2015 (8) TMI 1182 - HC - VAT and Sales Tax

Imposition of Penalty Legality Authority found that there was intention to evade tax and no documents were available in vehicle when vehicle was checked, therefore imposed tax and 3.5 times penalty Appeal against said order was dismissed Held that - No reasons have been assigned for imposing penalty Supreme Court in Hindustan Steel Ltd. v. State of Orissa reported in 1969 (8) TMI 31 - SUPREME Court Order imposing penalty will not ordinarily be imposed unless party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest In quasi-judicial function application of mind to facts as well as to requirement of law was necessary However authority has not assigned any reason that why penalty of 3.5 times was imposed against petitioner It was necessary for authority to assign proper reasons in imposing penalty Thus, imposition of tax hereby upheld, however, order of penalty set aside Matter remanded back to authority to pass proper order in regard to penalty after considering all facts of case Decided partially in favour of Assesse.

Summary

Issues:
Delay in filing the petition, Intention to evade tax, Imposition of penalty without assigning reasons.

Delay in filing the petition:
The judgment addresses an application for condonation of delay in filing the appeal. Despite a four-day delay, the application is allowed, and the delay is condoned based on the facts presented in the application. The appeal is then heard and disposed of with the consent of the parties at the motion hearing stage.

Intention to evade tax:
The case involves a driver appealing against orders related to the transportation of rice bran oil without proper documentation. The driver claimed to have loaded the oil from Kanpur to Morena and stated that documents were being collected at a check-post. However, upon inspection, no documents were found in the vehicle, leading to the imposition of tax and penalty by the authority. The subsequent statement by the company owner that the documents were with the driver after three days was not considered credible by the authorities, who believed that the papers could have been produced during the inspection or within a few hours. The authority imposed a tax and a 3.5 times penalty without providing reasons for the penalty.

Imposition of penalty without assigning reasons:
The judgment refers to previous Supreme Court rulings emphasizing that the imposition of penalties is a quasi-judicial function requiring the application of mind to the facts and the law. The court notes that in this case, the authority failed to provide reasons for imposing a 3.5 times penalty against the petitioner. Citing the need for proper reasoning in penalty imposition, the court upholds the tax but sets aside the penalty order. The matter is remanded back to the authority for a new penalty decision considering all case facts.

In conclusion, the judgment addresses the issues of delay in filing the petition, the intention to evade tax, and the imposition of penalty without proper reasoning. It highlights the importance of providing justifications for penalties in quasi-judicial functions and upholds the tax while remanding the penalty decision for reconsideration.