2016 (10) TMI 259 - HC - VAT and Sales Tax

Evasion of Entry tax - detention of goods - imposition of penalty u/s 51(7)(c)of that PVAT Act - two consignments originating from two consignors meant for two different consignees in the same vehicle - purchase of goods by the appellant on concessional rate of tax against form C - entry tax for one consignment duly deposited and delay in submission of entry tax on other consignment - whether the deposit of tax was made duly and no evasion of tax involved? - Held that - The appellant claimed that the amount was transferred in the account of the agent before 11.00 AM, however, it was reflected in his account late. The fact was got verified by the first appellate authority from the banker of the appellant and it was revealed that the amount was deposited in cash at 12.27 PM. Still further, the amount deposited in the account of the so-called agent was ₹ 42,500/-, whereas the amount of tax due on both the consignments, which was to be deposited at the barrier, was ₹ 43,170/-, hence, even the amount also did not tally. Further, if the agent could deposit the amount of tax for one consignment before the amount was deposited by the appellant in his accounts, he could very well deposit the same for the second consignment as well. The process for deposit of money started only after the goods were detained and were in the process of verification to create evidence - evasion of entry tax established - imposition of penalty justified - appeal dismissed - decided against appellant.

Summary

Issues:
1. Attempt to evade tax by depositing entry tax in the account of an agent before goods detained.
2. Discrepancy in the time of goods detention and findings recorded by the authorities.
3. Justification of penalty under Section 51(7)(c) when goods and vehicle within premises of Information Collection Centre (ICC).

Analysis:

Issue 1: Attempt to Evade Tax
The appellant raised concerns regarding the penalty imposed despite depositing entry tax for one consignment before goods were detained. Two consignments were loaded in the truck for different consignees, with one consignment's entry tax being delayed due to transfer issues with the agent. The appellant argued that the transaction was genuine, supported by documents and statutory form 'C'. However, the State contended that the second consignment was not declared initially, and the agent's involvement was a private arrangement. The State argued that the appellant's actions were to create evidence post-detention, as the amount transferred to the agent did not match the tax due. The court found the appellant's explanation unconvincing, as the amount was deposited in the agent's account after goods were detained, indicating an attempt to manipulate the situation.

Issue 2: Discrepancy in Time of Goods Detention
The appellant contested the discrepancy in the time of goods detention as recorded by the authorities. The appellant claimed that both consignments were with the driver at the barrier, eliminating the possibility of non-declaration. The State, however, asserted that the second consignment was discovered during inspection, indicating non-declaration. The court noted the conflicting accounts and found the appellant's explanation regarding the delayed tax deposit unconvincing, as the amount transferred did not match the tax due, raising suspicions about the genuineness of the transaction.

Issue 3: Justification of Penalty under Section 51(7)(c)
The appellant questioned the justification of upholding the penalty under Section 51(7)(c) when the goods and vehicle were within the ICC premises. The appellant argued that the purchase was made at concessional rates against form 'C', with no benefit in evading tax. The State maintained that the appellant's actions post-detention were suspicious and aimed at creating false evidence. The court examined the evidence and found no substantial question of law, dismissing the appeal and upholding the penalty. The court concluded that the findings of the authorities were not perverse, indicating a lack of merit in the appellant's arguments.

In conclusion, the court dismissed the appeal, finding no substantial question of law and upholding the penalty imposed under Section 51(7)(c) based on the suspicious circumstances surrounding the delayed tax deposit and discrepancies in the appellant's explanations.