2016 (10) TMI 286 - HC - VAT and Sales Tax

Detention of trucks - imposition of penalty in terms of sub section (5) of Section 68 of the Gujarat Value Added Tax Act - penalty imposable upto 150% of the tax - at Dahod check-post for production of wrong Form No. 403 - opportunity of being heard - Held that - petitioner to deposit such penalty at one and half times the tax liability which will remain in the nature of deposit with the department. The amount deposited under these directions would be adjusted towards the final liability ascertained - petitioner also to submit correct form no. 403. Detention of trucks at Kaprada check-post - power of Department to detain goods in terms of Section 45 of provisional attachment - Held that - penalty levied under sub section (5) of Section 68 of the VAT Act. Petitioner to pay ₹ 50,000/- towards penalty which will be adjusted with the amount of penalty ascertained. Petitioner also to deposit outstanding tax liabilities. Immediate release of truck granted - petition disposed off - decided in favor of petitioner.

Summary

Issues: Detention of trucks at different check-posts, arrears of taxes, incorrect form submission, penalty imposition, dispute over tax arrears, power of department to detain goods for tax recovery.

The judgment addresses the detention of four trucks belonging to the petitioner at different check-posts due to tax-related issues. Two trucks were held at Kaprada check-post for tax arrears, while the other two at Zalod check-post due to the submission of a wrong form. The department insisted on the correct form submission and payment of penalties under Section 68 of the Gujarat Value Added Tax Act. The court noted that penalties must be imposed after providing a reasonable opportunity for a hearing and that the maximum penalty is 150% of the tax payable, with discretion to impose less. The petitioner was directed to deposit the penalty amount, which would remain with the department pending a final decision after considering representations.

Regarding the other two trucks, the court found no power for the department to detain goods for tax recovery without a specific order under Section 45 of provisional attachment. Despite disputes over tax arrears, the petitioner admitted a liability of approximately ?40 lakhs, unable to pay due to financial constraints. The petitioner agreed to deposit ?12 lakhs towards the liability by a specified date. The judgment disposed of the petition with directions for the petitioner to deposit an amount approximating 1.5 times the tax liability, make representations for a lesser penalty, submit correct forms, and pay outstanding tax liabilities. Upon fulfilling these requirements, all four trucks were to be released.

The judgment emphasized the necessity for due process in imposing penalties, the limitations on the department's power to detain goods for tax recovery without specific orders, and the importance of addressing tax liabilities promptly. The court's directions aimed to balance the interests of the petitioner and the tax authorities while ensuring compliance with the law and procedural fairness.