2015 (3) TMI 593 - HC - VAT and Sales Tax

Levy of penalty on the respondent-assessee under Section 76(6) of the Rajasthan VAT Act, 2003 - Evasion of tax - Malafide intention - Held that - As the goods in transit were accompanied by all requisite documents under Section 76(2)(b) of the Act of 2003, the mere incident of the documents not being as the Assistant Commercial Taxes Officer, Flying Squad, Bharatpur thought they ought to have been, was not an occasion for levy of penalty. The question of nature of transaction is a matter to be considered in the regular assessment proceeding and where the nature of transaction was improper in law such transaction could have been discarded and requisite tax levied in regular assessment proceedings. Admittedly, the goods in transit were tax paid and even otherwise the respondent-assessee could have made the transfer of goods by way of stock transaction without paying any tax whatsoever. The ACTO, Flying Squad, Bharatpur could at best have referred the matter to the regular assessing authority but could not himself travel beyond his jurisdiction to pontificate on the issue of the irregularity of an inter-state sale being made by the respondent-assessee s Alwar office to its Morena office. This was beyond his jurisdiction. The overall context of the factual situation obtaining on the record of the case is indicative of a complete absence of any intent to evade the tax. - Decided against Revenue.

Summary

Issues:
Impugning order upholding penalty under Section 76(6) of Rajasthan VAT Act, 2003 based on alleged illegal inter-state sale; Consideration of requisite documents in transit and intent to evade tax; Jurisdiction of assessing authority and regular assessment proceedings.

Analysis:
The petition challenges the order upholding the penalty imposed on the respondent-assessee under Section 76(6) of the Rajasthan VAT Act, 2003. The case revolves around the inspection of goods in transit from Alwar to Morena by the Sales Tax Department, where all necessary documents, including goods receipt, bills, and declarations, were found to be complete as per Section 76(2)(b) of the Act. Despite this, the Assistant Commercial Taxes Officer believed the inter-state sale to be illegal, leading to the penalty imposition. The Deputy Commissioner (Appeals) later overturned the penalty, emphasizing the presence of all required documents and the absence of any evidence indicating an intent to evade tax. Additionally, it was noted that the goods in transit had the applicable 2% tax levied on them for inter-state sale. The Deputy Commissioner highlighted that any irregularity in the sale could be addressed during regular assessment proceedings, and the penalty was unjustified.

The subsequent appeal to the Rajasthan Tax Board, Ajmer, was dismissed, emphasizing that the dispatched goods were accompanied by all necessary documents, indicating no intention to evade tax. The Tax Board criticized the lack of inquiry by the assessing authority and deemed the penalty imposition as mere suspicion without substantial evidence of deliberate tax evasion. The High Court, upon review, concurred with the lower authorities' decisions. It emphasized that the presence of all requisite documents during transit negated the need for penalty imposition. The Court stressed that the nature of the transaction should be addressed in regular assessment proceedings, and any irregularities could be rectified through proper channels. The Court also highlighted that the Assistant Commercial Taxes Officer exceeded his jurisdiction by questioning the legality of the inter-state sale, which was beyond his purview. Ultimately, the Court found no grounds to interfere with the sales tax revision and dismissed the petition, along with the stay application.

This judgment underscores the importance of due process in tax assessments, the significance of complete documentation in transit, and the jurisdictional boundaries of assessing authorities. It clarifies that penalties should not be imposed based on suspicion alone and that any irregularities in transactions should be addressed through proper assessment procedures rather than arbitrary actions by individual officers.