2016 (6) TMI 1290 - HC - VAT and Sales Tax

Penalty - the petitioner, purchased an excavator purchased in June 2013 by availing loan facility from the financier M/s.Bajaj Finserv. The petitioner could not remit the said amount and therefore the vehicle remained in the custody of the Department. The Intelligence Officer imposed a penalty of ₹ 7,08470/- after conducting enquiry - Held that - the vehicle has been in the custody of the Department for quite a long time, it would be appropriate that the demand of penalty is reduced considerably so that it would be possible for the petitioner to get the vehicle released and take custody of the same - penalty reduced to ₹ 1,00,000/- - On remittance of the said amount, the respondent shall release the excavator to the petitioner within a further period of ten days of such remittance - petition allowed in part.

Summary

Issues:
Challenge to order imposing penalty on petitioner for non-payment of amount; Validity of detention of vehicle by Department; Consideration of evidence and agreement between parties; Imposition of penalty by Intelligence Officer; Judicial review of Tribunal's decision; Interpretation of relevant legal provisions; Justification for penalty imposition; Assessment of factual circumstances; Reduction of penalty amount.

Analysis:

The petitioner challenged the order imposing a penalty of ?7,08,470 for non-payment, following the detention of the excavator by the Department. The petitioner's contention was that the excavator was brought to Kerala for quarrying purposes under a valid permit, not for resale. The Tribunal initially set aside the penalty, citing an agreement between the petitioner and the quarry owner. However, the High Court, in a previous case, remitted the matter back to the Intelligence Officer for reconsideration, leading to the re-imposition of the penalty. The Intelligence Officer raised concerns about the agreement's date, suggesting it was manipulated to counter allegations. The petitioner argued that the agreement reflected the genuine arrangement and should not have been dismissed.

The Government Pleader contended that the lack of credible evidence regarding the excavator's hire justified the penalty as the vehicle seemed intended for resale within Kerala. The Government Pleader questioned the petitioner's failure to pursue appellate remedies. The Court, however, noted the prolonged pendency of the case and proceeded to address the contentions raised, emphasizing the need for a final resolution. The Court highlighted the Division Bench's prior observations regarding the burden of proof on the owner to counter tax evasion suspicions.

The Court analyzed the circumstances leading to the penalty imposition, focusing on the agreement's pre-dated nature and the vehicle's swift entry into Kerala post-purchase. It noted the absence of concrete evidence supporting the hire purpose during interception. The Court found the penalty excessive, considering the lack of tax liability if the hiring was proven. Ultimately, the Court reduced the penalty to ?1,00,000 to facilitate the excavator's release to the petitioner. The decision aimed to balance the penalty imposition with the factual context and the petitioner's ability to secure the vehicle promptly.

In conclusion, the judgment addressed the complex interplay of legal provisions, factual evidence, and procedural history to deliver a nuanced decision reducing the penalty while ensuring fairness and compliance with legal standards.