2015 (9) TMI 1515 - HC - VAT and Sales Tax

Imposition of penalties u/s 78(5) - transport of goods to Delhi and in the way crossed Rajasthan - goods were being carried with the intention of evasion of tax as CST number and other particulars were lacking in the bills and vouchers - Held that - the goods were being transported fromIndore to Delhi and merely passing through the State of Rajasthan and as such there was no occasion for the AO to intercept or check the vehicle at the check post to come to the conclusion on their own and such presumption on the part of the AO was not proper. Even the AO in the assessment order has clearly mentioned that the bills and vouchers were found and except at one place CST number of one of the parties was not found that does not mean that the bill becomes forged wrong or otherwise. Even the AO in the assessment order imposing penalty has stated name of purchaser along with bill number builty number etc. In the case of Commercial Taxes Officer Alwar v. Globe Transport Corporation 2013 (2) TMI 788 - RAJASTHAN HIGH COURT which was also a case of goods being checked in the State when it was not intended to be delivered in the State of Rajasthan and this court found that 25 bundles of iron springs and 25 bundles of axles were being sent from Khanna (Punjab) to Sarkhej (Gujarat). However merely because the vehicle did not stop or minor discrepancies having been noticed by the intercepting team of the Revenue this court primarily came to the conclusion that merely because the vehicle was passing through the State of Rajasthan the question of imposition of penalty under section 73(5) does not arise. Even if there were minor discrepancies but when there was no jurisdiction at all of this State then even the checking was found to be improper. The question of imposition of penalty does not arise - petition dismissed - decided against Revenue.

Summary

Issues:
1. Assessment of penalty under section 78(5) of the Rajasthan Sales Tax Act, 1994 based on interception of goods in transit.
2. Interpretation of jurisdiction for imposing penalty under section 73(5) in cases of goods transiting through Rajasthan.
3. Applicability of penalty provisions on transporters for failure to produce requisite documents during checks.

Analysis:
1. The petitioner-Revenue filed a sales tax revision petition challenging the order of the Rajasthan Tax Board upholding the decision of the Deputy Commissioner (Appeals) regarding the assessment of penalty under section 78(5) of the Act. The issue arose when goods being transported from Indore to Delhi were intercepted in Rajasthan, leading to the imposition of a penalty by the Assessing Officer. However, both the DC (A) and the Tax Board found that the goods were not meant for delivery in Rajasthan, thereby negating the basis for the penalty. The High Court concurred with the findings, emphasizing that the interception by the AO was unjustified as the goods were merely passing through Rajasthan, with no intention of being delivered in the state.

2. The High Court referred to the case of Commercial Taxes Officer v. Globe Transport Corporation, highlighting the principle that penalties under section 73(5) cannot be imposed when goods are in transit through a state without the intention of delivery within that state. Citing precedents, the court emphasized that the jurisdiction for imposing penalties is limited to cases where evasion of tax under the state's jurisdiction occurs. In this context, the court reiterated that the authorities can check vehicles passing through but cannot penalize if the goods are not intended for delivery within the state.

3. The judgment further addressed the issue of imposing penalties on transporters for failing to produce requisite documents during checks. Referring to legal precedents, the court held that penalties cannot be imposed on transporters for contravention of provisions requiring the production of specific documents. The court emphasized that the focus should be on ensuring the goods leave the state rather than penalizing transporters for minor discrepancies in documentation. Based on the findings of fact by the Tax Board and the court, the High Court dismissed the revision petition, emphasizing that no question of law emerged from the order as it was based on a proper appreciation of evidence.