2010 (9) TMI 873 - HC - VAT and Sales Tax

Inter state sale versus intra-State sale - Penalty under Section 51(7)(b) of the Punjab Value Added Tax, 2005 - The stand of the assessee was that goods were being transported in pursuance of an agreement for sale and nature of transaction was inter-State sale and the tax had been paid in the State from where movement of goods started. Rejecting this stand, the Excise and Taxation Officer-cum-officer-in-charge, Information Collection Centre, Kallar Khera (District Ferozepur) took the view that transaction was of intra-State sale in the State of Punjab as goods were to be used in the works to be executed in the State of Punjab. - held that - the petitioner furnished all the information and raised a dispute of taxability relying upon the judgment in Kone Elevators (India) Ltd s case (2005 -TMI - 105511 - SUPREME COURT OF INDIA). In such a situation there could be no question of attempt at tax evasion. Invocation of jurisdiction to impose penalty at the Information Collection Centre was not called for. - Decided in favor of assessee.

Summary

Issues:
1. Quashing of penalty order under Section 51(7)(b) of the Punjab Value Added Tax, 2005.
2. Determination of nature of transaction - inter-State sale or works contract.
3. Maintainability of writ petition due to appealable order.
4. Jurisdiction of Information Collection Centre to impose penalty.

Analysis:

1. The petitioner sought the quashing of the penalty order dated 25.7.2010 imposed by respondent no.2 under Section 51(7)(b) of the Punjab Value Added Tax, 2005. The petitioner's goods, elevator components, were detained at the Information Collection Centre while being transported to Punjab. The petitioner argued that the transaction was an inter-State sale, supported by invoices, but the officer-in-charge deemed it an intra-State sale for works to be executed in Punjab.

2. The petitioner contended that the transaction was an inter-State sale, citing a similar case decided by the Supreme Court. The petitioner argued that the legal issue required adjudication, and the penalty imposition was not justified as relevant documents were produced, and a genuine plea against taxability was raised. The respondent, however, claimed the transaction was a works contract, not an inter-State sale.

3. The respondent objected to the writ petition's maintainability, stating that the order was appealable. The court rejected the plea of alternative remedy, emphasizing the lack of jurisdiction in the present case based on admitted facts regarding the nature of the transaction.

4. The court allowed the writ petition, quashing the penalty order, emphasizing that the petitioner had provided all necessary information and raised a dispute in good faith. The court clarified that the Assessing Authority could still determine the taxability during assessment, highlighting that the penalty imposition at the Information Collection Centre was unwarranted.