2017 (1) TMI 127 - HC - VAT and Sales Tax

Imposition of penalty u/s 77(8) of the RST Act, 1994 - unaccounted stock - whether a voluntary statement can be contested later? - Held that - if there is voluntary statement and not complained of to the higher authorities within a reasonable period, such a fact cannot be accepted in appellate proceeding later on and after a considerable long period - the order of Tax Board is not sustainable and is required to be interfered and is accordingly interfered and the finding reached by the AO and DC(A) is just and proper and is accordingly sustained, and thus the penalty was rightly levied - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Penalty imposed on respondent for unaccounted stock.
2. Allegations of coercion and pressure during survey.
3. Violation of Rule 50 of RST Rules, 1995.
4. Validity of penalty deletion by Tax Board.
5. Admissibility of voluntary statement by respondent.
6. Requirement of complaint to higher authorities regarding coercion.
7. Applicability of previous court judgments on similar facts.

Analysis:
1. The case involved a penalty imposed on the respondent for unaccounted stock found during a survey at their business premises. The Assessing Officer (AO) passed an order under section 77(8) of the RST Act, 1994, based on the excess stock amounting to ?1,50,750 which was not recorded in the books. The respondent admitted the mistake on the spot and expressed willingness to pay the penalty.

2. The respondent alleged coercion and pressure during the survey, claiming a violation of Rule 50 of the RST Rules, 1995. However, the Dy. Commissioner (Appeals) upheld the penalty, which was later deleted by the Tax Board citing the absence of the AO's signature on the stock statement and lack of witnesses.

3. The petitioner contended that the AO's acceptance of guilt and the respondent's voluntary statement were sufficient, and produced records showing signatures of both parties on the stock statement. The petitioner argued that any claim of coercion made at a later stage should have been raised promptly with senior officers.

4. The court noted that the records confirmed the signatures of both parties on the stock statement and a trading account, along with the respondent's acceptance of undisclosed stock and payment of penalty. The court found no complaint to senior authorities regarding coercion before the appeal stage, emphasizing the importance of timely reporting.

5. Referring to a previous judgment, the court held that a voluntary statement not challenged promptly cannot be accepted in later appellate proceedings. The court distinguished the judgments relied upon by the respondent's counsel and upheld the penalty, reversing the Tax Board's decision.

6. Ultimately, the court concluded that the order of the Tax Board was not sustainable, and the penalty imposed by the AO was justified. The court upheld the penalty, stating that the findings of the AO and Dy. Commissioner (Appeals) were appropriate, leading to the success of the petitioner's appeal.