2016 (6) TMI 1318 - HC - VAT and Sales Tax

Penalty u/s 78(5) of Rajasthan Sales Tax Act, 1994 - Compliance with requirement of 78(2)(A) of the Rajasthan Sales Tax Act, 1994 - submission of 18-A form on receipt of notice - Held that - The Hon ble Supreme Court of India in the case of D.P. Metals 2001 (10) TMI 881 - SUPREME COURT OF INDIA has categorically held that on show cause notice with regard to alleged contravention/ deficiency found in respect of goods in transit, if the deficiency/ contravention is removed, with the filing of the requisite document by the assessee with the reply to the show cause notice, imposition of penalty ought to be eschewed. Both the first appellate authority and the Tax Board have not committed any illegality in passing the impugned orders setting aside the Assessing Officer s order of penalty u/s 78(5) of the 1994 Act - petition dismissed - decided against petitioner-Revenue.

Summary

Issues:
Sales Tax Revision petition against Rajasthan Tax Board's order, Compliance with Section 78(2)(A) of the Rajasthan Sales Tax Act, 1994, Imposition of penalty under Section 78(5) of the 1994 Act, Interpretation of D.P. Metals case by the Hon'ble Supreme Court, Legality of orders by the first appellate authority and Tax Board.

Comprehensive Analysis:

The Sales Tax Revision petition was filed against the Rajasthan Tax Board's order, which dismissed a second appeal by the department and upheld the order of the appellate authority. The appellate authority found that the assessee had complied with the requirement of Section 78(2)(A) of the Rajasthan Sales Tax Act, 1994 by submitting Form 18-A upon receipt of notice. The case revolved around the absence of Form 18-A with goods sent by the assessee, leading to a show cause notice for breach of law. Despite later submission of the form, the Assessing Officer imposed a penalty under Section 78(5) of the 1994 Act.

The Deputy Commissioner (Appeals) set aside the penalty order, citing the judgment in the State of Rajasthan Vs. D.P. Metals case by the Hon'ble Supreme Court. The Supreme Court held that if required documents are not readily available during transit checks but submitted later, it absolves the assessee from liability. The appellate authority and Tax Board upheld this view, leading to the dismissal of the penalty by the Assessing Officer. The High Court noted that the Supreme Court's decision in the D.P. Metals case emphasized that rectifying deficiencies upon receiving a show cause notice should preclude penalty imposition.

After considering the arguments and material on record, the High Court concluded that the first appellate authority and Tax Board did not act illegally in setting aside the penalty under Section 78(5) of the 1994 Act. The High Court found no merit in the revision petition and dismissed it, affirming the decisions of the lower authorities. The judgment highlighted the importance of complying with statutory requirements upon notice and the legal precedence set by the Hon'ble Supreme Court in similar cases.