2016 (12) TMI 128 - HC - VAT and Sales Tax

Levy of penalty u/Sec.78(10A) of the Act - inter stste transport of goods - failure to produce any documents - Held that - the Driver was carrying all necessary papers, invoices and no tax was due makes out a case that the vehicle was carrying the goods along with requisite documents without intention to avoid or evade tax. That being so, the discretion vested in the assessing authority was not liable to be exercised even if there was technical violation of sub-sec. 10-A to impose the penalty equal to 50% of the value of the goods, though as noticed by us no case of violation of sub-sec. (10-A) was spelt out in notice under Sec. 78. Thus, penalty came to be imposed without affording opportunity to the driver to defend himself. The levy of penalty thus being in breach of requirements of sub-sec. (10-A) and in breach of principles of natural justice, could not have been sustained. Penalty u/s 78 (10A) of the Act not levied - petition dismissed - decided against Revenue.

Summary

Issues:
Penalty imposition under Sec. 78(10A) for violation of tax regulations during transportation.

Analysis:
The case involved a revision petition against an order passed by the Rajasthan Tax Board, Ajmer, regarding the imposition of a penalty under Sec. 78(10A) of the Act. The incident occurred when a vehicle carrying 100 bags of Jau (Oats) was intercepted by revenue officers, and despite not having the necessary documents endorsed after crossing the Check-post, a penalty was imposed by the Assessing Officer. The matter was appealed, and the penalty was initially deleted by the Dy. Commissioner (A) based on a previous judgment of the Division Bench. The subsequent appeal by the revenue before the Tax Board also resulted in upholding the deletion of the penalty.

During the proceedings, the counsel for the revenue failed to distinguish the previous judgment cited by the Dy. Commissioner (A) and argued that the vehicle's failure to stop at the Check-post indicated clear intentions. On the contrary, the respondent's counsel supported the appellate authorities' orders, stating no perversity existed in the impugned order justifying interference. The judge examined the relevant legal provisions and the previous judgment, emphasizing the discretionary nature of imposing penalties under Sec. 78(10A) and the necessity of a nexus between tax evasion and the violation for penalty imposition.

Upon reviewing the facts and legal precedents, the judge concurred with the Appellate Authorities' decisions that no penalty was warranted under Sec. 78(10A) in the present case. Citing the Division Bench's judgment, the judge highlighted the importance of assessing the intention to evade tax and the need for procedural fairness in penalty imposition. Consequently, the judge dismissed the petition, noting that the same question had already been addressed by the Division Bench, thus rendering the petition baseless and affirming the decision to not levy a penalty in this instance.