2016 (11) TMI 611 - HC - VAT and Sales Tax

Release of detained goods on deposit of cash security equal to 15% of the gross value of the goods - proper and genuine documents or a declaration form for import i.e. form 38/39, e-sancharan etc not accompanied with the goods - Held that - Prima facie, it appears that the tax invoice was issued by the revisionist to cover up the interstate purchase of goods in question and sale thereof so as to give it colour of intra-state transaction. The provisions of Section 50 (1) has also been violated since the goods were not accompanied with the required documents. Under the circumstances, I do not find any infirmity in the impugned order of the Tribunal. The revision lacks merit. No question of law arises - the revision is dismissed. Liberty is granted to the competent authority to conclude the penalty proceedings without being influenced by any of the observations made in the body of this order.

Summary

Issues Involved:
Challenge to order directing release of goods on deposit of cash security under U.P. VAT Act, 2008.

Detailed Analysis:

1. Breach of Provisions of the Act:
The case involved a vehicle intercepted carrying Stainless Steel Utensils without proper documents. The driver lacked essential papers like bill, biliti, form 38/39, and e-sancharan for the goods transported within the State of U.P. The Tribunal found evidence of evasion of tax in a methodical manner, supported by documentary evidence. The authorities demanded security amounting to 40% of the goods' value, which the Tribunal reduced to 15%. The revisionist argued that the goods were covered by a tax invoice from a registered dealer, indicating no intention to evade tax. However, the standing counsel contended that the lack of proper documents justified the security demand to cover potential penalties.

2. Tribunal's Decision and Legal Violations:
The Tribunal found that the goods were transported from Jodhpur without requisite forms, constituting an import of goods. It noted that the tax invoice was issued within U.P. to mask an interstate purchase as an intra-state transaction, violating Section 50(1) of the Act. The Tribunal, despite reducing the security, upheld the demand based on clear evidence of tax evasion. The Court concurred with the Tribunal's findings, stating that no legal infirmity existed in the decision. It emphasized that the revision lacked merit and dismissed it, allowing the competent authority to proceed with penalty proceedings.

Conclusion:
The Court upheld the Tribunal's decision, affirming the demand for cash security due to the breach of statutory provisions and evidence of tax evasion. The judgment highlights the importance of compliance with documentation requirements under the U.P. VAT Act, emphasizing the consequences of attempting to misrepresent interstate transactions as intra-state to evade taxes.