2016 (3) TMI 376 - HC - VAT and Sales Tax

Detention of goods under Punjab VAT - Levy of penalty - Section 51(7)(c) - obligation of the detaining officer is under legal obligation to allow 72 hours to the owner of the goods to prove the genuineness of the transaction before him in his office - Held that - Concurrent findings have been recorded against the asssessee by the authorities below - the assessee had been transporting the goods without the genuine documents and the driver tried to escape from the ICC barrier, Banur but he was apprehended and the goods were detained. If the driver had lost the documents in transit, as alleged, he could have informed the assessee and stopped the vehicle which he did not. Nothing could be shown by the learned counsel for the appellant-assessee except to urge that opportunity of hearing was not provided to it. The said contention was negated by the fact that in response to the notice issued to the assessee, two Advocates Mr. Varinder Gupta and Mr. Dharam Singh appeared on behalf of the assessee before the authorities and explained that the goods were purchased from Delhi but the documents of purchases and GR were lost in transit at Delhi. They also failed to produce the account books. Further, the documents were produced later on by the counsel for the assessee after 20 hours of detention. - Appeal dismissed - Decided against the assessee.

Summary

Issues:
- Whether production of documents relating to the goods produced after 20 hours of detention is lawful under section 51(7)(c) of the PVAT Act?
- Whether non-reporting at the ICC justifies the levy of penalty under section 51(7)(c) of the PVAT Act?
- Was it justified to levy a penalty on the same day of receiving the report without giving an opportunity of being heard and production of account books?
- Was it justified to levy a penalty only on the basis of the driver's statement without conducting an inquiry to prove an attempt to evade tax?

Analysis:
1. The appellant-assessee appealed against the penalty imposed under section 51(7)(c) of the PVAT Act by the Tribunal. The appellant contended that the detaining officer did not allow the required time to prove the genuineness of the transaction, and the penalty was unjustified.

2. The appellant, a firm engaged in resale of pulses, imported goods covered by a bill and GR from Delhi to Kharar. The driver failed to stop at the ICC Banur for necessary documentation, leading to detention by the Excise and Taxation Inspector. The appellant was asked to produce genuine documents within 72 hours, but penalty was imposed on the same day without allowing a fair opportunity to present evidence.

3. The Tribunal upheld the penalty, stating that the appellant failed to produce genuine documents promptly, and the driver's actions indicated an attempt to evade tax. The Tribunal found no merit in the appellant's argument that the documents were lost in transit, as they were produced after a significant delay of 20 hours.

4. The High Court affirmed the Tribunal's decision, emphasizing that the appellant transported goods without genuine documents, and the driver's behavior suggested an intention to evade tax. The Court noted that the appellant's delayed production of documents and failure to incorporate the transaction in their books of account supported the penalty imposition.

5. The Court concluded that the concurrent findings by the authorities below were reasonable, and no substantial question of law arose. The appeal was dismissed, upholding the penalty under section 51(7)(c) of the PVAT Act. The judgment highlights the importance of timely document production and compliance with tax regulations to avoid penalties for tax evasion.