2017 (1) TMI 273 - HC - VAT and Sales Tax

Imposition of penalty u/s 76(6) of the Rajasthan VAT Act, 2003 - evasion of tax - non-disclosure of all facts in declaration form and required receipts - Held that - The AO, after having produced declaration form VAT 47, has not conducted any inquiry worth name and the order of AO at various places mentions about doubtful nature of transaction and has not come to a conclusive finding based on any other material on record, which could prove that the goods were being intended to transport with the intention of evasion of tax When the AO himself after conducting inquiry comes to a finding that when the railways does not accept any enclosure or document, then the AO ought not to have come to an adverse conclusion - penalty set aside - petition allowed - decided against AO.

Summary

Issues:
Identical issue involving penalty under Rajasthan Value Added Tax Act, 2003 for non-disclosure of consignee's name on railway receipt.

Analysis:
The case involved four petitions concerning the imposition of a penalty under the Rajasthan Value Added Tax Act, 2003, for an incident in the assessment year 2009-10. The issue revolved around a survey conducted at a Railway Parcel Godown in Jaipur, where Cardamom was found in the possession of the respondents. The authorities imposed a penalty under section 76(6) of the Act, alleging evasion of tax due to non-disclosure of the consignee's name on the railway receipt. The respondents argued that the railway system did not require additional declaration forms, and the consignee's name was indeed present on the back of the railway receipt. The Dy. Commissioner (Appeals) upheld the penalty, but the Tax Board later reversed this decision, leading to the petitions challenging the penalty.

The Revenue contended that the non-disclosure of the consignee's name indicated an intent to evade tax, citing Rule 53 and an incomplete VAT declaration form as evidence. They relied on the judgment in Guljag Industries v. CTO (2007) 7 SCC 269 to support their position. On the other hand, the assessee argued that the railway system did not require additional documents at the time of transportation, and the filled-in VAT declaration form was submitted later. They referenced the judgment in State of Rajasthan & Another v. D.P. Metals (2002) 1 SCC 279 to support their case. The assessee highlighted that the consignee's name was on the railway receipt's back, known to the AO only after seeing it, and no inquiry was conducted to prove tax evasion.

The court considered the arguments and the evidence on record. It noted that the railway system did not require additional documents besides the railway receipt, as confirmed by the AO's findings. The court emphasized that the presence of the consignee's name on the back of the railway receipt, along with the submission of necessary documents later, did not conclusively prove tax evasion. The court found that the AO's suspicions lacked substantial inquiry and that the Tax Board's decision to delete the penalty was justified based on factual evidence. Therefore, the court dismissed the petitions, deeming them meritless.