasizing the discrepancies in documents and the driver's version. They contended that the Tax Board erred in deleting the penalty and raised the issue as a question of law for the Court's consideration. However, the Court found no grounds for interference, noting that the Tax Board had made a reasoned decision after evaluating the evidence and facts.

A critical aspect highlighted was the lack of compliance with principles of natural justice in the penalty imposition process. The Court noted that the penalty order was passed swiftly without providing the respondent with an opportunity to respond adequately. The Assessing Officer imposed the penalty within three days of receiving a report, without sharing it with the respondent or conducting further verification. This procedural flaw led the Court to agree with the Tax Board's decision to delete the penalty, emphasizing the importance of due process and fair treatment.

Despite the revenue's request to remand the matter for fresh opportunities, the Court deemed it inappropriate due to the significant time elapsed since the penalty imposition in 1991. The Court concluded that no illegality, infirmity, or perversity existed in the Tax Board's decision, dismissing the revision petition outright. The judgment underscored the importance of upholding natural justice principles in administrative proceedings and highlighted the need for thorough consideration of evidence before penalizing parties for alleged violations.