2014 (7) TMI 888 - HC - VAT and Sales Tax

Penalty - Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in treating the invoices produced by the appellant as Retail Invoices even though the nomenclature of a document cannot be conclusive to decide as to whether a invoice produced is a Retail Invoice or a Tax Invoice and even though admittedly, the invoice produced contained all the essential ingredients of a Tax Invoice including details of tax charged separately - Held that - On persual of the statutory notice issued in Form No.309 and considering the same it appears that there is a reference to the penalty u/s 34(7) and u/s 12(7) of the Act only. However, there is no reference of penalty u/s 34(12) of the Act. Thus, before imposing the penalty u/s 34(12) of the Act neither any statutory notice has been served upon the appellant nor the appellant has been called upon to show cause as to why the penalty u/s 34(12) of the Act may not be levied/imposed. Under the circumstances, the order passed by the First Adjudicating Authority, partly confirmed by the First Appellate Authority and confirmed by the Appellate Tribunal imposing the penalty u/s 34(12) of the Act cannot be sustained and the same deserves to be quashed and set aside as the same is in breach of principle of natural justice. Consequently, the order passed by the First Adjudicating Authority imposing penalty u/s 34(12) of the Act, partly confirmed by the First Appellate Authority and further confirmed by the Appellate Tribunal, is hereby quashed and set aside - Decided in favour of assessee.

Summary

Issues involved:
1. Interpretation of invoices as "Retail Invoices" or "Tax Invoices"
2. Allowance of Input Tax Credit without tax invoices
3. Verification of tax deposits for input tax credit
4. Imposition of penalty under Section 34(12) without proper notice

Analysis:

Issue 1: Interpretation of Invoices
The appellant challenged the order of the Gujarat Value Added Tax Tribunal regarding the classification of invoices as "Retail Invoices" or "Tax Invoices." The Appellate Tribunal's decision was questioned based on the nomenclature of the document and the essential ingredients of a Tax Invoice. The Court noted the consensus between the parties to remit the matter to the Appellate Tribunal for fresh consideration in accordance with the law.

Issue 2: Allowance of Input Tax Credit
The appellant contested the Appellate Tribunal's decision to allow Input Tax Credit without a tax invoice, arguing that certain documents should contain all the necessary particulars of a tax invoice. The Court dismissed the appeal on this issue as the appellant did not press it further, indicating a lack of challenge.

Issue 3: Verification of Tax Deposits
The Appellate Tribunal directed the assessing authority to verify tax deposits before allowing input tax credit on purchases made through tax invoices. The Court noted that such a provision was inserted in the statute book post the relevant period. The appellant's challenge on this issue was dismissed as not pressed, with no further discussion.

Issue 4: Imposition of Penalty
The primary contention revolved around the imposition of a penalty under Section 34(12) without proper notice to the appellant. The appellant argued that the show cause notice did not mention the penalty under this section. The Court, after examining the statutory notice and principles of natural justice, concluded that the penalty imposed under Section 34(12) was not sustainable. Consequently, the penalty was quashed and set aside, leading to partial success for the appellant in this regard.

In summary, the judgment involved a detailed analysis of various issues related to tax appeals, invoices classification, input tax credit, verification of tax deposits, and the imposition of penalties under the Gujarat Value Added Tax Act, 2003. The Court's decision to remit certain matters for fresh consideration and quash the penalty imposed without proper notice showcases a meticulous approach to legal interpretation and application of principles of natural justice.