2019 (7) TMI 147 - HC - VAT and Sales Tax

Restoration of penalty u/s 15A(1)(q) of U.P. Trade Tax Act, 1948 - allegation that transit declaration form was never discharged at the exit check post i.e. Naubatpur check post, therefore, it be presumed under Section 28(B) of the Act that the goods had been sold inside the State of U.P. - Whether on the facts and circumstances of the case, the Tribunal was correct to restore the penalty of ₹ 3,00,000/- under Section 15A(1)(q) of the Act when the Department has failed to prove that the transit pass no. 1085 dated 10.06.2007 was issued by the entry check post Dramomnedganj? HELD THAT - While it is an admitted position of law that the presumption raised under Section 28(B) of the Act is rebuttable, however, that principle is of less relevance in the facts of the present case. It would apply if issuance of the transit declaration form to the applicant was either admitted or established on record. In the instant case, from bare perusal of the reply furnished by the applicant being dated 05.06.2009 and 04.03.2010, it is clear that the applicant wholly disputed the issuance of such transit declaration form. In fact, he confronted the revenue authorities to make available a copy of such form so that he may establish the truth. Strangely, the revenue authority did not accept the request made by the applicant. It neither made available to him any copy of the transit declaration form nor it produced the same before the first appel authority - the finding of the Tribunal that the applicant had admitted the issuance of transit declaration form is patently perverse. The revenue has been unable to establish existence of any material on the basis of which such a conclusion could have been drawn. The finding of the Tribunal that the applicant had admitted the issuance of transit declaration form is patently perverse. The revenue has been unable to establish existence of any material on the basis of which such a conclusion could have been drawn - the mandatory pre-requisite for the presumption to arise was never fulfilled. Once the revenue authorities did not produce the disputed issuance of the transit declaration form and the revenue authorities did not establish from their own record that such transit declaration form had been obtained by the applicant there never arose a situation where the presumption could arise or the applicant could be burdened to rebut it. The allegation that there was no material available to establish that the goods actually passed from the State of U.P. through (exit) Naubatpur check post would remain a fact of no consequence, insofar as the present applicant is concerned - the question of law, framed above, is answered in the negative, i.e. in favor of the applicant and against the revenue. Revision allowed.

Summary

Issues:
1. Penalty imposed under Section 15A(1)(q) of the U.P. Trade Tax Act, 1948.
2. Disputed transaction involving transit pass no. 1085 and goods transportation.
3. Burden of proof on the applicant to rebut the presumption under Section 28(B) of the Act.

Analysis:
1. The revision was filed against the penalty imposed on the applicant under Section 15A(1)(q) of the Act. The Tribunal had sustained the penalty, alleging that the goods were sold inside the State of U.P. as they did not exit through the designated check post. The initial penalty order was non-speaking and set aside later. The applicant denied involvement and requested a copy of the transit declaration form, which was not provided. The first appeal authority deleted the penalty due to lack of evidence establishing the applicant's possession of the transit declaration form.

2. The disputed transaction involved the applicant's truck carrying 'arhar dal' with a transit pass from one check post to another. The Tribunal presumed the goods were sold within U.P. based on the failure to exit at the designated check post. The applicant disputed obtaining the transit declaration form and requested evidence to prove otherwise. The revenue failed to provide the form, leading to the deletion of the penalty in the first appeal.

3. The burden of proof rested on the applicant to rebut the presumption under Section 28(B) of the Act. The Tribunal's finding that the applicant admitted to obtaining the transit declaration form was deemed incorrect as the applicant consistently denied it and requested evidence to support the claim. The revenue's failure to produce the form or establish its issuance to the applicant negated the presumption, rendering the penalty unjustified. The Tribunal's conclusion was deemed baseless, and the revision was allowed in favor of the applicant.