2020 (2) TMI 900 - HC - VAT and Sales Tax

Levy of penalty u/s 54(1)(14) of the UP VAT Act, 2008 - Unfilled (blank) column No.8 of Form 38 - inter-state sale - intent to evade tax or not - challan number was entered int column 8 of from 38 and challan number and date and number of form 38 was mentioned in the goods receipt and goods were brought not for sale but for use in job work and subsequent return of goods after job work - HELD THAT - Non-filling up of date in column no. 8 i.e. not mentioning date 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 reused 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 - 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 - The Tribunal has only observed that non-filing of various columns in Form 38 indicates that there was intention to evade tax and only this ground rejected the appeal of the assessee. The Tribunal has not correctly applied the law in this regard, as they have not given any finding about the intention to evade tax, which is a precondition for imposition of penalty. The impugned order of Tribunal is contrary to settled legal proposition and is therefore set-aside - revision allowed.

Summary

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 for Form 38.
3. Intention to evade tax.
4. Applicability of previous judgments and circulars.

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 revision challenges the order dated 5.3.2014 by the Trade Tax Tribunal, which upheld the penalty imposed by the Assessing Authority. The penalty was levied because the revisionist was found importing goods with an unfilled (blank) column No. 8 in Form 38, leading to an apprehension of tax evasion. The Assessing Authority imposed a penalty of ?12,80,000, which was 40% of the value of the goods. The Tribunal upheld this decision, leading to the present revision.

2. Compliance with procedural requirements for Form 38:
The revisionist argued that the blank column in Form 38 was due to negligence and not an intention to evade tax. The vehicle was carrying all relevant documents, including the bill/challan/bilty, which could verify the details of the goods. The revisionist cited a circular dated 03.02.2009, which directed that any unfilled column in Form 38 should be completed by the inspecting officer at the check post, who should then release the goods.

3. Intention to evade tax:
The core issue revolved around whether the blank column indicated an intention to evade tax. The court noted that the penalty under Section 54(1)(14) could only be imposed if there was an intention to evade tax. The court referred to previous judgments, including Jain Suddh Vanaspati Ltd. vs. State of U.P. and I.C.I. India Limited vs. Commissioner of Sales Tax, which emphasized that procedural defects alone, without any intention to evade tax, could not justify penalties.

4. Applicability of previous judgments and circulars:
The court examined various judgments and circulars. In Jain Suddh Vanaspati Ltd., it was held that the power to detain goods and levy penalties could only be exercised if there was material indicating an attempt to evade tax. The judgment in I.C.I. India Limited reiterated that procedural defects, such as unfilled columns in Form 38, did not necessarily indicate an intention to evade tax. The court also referred to the circular dated 03.02.2009, which instructed officers to fill in any unfilled columns in Form 38 and release the goods if the other documents were in order.

Conclusion:
The court concluded that the Tribunal had not correctly applied the law, as it had not provided any finding about the intention to evade tax, which is a precondition for imposing a penalty. The court set aside the Tribunal's order dated 5.3.2014 and allowed the revision, emphasizing that the mere non-filling of a column in Form 38 could not be the sole ground for imposing a penalty without establishing an intention to evade tax.