2007 (4) TMI 767 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Territorial Jurisdiction
2. Imposition of Penalty u/s 45-A of the Madhya Pradesh Commercial Tax Act, 1994

Summary:

1. Territorial Jurisdiction:
The respondents raised a preliminary objection regarding the territorial jurisdiction of the Gwalior Bench, arguing that the cause of action arose within the jurisdiction of the Indore Bench. The petitioner countered that the adverse effect of the impugned order was felt at their factory in Malanpur, where the penalty amount was deposited. The court referred to the Full Bench decision in K.P. Govil vs. Jawaharlal Nehru Krishi Vishwa Vidyalaya, Jabalpur, which held that the cause of action arises not only where the order is passed but also where its consequences are felt. Consequently, the court overruled the preliminary objection, affirming its jurisdiction to hear the matter.

2. Imposition of Penalty u/s 45-A of the Madhya Pradesh Commercial Tax Act, 1994:
The petitioner argued that the penalty imposed was unsustainable as there was no intention to evade tax. The consignment in question was raw material (LMC) for manufacturing chocolates, not a saleable product. The Form No. 75 was inadvertently left in Mumbai but was submitted within three days. The court noted that the authorities presumed an intention to evade tax without considering that the transported goods were not saleable and were exempt from entry tax. The court emphasized that penalty should not be imposed for technical or venial breaches without dishonest intention or malice, as per the Supreme Court's ruling in M/s Hindustan Steels Ltd. vs. State of Orissa. The court found that the authorities acted mechanically without establishing any mala fides or intention to evade tax. Consequently, the court quashed the impugned orders and directed the refund of the penalty amount deposited by the petitioner.

Conclusion:
The petition was allowed, and the impugned orders imposing the penalty were quashed. The authorities were directed to refund the penalty amount deposited by the petitioner. The case was disposed of without any order as to costs.