2020 (1) TMI 751 - HC - VAT and Sales Tax

Waiver of penalty u/s 54(1)(14) of U.P. Value Added Tax Act, 2008 - unfilled (blank) column of Form 38 - contravention of the provisions of Section 50 of the Act, 2008 - HELD THAT - In the instant case it is admitted fact that the respondent had duly applied for and obtained Form 38 for import of goods and the Column 6 of the said Form was left blank on account of negligence of the respondent. It is only on account of non filling of Column 6, penalty has been imposed upon the respondent. It has been submitted on behalf of the respondent that there was no intention to evade tax and the driver of the vehicle carrying the goods was carrying all the relevant documents including the bill/challan/bilty etc. from which the details of goods being carried on the vehicle could have been verified by the officer concerned and therefore there was no occasion for the assessing officer to pass penalty order, inasmuch as there was no intention on the part of the assesee to evade tax. Non-filling up of column no. 6 i.e. not mentioning of bill / cash memo / chalan / invoice number may lead to an inference that in case of non-checking of goods the declaration form may be re-used for importing goods of same quantity, weight and value to evade payment of tax but it cannot be the sole ground to impose penalty under Section 54(1)(14) of the Act, 2008. Satisfaction has to be recorded after giving opportunity to the dealer / person and after considering all the relevant materials / evidences on record that there was an intention to evade payment of tax. The guilty mind is necessary to be established to impose penalty under Section 54(1)(14) of the Act, 2008 - In the present case also the vehicle was accompanied by Form 38 and all other documents were being carried along with other documents and only due to human error column would remain unfilled. It was the duty of the Officer managing the Check Post who after discovering that some column of Form 38 found unfilled should have filled the same himself in the light of Circular dated 03.02.2009 and should have allowed the vehicle to proceed alongwith the goods. It is undisputed that the goods transported were the same which were mentioned in the various documents (bill/builty/challan etc.) carried by the driver of the vehicle. Revision dismissed.

Summary

Issues Involved:
1. Whether the Commercial Tax Tribunal was legally justified in deleting the penalty levied under Section 54(1)(14) of U.P. Value Added Tax Act, 2008?

Issue-wise Analysis:

1. Legality of Deleting Penalty under Section 54(1)(14) of U.P. Value Added Tax Act, 2008:

The revenue challenged the order of the Trade Tax Tribunal, which had set aside the penalty imposed by the Assessing Authority on the respondent for the assessment year 2009-10. The penalty was levied because the respondent's vehicle was found importing goods with an unfilled column in Form 38, raising suspicions of tax evasion. The Assessing Authority imposed a penalty of ?1,80,000, which was upheld by the first appellate authority but overturned by the Tribunal.

The revenue argued that the blank column in Form 38 indicated an intention to evade tax, citing the Supreme Court's judgment in M/s Guljag Industries Vs. Commercial Tax Officer, which held that incomplete forms could be reused to evade tax. The respondent contended that the omission was due to negligence and not an intention to evade tax, as all relevant documents were present.

The court examined the provisions of the U.P. Value Added Tax Act, 2008, particularly Sections 50 and 54(1)(14), and noted that the driver must carry a declaration form along with other relevant documents. If any column in Form 38 is left blank, it could facilitate tax evasion by reusing the form. However, the court emphasized that penalty under Section 54(1)(14) requires proving an intention to evade tax.

The court referred to a circular dated 03.02.2009, which instructed officers to fill in any blank columns in Form 38 based on other accompanying documents. The court also cited previous judgments, including Jain Suddh Vanaspati Ltd. Vs. State of U.P. and I.C.I. India Limited Vs. Commissioner of Sales Tax, which held that mere procedural defects in forms do not necessarily indicate an intention to evade tax.

The court concluded that the non-filling of Column 6 in Form 38 alone does not justify imposing a penalty unless there is evidence of an intention to evade tax. The tribunal's finding that there was no intention to evade tax was not perverse or based on irrelevant material. The court affirmed the Tribunal's order, dismissing the revision and ruling in favor of the assessee. The question of law was answered in favor of the assessee and against the revenue.