2014 (6) TMI 83 - HC - VAT and Sales Tax

Penalty - Whether the penalty imposed on the assesse would be justified in the present facts and circumstances of the case, when a finding has been rendered by the authorities that the requisite document had not accompanied the goods that was being transported - Held that - when it is seen that in fact the document, which was required to be produced had not been produced and the penalty was also imposed after providing an opportunity and in the manner as provided under the provisions of the Act, certainly at this juncture, it would not be open for the assessee to contend otherwise, more particularly in a circumstance when the initial contention was that the notification dated 08.08.2008 itself would not apply to them - once it is seen that the required document had not accompanied the goods, the levy of penalty would be justified. In the instant case, as already noticed, the original authority i.e., the Commercial Tax Officer as well as the Additional Commissioner of Commercial Taxes, while arriving at the conclusion have also taken note of the manner in which the reduced penalty has been imposed - Decided against assessee.

Issues:
1. Appeal against the order of Additional Commissioner of Commercial Taxes restoring the order of Commercial Tax Officer.
2. Justification of penalty imposed on the assessee for non-compliance of producing requisite document during transportation of goods.
3. Interpretation of relevant notifications and forms under the Karnataka Value Added Tax Rules.
4. Consideration of penalty imposition under Section 53(12)(a) of the KVAT Act, 2003.

Analysis:
1. The appeal was filed against the order of the Additional Commissioner of Commercial Taxes, which restored the order of the Commercial Tax Officer regarding the penalty imposed on the assessee for non-compliance of producing the requisite document during the transportation of goods. The First Appellate Authority had initially set aside the penalty, but it was reinstated by the Additional Commissioner under Section 64(i) of the KVAT Act, leading to the appeal before the High Court.

2. The primary issue was the justification of the penalty imposed on the assessee for not accompanying the goods with the required Form VAT-505 during transportation. The assessee argued that since the goods were for recycling and not for sale, Form VAT-515 was sufficient. However, the Revenue contended that Form VAT-505 was necessary as per the notification dated 08.08.2008, even for non-sale transportation of non-ferrous metal. The Court analyzed the applicable notifications and forms to determine the correctness of the penalty imposition.

3. The Court examined the notifications dated 05.01.2006 and 08.08.2008 to ascertain the appropriate form required for the transportation of non-ferrous metal, irrespective of the purpose of sale. It was concluded that Form VAT-505 was mandated for such transportation, even if not intended for sale, based on the specific provisions and requirements outlined in the notifications and relevant rules.

4. Regarding the penalty imposition under Section 53(12)(a) of the KVAT Act, the Court noted that the penalty was levied after due consideration and opportunity provided to the assessee. Despite subsequent production of Form VAT-505, the Court emphasized that the initial willingness of the assessee to pay a reduced penalty amount indicated acceptance of the penalty imposition process. Therefore, the Court upheld the penalty imposition based on the non-compliance with the required document during transportation and the procedural correctness followed in imposing the penalty.

In conclusion, the High Court dismissed the appeal, upholding the penalty imposition on the assessee for failing to produce the necessary document during the transportation of goods, as mandated by the relevant notifications and provisions of the KVAT Act, 2003.

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