2018 (8) TMI 1493 - HC - VAT and Sales Tax

Penalty - it was alleged that though the goods were sold to a person situated outside the state of U.P. i.e. at Delhi but the challan/invoice indicating the details showing the charge of tax under U.P. Trade Tax Act and not under the Central Sales Tax Act - Held that - There is no dispute that in the challan/invoice the details of the Delhi purchaser are mentioned but it appears that inadvertently while preparing the challan/invoice the tax has been charged under the U.P. Trade Tax instead of Central Sales Tax laws - it is the case where this cannot be ruled out that some time the person who is suppose to prepare the challan/invoice or the documents may commit mistake and in the instant case instead of mentioning the Central Tax the person who has prepared the challan/invoice has mentioned the rate of tax as U.P. Tax. There was no ill intention at the hands of the Revisionist as the sales are duly accounted for and due challan/invoice was issued - penalty set aside - appeal allowed.

Summary

Issues:
1. Interpretation of U.P. Trade Tax Act, 1948 regarding the charge of tax.
2. Validity of penalty imposed under Section 13-A of the U.P. Trade Tax Act.
3. Consideration of challan/invoice details in determining tax liability.
4. Assessment of penalty in cases of inadvertent errors in tax documentation.

Analysis:
1. The case involved a dispute regarding the charge of tax under the U.P. Trade Tax Act, 1948 in a transaction where goods were sold to a party in Delhi but tax was charged under the U.P. Trade Tax Act instead of the Central Sales Tax Act. The revisionist, a registered firm, faced penalty proceedings under Section 13-A due to this discrepancy.

2. The Deputy Commissioner converted the cash deposit made by the revisionist into a penalty under Section 13-A(4) of the U.P. Trade Tax Act. The revisionist appealed against this penalty order, which was upheld by the Deputy Commissioner (Appeals) and the Trade Tax Tribunal. The Tribunal affirmed the penalty order based on the weight of goods recorded in the accompanying challan.

3. The Tribunal's decision was based on the details of the challan/invoice, which indicated the charge of U.P. Tax instead of Central Sales Tax. The revisionist, being a bonafide registered dealer, argued that the penalty imposition was arbitrary as the goods' weight matched the declaration on the challan, and the transaction was properly documented.

4. The High Court, after considering the arguments, concluded that the discrepancy in tax charging was likely due to inadvertent errors in preparing the challan/invoice rather than any ill intention on the part of the revisionist. The Court found that the sales were duly accounted for, and the challan/invoice was issued correctly. Consequently, the penalty order and decisions of the appellate authorities were set aside, ruling in favor of the revisionist.