2020 (2) TMI 362 - HC - VAT and Sales Tax

Levy of penalty u/s 54(1)(14) of the U.P. Value Added Tax Act, 2008 - inter-state sale - Form 38 had certain unfilled (blank) column - intent to evade tax or not - 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 2 to 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. 2 to 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. No question of law arises in this revision for consideration of this Court - Revision dismissed.

Issues Involved:
1. Legality of the penalty imposed under Section 54(1)(14) of the U.P. Value Added Tax Act, 2008.
2. Compliance with procedural requirements under Section 50 of the Act, 2008.
3. Interpretation of the intent to evade tax.
4. Applicability of the Apex Court's judgment in M/s Guljag Industries Vs. Commercial Tax Officer.
5. Validity of the Trade Tax Tribunal's order.

Issue-Wise Detailed Analysis:

1. Legality of the Penalty Imposed under Section 54(1)(14) of the U.P. Value Added Tax Act, 2008:
The revenue challenged the Trade Tax Tribunal's decision to set aside the penalty imposed by the Assessing Authority. The penalty was levied because certain columns in Form 38 were left blank, which the revenue argued indicated an intention to evade tax. The Tribunal, however, found that the omission was due to negligence and not an intent to evade tax, thereby invalidating the penalty.

2. Compliance with Procedural Requirements under Section 50 of the Act, 2008:
The Act mandates that any person importing goods into the state must carry a properly filled declaration form (Form 38). The driver of the vehicle must have all relevant documents, and if any discrepancies are found, the officer at the check post should record the reasons and give an opportunity for a hearing before detaining the goods. In this case, the Tribunal found that the vehicle was accompanied by all necessary documents except for the incomplete Form 38, which was a procedural lapse rather than an attempt to evade tax.

3. Interpretation of the Intent to Evade Tax:
The core issue was whether leaving columns 2 to 6 of Form 38 blank constituted an attempt to evade tax. The Tribunal, supported by the respondent's argument, concluded that there was no intention to evade tax as all other documents were in order and could verify the goods being transported. The Tribunal's decision was based on the principle that mere procedural defects without evidence of intent to evade tax do not warrant penalties.

4. Applicability of the Apex Court's Judgment in M/s Guljag Industries Vs. Commercial Tax Officer:
The revenue relied on the Apex Court's decision in M/s Guljag Industries, which held that leaving declaration forms blank could imply an intention to evade tax. However, the Tribunal distinguished this case by emphasizing that the U.P. VAT Act requires proving mens rea (guilty mind) for imposing penalties. The Tribunal found that in this case, the omission was a result of negligence, not an intent to evade tax, making the Apex Court's ruling inapplicable.

5. Validity of the Trade Tax Tribunal's Order:
The Tribunal's order was affirmed by the High Court, which found no error in the Tribunal's reasoning. The High Court noted that the Tribunal had correctly interpreted the law and the facts, concluding that the penalty was unjustified. The High Court also referenced previous judgments, including the case of I.C.I. India Limited, which supported the view that procedural defects alone do not indicate tax evasion.

Conclusion:
The High Court dismissed the revenue's revision, affirming the Tribunal's order and holding that there was no intention to evade tax. The penalty imposed by the Assessing Authority was found to be unjustified due to the lack of evidence of mens rea. The High Court emphasized that procedural lapses should be addressed by the officer at the check post, as outlined in the Circular dated 03.02.2009, and not by imposing penalties without substantive evidence of tax evasion.

← Previous Next →