2019 (12) TMI 329 - HC - VAT and Sales Tax

Imposition of penalty - Section 54(1)(14) of the U.P. Value Added Tax Act - validity of passing a fresh order after quashing the order of penalty, being without any basis and without any material on record - validity of remanding the matter back to the Assessing Authority to give fresh innings in terms of passing a fresh order when the order appealed against was unsustainable in the eyes of law - Principles of natural justice. HELD THAT - From the perusal of the record, it reveals that the first appellate authority has accepted the contention of the revisionist that the penalty order is a cryptic one, as neither any provision was referred nor any reason was assigned for levy of penalty - The record further reveals that the first appellate authority has recorded a finding of fact in favour of the revisionist that in the penalty order, no violation of law has been mentioned. Moreover, neither any notice was issued before levy of penalty, nor any opportunity was provided to the revisionist before taking action against it. In the case, in hand, the revisionist was deprived of any notice being served upon it, nor any reason or contravention of the provisions were mentioned in the penalty order. The penalty order clearly shows that it has been passed in pre-printed format, from which it is clear that the penalty has been imposed without application of mind and without assigning any reason. The case, in hand, is squarely covered by the judgement of this Court in M/s Ecom Express Private Ltd. 2019 (1) TMI 309 - ALLAHABAD HIGH COURT . In the said case, the Court came to the conclusion that after issuance of notice, charges were framed. The first appellate authority is not permitted to give a second innings to the Department. Revision is allowed - issue answered in favour of the revisionists and against the Department.

Summary

Issues:
Challenging penalty orders under the U.P. Value Added Tax Act; legality of remand orders; violation of natural justice principles; validity of penalty imposition without notice or reason; justification of remand by appellate authorities.

Analysis:
The revisions were filed against a common order passed by the Commercial Tax Tribunal, dismissing second appeals and affirming orders of remand by the first appellate authority. The penalty amounts of ?7,00,940 and ?4,99,484 were in dispute for the assessment year 2014-15.

The common questions of law in both revisions revolved around the Tribunal's justification for allowing the Assessing Authority to pass a fresh order after quashing the penalty order, and the legality of remanding the matter back for a fresh order despite the unsustainable nature of the initial penalty order.

The revisionist, a registered dealer in 'Pan' materials, challenged the penalty orders imposed under the VAT Act, alleging violation of natural justice principles due to the absence of notice, specific provisions, or reasons for the penalties. The first appellate authority remanded the matter, leading to second appeals before the Tribunal and subsequent revisions.

The revisionist contended that the penalty imposition lacked basis and justification, emphasizing the absence of proper notice or legal grounds for the penalties. The counsel argued against the remand, stating that it provided an unwarranted opportunity for the Department to reinitiate penalty proceedings.

Citing a previous judgment, the Court highlighted that once a penalty notice is found deficient, no fresh opportunity or remand is warranted, as the burden lies on the revenue authority to issue a proper notice outlining the alleged violations. The revisionist's case aligned with this legal precedent.

The Court found that the penalty orders were cryptic, lacking legal basis and procedural fairness, as no notice or opportunity was provided before penalty imposition. Relying on the precedent, the Court allowed the revisions, setting aside the impugned orders and ruling in favor of the revisionists against the Department.

In conclusion, the Court answered the legal questions in favor of the revisionists, directing the Department to take any lawful action if necessary, in accordance with the judgment.