2015 (9) TMI 358 - HC - VAT and Sales Tax

Non-production of ST-38 form Goods Detained Exempted Unit - Goods of petitioner were detained on ground that ST 38 form produced was blank and goods were not covered with genuine and proper documents, thereafter penalty was imposed Tribunal by impugned order, partly allowed appeal by reducing penalty by 50% and holding that though petitioner was exempted unit, yet requirement of carrying duly filled ST 38 form was binding Held that - as observed by current court in M/s Crown Gaskets (India) s case 2003 (10) TMI 617 - PUNJAB AND HARYANA HIGH COURT where sales and purchases were not leviable to tax, it could not be said that person transporting goods was attempting to evade tax Thus said principle would be applicable to current case It was not controverted that petitioner was exempted unit Though there was technical defect in not producing Form ST 38 but there was no attempt to evade tax Therefore, sustaining of penalty under Section 37(6) of Haryana General Sales Tax Act, 1973 by Tribunal was unjustified Petitions allowed Decided in favour of Assesse.

Summary

Issues:
1. Quashing of order dated 19.5.2001 by Excise and Taxation Officer and cancellation of penalty upheld by Sales Tax Tribunal.
2. Interpretation of provisions of Haryana General Sales Tax Act, 1973 and Central Sales Tax Act, 1956 regarding exemption from tax liability.
3. Application of penalty under Section 37(6) of the Act for attempt to evade tax.
4. Analysis of legal precedents M/s Crown Gaskets (India) and Delhi Assam Roadways Corporation Ltd. in relation to tax evasion and penalty imposition.

Issue 1:
The petitioner sought a writ of mandamus to quash the order dated 19.5.2001 by the Excise and Taxation Officer and for the cancellation of the penalty upheld by the Sales Tax Tribunal. The petitioner contended that the penalty imposed was unjustified as there was no attempt to evade tax, despite a technical defect in not producing Form ST=38.

Issue 2:
The petitioner argued exemption from tax liability under section 13B of the Haryana General Sales Tax Act, 1973, indicating no intention to evade tax under section 37(6) of the Act. The petitioner cited legal precedents to support their claim, emphasizing the absence of mens rea in the alleged tax evasion.

Issue 3:
The State supported the penalty upheld by the Tribunal under Section 37(6) of the Act, contending that the penalty was justified. However, the Court found merit in the petitioner's argument, emphasizing that where there was no liability to pay tax under the Act, there could be no inference of an attempt to evade tax. The Court concluded that sustaining the penalty was unjustified.

Issue 4:
In analyzing legal precedents such as M/s Crown Gaskets (India) and Delhi Assam Roadways Corporation Ltd., the Court highlighted that in cases where sales and purchases were not subject to tax under the Act, there could be no attempt to evade tax. The Court reiterated that the absence of tax liability negated the imposition of penalties under Section 37(6) of the Act. Therefore, the Court allowed the writ petitions, setting aside the penalty imposed against the petitioners.