2017 (3) TMI 669 - HC - VAT and Sales Tax

Imposition of penalty u/s 61 of VAT Act - non-payment of tax - manufacture of Bidi - Held that - It is an admitted fact that though goods were being sold through challan but it was mentioned VAT Payable as per Schedule, if applicable as on date . Therefore, the assessee was not hiding anything from the Revenue. It is also noticed that on perusal of the impugned order that as per notification dt.17.02.2004, the assessee was entitled to deposit the tax on or before 14 days of the close of the month and such notification was in force and therefore the assessee deposited the entire tax on or before 14 days of the close of the month - penalty set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
- Dispute over levy of VAT on 'Bidi' (Tobacco Product)
- Imposition and deletion of penalty under Sec.61 of the VAT Act

Analysis:
1. The case involves a dispute regarding the levy of VAT on 'Bidi' (Tobacco Product) by the Revenue. A survey revealed that the assessee was not depositing tax as required by law, leading to the imposition of VAT at different rates and a penalty by the Assessing Officer.

2. The Assessing Officer charged VAT at 4% from 01.04.2007 to 03.04.2007 and at 12.50% from 04.04.2007 onwards, along with a penalty under Sec.61 of the VAT Act. The appeal process saw the tax upheld but the penalty deleted by the Rajasthan Tax Board, prompting the Revenue to challenge the penalty deletion.

3. The Revenue contended that the assessee failed to pay the mandated tax rates and did not issue VAT invoices, violating VAT Act provisions. The Revenue argued that the penalty was rightly imposed and should not have been deleted by the Tax Board, raising questions of law from the Board's decision.

4. The High Court noted that the assessee mentioned "VAT Payable as per Schedule" on challans, indicating transparency. The Court found that the assessee deposited the tax within the specified time frame as per a relevant notification, and the Empowered Committee had suggested exempting 'Bidi' from tax, creating ambiguity.

5. The Court observed that the Tax Board correctly concluded that the penalty imposition was unwarranted. The Court upheld the Tax Board's decision, stating that no legal question arose for consideration, and found no reason to interfere with the order. Consequently, the petition challenging the penalty deletion was dismissed for lack of merit.