2016 (8) TMI 337 - HC - VAT and Sales Tax

Revision penalty rested on the statement of the driver that the goods were not loaded at the business premises of the revisionist but were loaded at another place in Saharanpur SCN revisionist produced all relevant documents and records tribunal assumed that the transaction in question had not been duly recorded in the books of accounts at the time of consignment and that records were prepared by the revisionist only after the instant proceedings were drawn up. Held that - The imposition of penalty upon the assessee cannot be made dependent upon the presumption or assumption of any authority. The authority concerned is obliged to arrive at a conclusion based upon the material on record that the bills had not been accounted for and there was an attempt to evade payment of tax. The first appellate authority had recorded that the goods had been duly accounted for in the books of accounts which were produced before him - the jurisdictional fact, existence of which was required for imposition of penalty was clearly absent order of Tribunal unsustainable revision allowed.

Summary

Issues:
Challenge to Tribunal's order affirming penalty imposition based on seizure of consignment of kerosene; Failure to explain circumstances leading to seizure; Justification of penalty imposition; Presumption of evasion of tax; Ante dating of entries in books of accounts.

Analysis:
The High Court addressed the challenge to the Tribunal's order affirming the penalty imposition arising from the seizure of a consignment of kerosene. The proceedings stemmed from the seizure of goods in Saharanpur en route to a dealer in Ghaziabad, allegedly dispatched by the revisionist. The penalty was initially based on the driver's statement that the goods were loaded at a different place in Saharanpur, not the revisionist's business premises. The respondent contended that the revisionist failed to explain the circumstances leading to the seizure and penalty imposition.

Upon review, the Court noted that the revisionist had submitted a detailed reply to the show cause notice, stating that the goods were transported as per bills, duly recorded in cash books and bill books. The first appellate authority had annulled the penalty, observing that the bills accompanied the transportation bill and were reflected in the dealer's accounts, with taxes duly paid. However, the Tribunal raised concerns that the revisionist had closed business before the consignment date and no kerosene business was conducted for a year. The Tribunal presumed that entries were ante dated, implying an attempt to evade tax.

The Court disagreed with the Tribunal's reasoning, emphasizing that penalty imposition cannot rely on presumptions. The authority must establish through evidence if goods were unaccounted for, not merely assume evasion. As the first appellate authority confirmed proper accounting, the Tribunal's presumption lacked justification. The Court found the jurisdictional fact necessary for penalty imposition absent, rendering the Tribunal's order unsustainable.

Consequently, the Court allowed the revision, setting aside the Tribunal's and assessing authority's orders. The judgment clarified the importance of factual evidence over assumptions in penalty proceedings, ensuring fair and just adjudication based on concrete proof rather than conjecture.