2013 (5) TMI 921 - HC - VAT and Sales Tax

Penalty - Survey - It has been stated by the assessing officer that despite ample opportunities having been provided to the assessee, he could not produce the books of accounts and supporting material - Held that - I am satisfied that the penalty has wrongly been deleted by the Tax Board for the reason that (i) no books of accounts, bills, builty and vouchers were found/produced during the course of survey ; (ii) despite adequate opportunity having been granted not only at the time of survey but thereafter neither bills, builty, vouchers and books of accounts and other supporting documents relating to excess goods were produced ; (iii) there is clear-cut confessional statement of partner of the respondent-firm admitting about the excess stock of the goods; (iv) two witnesses were also present at the time of survey and in their presence physical stock was taken and the value of excess goods was admitted by the respondent; and (v) even before the DC (A) neither the bills, builty, vouchers nor books of accounts were produced and there is a categorical finding of the DC (A) that there is no violation of rule 50. It is very relevant here to observe that while order of imposing the penalty was passed on January 19, 2004, the appeal was decided on March 22, 2007 therefore, during the intervening period of almost about three years, no action whatsoever was taken by the respondent about pressurizing tactics/coercion by the assessing officer, during the course of survey and filing an affidavit is merely for the sake of filing of an affidavit - Decided against the assessee.

Summary

Issues:
Challenge to penalty imposition under Rajasthan Sales Tax Act, 1994 based on violation of rule 50 and lack of supporting documents during survey.

Analysis:
The revision petition challenged an order by the Rajasthan Tax Board that had quashed and deleted a penalty imposed by the assessing officer on the respondent-assessee under the Rajasthan Sales Tax Act, 1994. The case arose from a survey conducted at the business premises of the respondent where no books of accounts, bills, vouchers, or supporting material were found. Despite opportunities, the respondent failed to produce the required documents. The assessing officer imposed a penalty, which was upheld by the Deputy Commissioner (Appeals) but later deleted by the Tax Board.

The assessing officer and the Deputy Commissioner (Appeals) found that the respondent had admitted to the unaccounted stock of goods without proper documentation. Two witnesses were present during the survey, and the value of excess goods was agreed upon by the respondent. The Tax Board reversed the penalty based on the respondent's affidavit and lack of violation of rule 50. However, the court found that the penalty deletion was unjustified as there was no production of necessary documents, clear admission of excess stock, and compliance with rule 50 during the survey.

The court emphasized that the affidavit filed by the respondent lacked evidentiary value due to the absence of supporting documents. The court also noted the delay in raising concerns about coercion during the survey, questioning the credibility of the after-the-fact affidavit. The court distinguished the present case from cited precedents and concluded that the penalty imposition was justified. Consequently, the court quashed the Tax Board's order and upheld the penalty.

In summary, the court upheld the penalty imposition under the Rajasthan Sales Tax Act, 1994, citing the lack of supporting documents, clear admission of excess stock, and compliance with rule 50 during the survey. The court found the respondent's affidavit lacking evidentiary value and criticized the delayed claim of coercion. The court distinguished relevant precedents and reversed the Tax Board's decision, sustaining the penalty imposition.