2020 (2) TMI 1383 - HC - VAT and Sales Tax

Levy of penalty u/s Section 51 of the Punjab VAT Act, 2005 - unaccountal of goods or not - Pressure Cookers - the goods were voluntarily reported at ICC - goods in question were voluntarily reported on its entry into the State of Punjab at ICC and were also reported at Himachal Pradesh tax barrier while making exist from Himachal Pradesh - goods meant for trade or not - duty to carry documents - HELD THAT - There is no dispute on the fact that there was no document accompanying the goods whereby it was evident that the appellant had made sales to purchaser in Punjab. The stand taken that there was an advance purchase order does not enhance the case of the appellant, the purchase order was not accompanying the goods. Moreover, in case the position had been so, the invoice issued by the seller would have at least mentioned that the goods to be delivered to the purchaser at Dera Bassi whereas the invoice was issued in the name of the appellant at Mumbai. The destination as per the GR was different than stated in the invoice. Even in the declaration filed at Himachal barrier, the name of the consignee given was as appellant. It would be pertinent to note that even after detention of goods, no bill/invoice issued by the appellant in favour of the purchaser was produced. It was only first time before the Tribunal that one invoice was produced. The goods were not specific goods for purchase but were general pressure cookers. The facts are self evident that the transaction between the appellant and the dealer in Punjab was without any documentation - The questions raised for challenge to the penalty are factual issues. No case is made out for interference in penalty under Section 51(7) (b). In the present case Section 51(12) could not have been invoked. The said provision comes into play only when the transporter fails to give information about the consignor or the consignee, but in the present case the documents produced at the time of checking gave the details of consignor and consignee. The penalty under Section 51(12) is quashed. Appeal allowed in part.

Summary

Issues:
1. Interpretation of Section 51 of the Punjab Value Added Tax Act, 2005 regarding penalty imposition.
2. Obligation of the incharge of the vehicle to carry necessary documents under the PVAT Act, 2005.
3. Application of penalty under Section 51(7) for mistakes in documents without tax evasion attempt.
4. Imposition of penalty under Section 51(7) for transactions involving tax under the Central Sales Tax Act, 1956.
5. Validity of penalty under Section 51(12) of the Act when goods are accompanied by a valid sale invoice.

The judgment involves a dispute under Section 51 of the Punjab Value Added Tax Act, 2005, regarding the imposition of penalties. The appellant challenged the penalty imposed by the Value Added Tax Tribunal, Punjab, arguing that the goods were voluntarily reported at the Information Collection Centre (ICC) and therefore should not be penalized. The appellant also questioned the justification of penalties under Section 51(7) for transactions involving pressure cookers not meant for trade by a pharmaceutical company. The case revolved around a detained vehicle carrying pressure cookers, where the documents did not fully support the transactions. The appellant contended that the penalty was unjustified as there was no attempt to evade tax, only faulty documentation.

The High Court analyzed the facts and arguments presented by both parties. It was observed that the appellant failed to provide sufficient documentation to prove the legitimacy of the transactions. The court noted discrepancies in the invoices and declarations, indicating a lack of proper documentation for the sales in question. Despite the appellant's claim of having a purchase order, the absence of accompanying documents raised doubts about the authenticity of the transactions. The court upheld the penalty under Section 51(7) based on the evidence and lack of proper documentation supporting the sales to the purchaser in Punjab.

Regarding the obligation of the incharge of the vehicle to carry necessary documents, the court emphasized the importance of proper documentation to avoid penalties under the PVAT Act, 2005. The court highlighted that the absence of documents supporting the sales to the purchaser in Punjab was a clear violation, leading to the imposition of penalties. However, the court found that the penalty under Section 51(12) was wrongly invoked in this case. Section 51(12) applies when there is a failure to provide information about the consignor or consignee, which was not the situation in this case. Thus, the court quashed the penalty under Section 51(12) while upholding the penalty under Section 51(7) based on the lack of proper documentation for the transactions.

In conclusion, the High Court partly allowed the appeal, quashing the penalty under Section 51(12) but upholding the penalty under Section 51(7) due to insufficient documentation supporting the sales transactions. The judgment emphasized the importance of maintaining accurate and complete documentation to comply with tax laws and avoid penalties under the PVAT Act, 2005.