2019 (7) TMI 1125 - HC - VAT and Sales Tax

Imposition of penalty u/s 30A(4) of the U.P. Trade Tax Act, 1948 - transaction of transportation of goods that had been stopped for checking on 7.2.2004 - mere technical and clerical errors noted by the seizing authority - HELD THAT - In the first place, the penalty order is not based of any reasoning either that the invoices produced by the assessee were not serially numbered, or that, they were not accounted for in the books of account of the assessee, at the relevant time - The assessing authority merely referred to the fact that three columns in Form 49 were not filled up by the assessee and the assessee had not been able to establish what action he had taken against the transporter, for the default committed by the latter, in not filling three columns in Form 49. Once the assessee produced the books of account prior to seizure along with all invoices, it had opened itself to scrutiny by the seizing authority at that stage itself, as to the correctness of the explanation furnished. No adverse inference having been drawn with respect to books of account, the mere absence of certain invoices at the stage of detention of Form 49 is not enough to impose penalty. It does appear that there was no material or evidence to reach a conclusion that the goods were not properly accounted for, by the assessee. In fact, all relevant material having been produced before the authorities, they have failed to record any finding in that regard. The finding of guilt recorded by the assessing authority as sustained by the Tribunal, is found to be perverse and, therefore, the penalty is permitted to be deleted - Revision allowed.

Summary

Issues:
Challenge against penalty imposed under Section 30A(4) of the U.P. Trade Tax Act, 1948 based on technical and clerical errors noted by the seizing authority.

Analysis:

The revision was filed against the Trade Tax Tribunal's order rejecting the appeal arising from a penalty imposed under Section 30A(4) of the U.P. Trade Tax Act, 1948. The penalty was imposed due to technical errors noted during the transportation of goods, leading to a demand for penalty amounting to ?7,11,300. The primary question of law in the revision was whether such a penalty could be imposed solely based on technical and clerical errors.

During the hearing, the Senior Counsel for the assessee argued that the goods were properly accounted for, despite discrepancies noted by the seizing authority. The Counsel emphasized that the account books of the assessee should be the basis for determining proper accounting, not minor discrepancies in accompanying documents like Form 49 and invoices. The Counsel also refuted the additional reasons provided by the Tribunal for upholding the penalty, stating that they were not valid grounds for imposition.

On the other hand, the Standing Counsel contended that the penalty was rightly imposed as the goods, considered sensitive for tax evasion, were not adequately accounted for by the assessee. The Standing Counsel highlighted the importance of ensuring all necessary documents accompany goods transportation and pointed out the failure of the assessee to provide satisfactory explanations for the discrepancies found.

After considering the arguments and examining the record, the court found that the penalty order lacked a proper basis. It was observed that the assessing authority did not establish a direct link between the alleged errors and the failure to account for the goods. The court emphasized that the absence of certain invoices during the detention of Form 49 was insufficient to justify the penalty, especially when the account books were produced before seizure and found to be in order. The court deemed the finding of guilt by the assessing authority and upheld by the Tribunal as unjustified and ordered the deletion of the penalty.

In conclusion, the court ruled in favor of the assessee, stating that there was insufficient evidence to support the imposition of the penalty. The decision highlighted the importance of a thorough examination of evidence before penalizing an assessee and emphasized the need for a valid basis for such penalties to be upheld.

Judgment:
The present revision was allowed, and the penalty imposed under Section 30A(4) of the U.P. Trade Tax Act, 1948 was deleted in favor of the assessee.