2018 (4) TMI 1580 - HC - VAT and Sales Tax

Levy of penalty - it was found that Form-38 being carried with the goods was not complete in various respects and certain columns specially Column No. 6 relating to the Bill/ Invoice number was unfilled. - Held that - As far as Section 7 of the Act, 2008 and Section 5 of the Central Sales Tax Act, 1956 are concerned, the import from outside into the Territory of India which is exempted from Sales Tax, obviously it is so at the point of entry into the country. It is not as if after delivery of the goods at the destination within the Territory of India if the said goods are further transported to any other part of the country, they would be exempted from tax on sale etc. In the present case the destination of delivery of the telecommunication equipments which was imported from China was Tuglakabad, Delhi, as such, once the goods were delivered to the revisionist at Delhi it is only up to this stage that no tax was leviable under the Act, 2008 and the Act, 1956. Once, it was being transported further to other parts of the country and was being imported in the State of U.P., then the relevant taxation provisions would apply. Different forms are prescribed for being carried during the course of import into the State by road for business purpose or otherwise than in the course of business. In both eventualities Section 50 had to be complied. During the course of such import adherence to Section 50 of the Act, 2008 was must. It is not in dispute that Section 50 of the Act, 2008 was violated as the requisite document which was being carried was not as per Rules, as relevant columns were unfilled. The original records were perused by this Court and it was revealed that not only Column 6 but even Column 8 of the original copy as also other relevant columns were unfilled. Thus, one of the two prerequisites for imposition of penalty under Section 54(1)(14) was satisfied. First Appellate Authority and Tribunal have concurrently recorded a finding based on material on record that there was intent to evade tax as aforesaid which does not require interference in exercise of revisional powers of this Court as it can not be said that they erred in exercising their jurisdiction in this regard. - Levy of penalty confirmed.

Summary

Issues Involved:
1. Validity of penalty imposed under Section 54(1)(14) of the U.P. VAT Act, 2008.
2. Compliance with Section 50 of the U.P. VAT Act, 2008 regarding the import of goods.
3. Applicability of Circulars dated 03.02.2009 and 03.06.2009.

Issue-wise Detailed Analysis:

1. Validity of Penalty Imposed Under Section 54(1)(14) of the U.P. VAT Act, 2008:
The petitioner challenged the penalty of ?23,25,000 imposed due to deficiencies in Form-38 during the transportation of telecommunication equipment from Delhi to Meerut. The petitioner argued that since the goods were imported into India and were not taxable under Section 7(a)(iii) of the U.P. VAT Act, 2008, there was no intent to evade tax, and thus, no penalty should be imposed. However, the court found that the incomplete Form-38 indicated an intent to reuse the form for evading tax, as supported by the Supreme Court's decision in Guljag Industries Vs. CTO and the Allahabad High Court's decision in M/s KMGS Road Signs Pvt. Ltd. Vs. Commissioner Commercial Taxes, U.P., Lucknow. The Tribunal and lower authorities had correctly assessed the intent to evade tax based on the incomplete form, justifying the penalty.

2. Compliance with Section 50 of the U.P. VAT Act, 2008 Regarding the Import of Goods:
The court emphasized that compliance with Section 50 of the U.P. VAT Act, 2008 was mandatory during the import of goods into Uttar Pradesh. The petitioner failed to fill in crucial columns (e.g., Column No. 6) in Form-38, which was essential for correlating the form with the goods being transported. This non-compliance suggested a potential for reusing the form to evade tax. The court highlighted that Section 50 applies to all goods except those listed in Schedule-I, and the petitioner’s failure to comply with this provision justified the seizure and penalty.

3. Applicability of Circulars Dated 03.02.2009 and 03.06.2009:
The petitioner referred to the Circular dated 03.02.2009, arguing that it supported their case. However, the court clarified that this Circular applied only to imports from outside India into its territory and not to inter-state imports within India. The subsequent Circular dated 03.06.2009 further clarified this point. The Tribunal correctly interpreted these Circulars, affirming that they did not apply to the petitioner’s case of transporting goods from Delhi to Uttar Pradesh.

Conclusion:
The court concluded that the revision did not involve any question of law warranting interference under Section 58 of the U.P. VAT Act, 2008. The penalty imposed was upheld based on the petitioner’s non-compliance with Section 50 and the intent to evade tax. The revision was dismissed, and the interim order was discharged.