2014 (8) TMI 50 - HC - VAT and Sales Tax

Penalty u/s 76(6) - Whether ex parte decision of the appeal in the facts and circumstances of the case could not be countenanced for want of service of summons on assessee and appeal needs to be restored to the file of the Tax Board for decision afresh affording opportunity of hearing to the appellant to secure the ends of justice - Held that - Even though the Deputy Commissioner (Appeals), Commercial Tax Department, Bharatpur vide order dated January 23, 2007 had set aside the imposition of penalty on the petitioner firm under section 76(6) of the Rajasthan Value Added Tax Act, 2003, the learned Tax Board vide its order dated August 24, 2009 has upset ex parte the said finding and revived the order of penalty visited upon the petitioner-firm by the assessing authority under the order - view of the respondent-Department is wholly without foundation inasmuch as other than sugar manufactured by the vacuum process other kind of sugar otherwise partakes the character of khandsari sugar and consequently, there was no declaration in the documents accompanying the goods in transit as alleged by the Department. In the event the petitioner-firm had the opportunity of appearing before the Tax Board in the Revenue s appeal against the appellate order dated January 23, 2007 exculpatory of any wrong doing or illegality by the assessee, the correct legal and factual position would have been brought to the notice of the Tax Board - Matter remanded back - Decided in favour of assessee.

Issues:
1. Ex parte decision of the appeal due to lack of service of summons on assessee.
2. Validity of penalty under section 76(6) of the Rajasthan Value Added Tax Act, 2003.
3. Justification of penalty imposition without proof of false documents.
4. Legality of penalty exceeding 30% of the value of goods.

Analysis:

1. The petitioner-firm challenged the ex parte decision of the appeal, arguing that the Tax Board's order dated August 24, 2009, imposing a penalty on the firm, was made without proper service on the petitioner. The Deputy Commissioner had earlier set aside the penalty under section 76(6) of the RVAT Act, 2003, but the Tax Board overturned this decision. The petitioner contended that they were not served and therefore not represented during the proceedings, which violated the principles of natural justice. The court found merit in this argument and set aside the Tax Board's order due to the lack of proper service, remanding the matter back to the Tax Board for further proceedings.

2. The issue of the validity of the penalty imposed under section 76(6) of the RVAT Act, 2003 was raised. The petitioner argued that the penalty was imposed based on a mis-declaration in the documents accompanying the goods in transit. The respondent-Department claimed that the goods were mislabeled as khandsari sugar instead of sulphur sugar. The petitioner contended that the respondent's classification was unfounded, as sugar manufactured by processes other than vacuum process could be considered khandsari sugar. Additionally, the petitioner highlighted that tax had been paid on the subsequent sale of the goods in Rajasthan. The court did not delve into the merits of this issue but focused on the procedural irregularity of lack of service in its decision.

3. The petitioner also questioned the justification for imposing a penalty without proof of false or forged documents and without establishing mens rea on their part. They argued that the penalty was sustained by the Tax Board without sufficient evidence of wrongdoing. The court did not provide a detailed analysis of this issue but set aside the penalty primarily on grounds of natural justice violation.

4. Lastly, the petitioner raised concerns about the legality of the penalty exceeding 30% of the value of the goods as prescribed in section 76(6) of the RVAT Act, 2003. However, the court's decision to set aside the Tax Board's order was based on procedural grounds rather than delving into the specifics of the penalty amount. The matter was remanded back to the Tax Board for further proceedings, with directions for the petitioner-firm to appear before the Board on a specified date.

In conclusion, the High Court's judgment primarily focused on the procedural irregularity of lack of service, leading to the setting aside of the Tax Board's order imposing a penalty on the petitioner-firm under the RVAT Act, 2003. The court emphasized the importance of upholding the principles of natural justice in legal proceedings, warranting a remand of the matter for fresh consideration.

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