2019 (8) TMI 1626 - HC - VAT and Sales Tax

Deletion of Penalty under Section 54(1)(14) of the U.P. VAT Act, 2008 - only allegation made against the assessee was that it had used magic ink in filling of import declaration form - case of respondent is that the assessee is only the purchasing dealer and it could not be made liable for mistakes and actions by the consignee - HELD THAT - In the present case, it appears that in absence of any finding of the authorities that the import declaration form had been filled up using such ink as may evaporate if heat were to be applied to it, it is difficult to reach a conclusion that due disclosure of transaction had not been made by the assessee - The penalty order as also the appellate orders would reveal that the only allegation that was made against the assessee was of use of magic ink without specifying how it caused any prejudice. Mere use of expression magic ink cannot lead to any conclusion that the ink would have vanished without leaving any impression on that form. While as a fact, it cannot be denied that such techniques and devices exist, however, for the penalty to be imposed and sustained, there must exist a clear application of mind and specific finding to that effect. In absence of any finding to establish that the ink used was liable to vanish/evaporate without leaving a legible impression, the finding of fact recorded by the Tribunal appears to be based on evidence and material on record, which requires no interference - Revision dismissed - decided against Revenue.

Summary

Issues:
1. Revision filed against Commercial Tax Tribunal's order
2. Allegation of using "magic ink" on import declaration form
3. Liability of the purchasing dealer for consignee's actions
4. Lack of specific finding on the ink used
5. Applicability of penalty based on evidence

Analysis:
The High Court of Allahabad addressed a revision filed by the revenue against the Commercial Tax Tribunal's order in a case concerning the imposition of a penalty under Section 54(1)(14) of the U.P. VAT Act, 2008 for the assessment year 2015-16. The Tribunal had ruled in favor of the assessee, citing a previous decision of the Court. The revenue contended that the assessee used ink that would evaporate without leaving an impression on the import declaration form, thus justifying the penalty. However, the opposite party's counsel argued that no authority had confirmed this claim and that the assessee was not responsible for the consignee's actions, emphasizing that the transaction was legitimate.

The Court noted the absence of any conclusive finding by the authorities regarding the ink used on the form. It highlighted that the mere mention of "magic ink" was insufficient to prove that the ink would disappear without a trace. The Court stressed the necessity of a clear application of mind and specific findings to impose and uphold a penalty. Referring to a previous judgment, the Court found that the Tribunal's decision was supported by evidence on record and did not warrant interference.

Conclusively, the Court dismissed the revision, finding it lacking in merit. The judgment underscored the importance of establishing clear evidence and specific findings to support penalties, emphasizing the need for a thorough assessment of the facts before imposing financial liabilities on parties involved in transactions.