2013 (6) TMI 171 - HC - VAT and Sales Tax

Penalty u/s 54(1)(14) of the U.P. Value Added Tax Act, 2008 - seizure of goods as the weight of the consignment was more than that disclosed in the documents - Held that - It is admitted on record that the assessee is a dealer having turnover of Rs.15 crore per annum. The total consignment was of 23.84 metric tones in 465 bags and during seizure only 33 bags weighing about 805 Kg. having the value of Rs.11,000/- alone were said to have been found in excess. In comparison to the volume of the trade carried on by the assessee and the quantity of the consignment, the goods in excess were quite negligible. The tax liability on it would have been Rs.110/- only. It is not expected of any dealer to involve himself in penalty proceedings relating to such petty quantity of goods having tax incidence of Rs.110/-only. Therefore, there appears to be no intention of evaision of tax in transportation of such excess goods. It was not proper to levy penalty by taking the value of the entire consignment as base. The evasion of tax, if any, would have been only o33 bags of yellow peas excess bags found and, therefore, the penalty ought to have been in tune with the value of the said excess goods. In favour of assessee.

Summary

Issues:
1. Imposition of penalty under Section 54(1)(14) of the U.P. Value Added Tax Act, 2008.
2. Justification of penalty based on the value of entire consignment or only on the excess quantity.

Analysis:
1. The revisionist, engaged in the manufacture and sale of Besan, faced penalty proceedings due to a consignment of yellow peas being seized during transit for allegedly having more weight than disclosed. The penalty of Rs.1,60,000 was imposed, equivalent to 40% of the total goods' value, which was challenged.

2. The counsel for the revisionist argued that the excess goods were negligible concerning the turnover and status of the dealer, suggesting penalty initiation was unwarranted. Additionally, it was contended that if any excess quantity was present, the penalty should have been based on that specific value, not the entire consignment.

3. The court noted the revisionist's annual turnover of Rs.15 crore, the consignment of 23.84 metric tones, and only 33 bags (weighing 805 Kg) found in excess during seizure, valued at Rs.11,000. The tax liability on the excess goods was minimal at Rs.110, indicating a lack of intent to evade taxes due to the insignificant amount.

4. Referring to a previous case, the court highlighted that penalty imposition should not be arbitrary or harassing, especially when the dealer's status and business nature are considered. In this context, the penalty was deemed unjustified based on the circumstances and the negligible tax evasion potential of the excess goods.

5. The court emphasized that the penalty should have been limited to the value of the unaccounted excess goods, not the entire consignment. It was clarified that only the 33 bags of yellow peas found in excess were unaccounted, and there was no discrepancy in the rest of the consignment warranting penalty imposition.

6. Consequently, the court ruled in favor of the revisionist, setting aside the penalty orders as the penalty proceedings were deemed unjustified in the given circumstances. The judgment highlighted that the penalty should have been based solely on the value of the excess and unaccounted goods, not the total consignment value.