2016 (9) TMI 826 - HC - VAT and Sales Tax

Imposition of penalty - detention of goods by department - SCN - in reply to the show-cause notice at first opportunity the assessee had produced these forms-31 - Tribunal silent about the relevancy of forms - whether forms-31 relate to the goods, which were carried or not? - Held that - when an opportunity to show-cause is given then any material which is produced by the offender must be considered either it could be accepted or rejected. Tribunal is completely silent about the veracity of these forms and whether related or not related to the goods which were being transported - the matter remanded to the Tribunal for a consideration of these facts whether the forms were good or bad and could have been accepted. The matter on remand to be considered by the Tribunal within a period of three months from the date of production of certified copy of the order before it. A certified copy of the order may be produced before the Tribunal within next 15 days. The penalty may be kept in abeyance till the matter is finally decided by the Tribunal. Revision disposed off - decided in favor of assessee.

Issues:
1. Justification of penalty imposed by the Tribunal based on intention to escape tax.
2. Imposition of penalty under section 15-A(1)(o) for goods not being raw material for the applicant.
3. Justification of penalty despite goods being under strict supervision of Central Excise department.
4. Justification of penalty amount under Section 15-A(1)(o) of U.P. Trade Tax Act.
5. Justification of the quantum of penalty imposed on the applicant.

Issue 1 - Justification of Penalty Based on Intention to Escape Tax:
The revision was filed against an order imposing a penalty on the assessee for allegedly intending to escape tax. The Tribunal's decision was challenged, citing judgments of various cases. The Tribunal did not clarify whether the produced forms were related to the transported goods or not. The High Court found the Tribunal's silence on this crucial aspect problematic and remanded the matter back to the Tribunal for a proper consideration of the facts regarding the forms within a specified timeframe. The penalty was to be kept in abeyance until the Tribunal's final decision, and any deposited amount was subject to the Tribunal's order.

Issue 2 - Imposition of Penalty for Non-Raw Material Goods:
Despite the goods not being raw material for the applicant, a penalty was imposed under section 15-A(1)(o). The applicant claimed they did not send the required forms earlier due to a genuine belief. The Tribunal's decision was based on the absence of these forms initially, indicating an intention to evade tax. However, the High Court emphasized that the Tribunal failed to assess the relevance of the produced forms to the transported goods. The matter was remanded for the Tribunal to determine the validity of the forms in relation to the goods, with the penalty being held in abeyance until a final decision.

Issue 3 - Penalty Despite Central Excise Supervision:
The goods in question were under strict supervision and control of the Central Excise department. Despite this, a penalty was imposed on the applicant. The High Court directed the Tribunal to reexamine the case within a specified period, emphasizing the need for a thorough evaluation of the forms provided by the assessee. The penalty was to be suspended until the Tribunal's final decision, ensuring fair consideration of all relevant aspects.

Issue 4 - Justification of Penalty Amount:
The penalty amount imposed under Section 15-A(1)(o) of the U.P. Trade Tax Act was challenged for its validity. The High Court's decision to remand the case to the Tribunal for a detailed assessment of the forms provided by the assessee indicates a need for a comprehensive review of the penalty amount. The Tribunal was instructed to reconsider the matter within a specific timeframe, with the penalty being put on hold until a final determination was made.

Issue 5 - Assessment of Penalty Quantum:
The quantum of penalty imposed on the applicant was questioned in the revision. The High Court's directive to the Tribunal to reevaluate the case within a stipulated period suggests a critical examination of the penalty amount. By keeping the penalty in abeyance until the Tribunal's final decision, the High Court ensured a fair and thorough consideration of the penalty quantum, emphasizing the importance of assessing all relevant factors before reaching a final conclusion.

By thoroughly examining each issue raised in the revision, the High Court provided detailed instructions for the Tribunal to reevaluate the case, emphasizing the need for a comprehensive assessment of the facts and relevant documents to ensure a just and fair decision regarding the penalty imposed on the applicant.

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