2007 (2) TMI 681 - HC - VAT and Sales Tax

Summary

Issues involved: Assessment under U.P. Trade Tax Act, validity of penalty under section 15-A(1)(o) of the Act, interpretation of Section 28-A of the Act.

Assessment under U.P. Trade Tax Act: The case involved a dispute regarding the transportation of goods from Delhi to Kolkata, where the goods were intercepted at Kanpur. The driver's statement and documents found in the vehicle indicated that the goods were intended for delivery at Kanpur, contrary to the transit pass obtained. The Tribunal initially allowed the release of goods on deposit of tax, which was challenged by the Commissioner of Trade Tax. The High Court directed additional security and compliance with Tribunal's order, leading to the release of goods. Penalty proceedings were initiated under section 15-A(1)(o) of the Act, which was upheld by the Joint Commissioner but later quashed by the Tribunal based on the goods leaving U.P. and the surrender of the transit pass at the exit check post.

Validity of Penalty under Section 15-A(1)(o) of the Act: The penalty was imposed due to suspicions that the goods were intended for sale at Kanpur, supported by discrepancies in documents and statements. The Standing Counsel argued that the penalty should be judged based on circumstances at the time of seizure, emphasizing the intent to evade tax by selling goods in U.P. The opposite party contended that the goods were in transit to Kolkata, and surrendering the transit pass at the exit check post absolved them of liability. The Tribunal ruled in favor of the opposite party, considering the goods' movement and the surrender of the transit pass.

Interpretation of Section 28-A of the Act: Section 28-A was discussed in light of previous court decisions, emphasizing its role in preventing tax evasion. The Apex Court clarified that the section raises a rebuttable presumption of goods being sold in U.P. if the transit pass is not surrendered. The High Court highlighted that the genuineness of consignor and consignee is irrelevant for this section, placing the responsibility on the vehicle owner or in-charge. The judgment stressed that mere deviations in the transportation route do not warrant adverse inferences.

In conclusion, the High Court dismissed the revision, upholding the Tribunal's decision to quash the penalty under section 15-A(1)(o) of the Act. The judgment emphasized the importance of proper enforcement at check posts to prevent collusion and manipulation, holding departmental officers responsible for combating tax evasion effectively.