2019 (7) TMI 1237 - HC - VAT and Sales Tax

Imposition of penalty u/s 54(1)(14) of the U.P. Value Added Tax Act, 2008 - stock transfer or not - intent to evade or not - HELD THAT - In the facts of the present case, the assessee had offered an explanation that coloumn no.6 had remained blank on account of clerical error. More importantly, he had submitted that the transaction was one of stock transfer. In support where of, he had adduced evidence in shape of stock transfer invoice, bilty etc., which documents were produced at the stage of detention of goods. Clearly, none of the authorities has applied their mind to that explanation and have not recorded any finding to reject the explanation based on the claim of stock transfer. It also cannot be lost sight of that the assessee is a manufacturer of goods and that against the total stock transfer in excess of ₹ 4,00,00,000/- made during the assessment year in question, only a single transaction of value at ₹ 5.5 lakhs has been doubted solely on account of coloumn no.6 being left blank, though the stock transfer invoice and other documents were accompanying the goods. Normally the proceedings may have been remitted to the Tribunal to pass a fresh order, however, in view of the fact that the appeal is pertaining to A.Y. 2008-09 and the fact that the VAT Act itself has now been repealed and has been replaced by the G.S.T. Act, no useful purpose would be served in remanding the matter, specially in light of the observations made above, which are peculiar to the facts and circumstances of the present case involving manufactured goods duly packaged and identified nos. of packing boxes, weight and value. The question of law is answered in favour of the assessee and against the revenue - revision allowed.

Summary

Issues:
Challenge against the order of Commercial Tax Tribunal confirming penalty imposition on the assessee under the U.P. Value Added Tax Act, 2008.

Analysis:
1. The revision was filed against the Tribunal's order confirming a penalty imposed on the assessee. The key question was whether the penalty imposition was justified given the circumstances of the case.

2. The primary argument presented was that the transaction in question was a stock transfer, supported by relevant documents, and the penalty was unjustified. The counsel argued that the assessing authority did not give proper consideration to the explanation provided by the assessee regarding the clerical error in Form-38.

3. The counsel highlighted that apart from the disputed transaction, the assessee had a significant volume of stock transfers during the year, indicating no intention to evade tax. Reference was made to relevant case laws to support the argument.

4. On the opposing side, it was argued that the absence of details in column no. 6 of Form-38 was crucial to establish the legitimacy of the transaction. The assessing authority inferred an intention to evade tax based on this omission.

5. The court acknowledged the importance of column no. 6 but emphasized the need for the assessing authority to establish intent to evade tax based on concrete evidence. The court cited previous judgments to support the requirement of a clear finding before imposing penalties under the Act.

6. The court found that the authorities did not adequately consider the explanation provided by the assessee regarding the clerical error and the nature of the transaction as a stock transfer. It noted the discrepancy in penalizing a single transaction out of a substantial volume of stock transfers.

7. Ultimately, the court deemed the Tribunal's finding as perverse and ruled in favor of the assessee. Considering the peculiarities of the case and the repeal of the VAT Act, the court allowed the revision, emphasizing the specific circumstances surrounding the manufactured goods involved in the case.