2020 (3) TMI 820 - HC - VAT and Sales Tax

Imposition of penalty u/s 54 (1) (14) of the U.P. Value Added Tax Act, 2008 - intent to evade tax - Learned counsel for the Revenue submitted that since Form 38 was filed with magic ink and, therefore, there was intention to evade tax - HELD THAT - Concededly, at the time of interception of goods, other documents, namely invoices and bilty were also found. These documents were in order. Even Form 38 was found to be duly filled up evidencing the transaction under which the goods were being imported. The assessee had duly produced his books of accounts in which the transaction in question is duly accounted for. In such circumstances, merely on assumption that Form 38 could be re-used, the Assessing Officer was not justified in imposting penalty. Revision dismissed.

Summary

Issues:
1. Revision against the order of the Commercial Tax Tribunal.
2. Imposition of penalty under the U.P. Value Added Tax Act, 2008.
3. Seizure of goods due to alleged use of magic ink in Form 38.
4. Tribunal's decision based on evidence of proper documentation and ink used.
5. Dispute regarding intention to evade tax due to magic ink in Form 38.

Analysis:
The High Court addressed the instant revision against the Commercial Tax Tribunal's order, where the Assessee's appeal under Section 54 (1) (14) of the U.P. Value Added Tax Act, 2008 was allowed, setting aside the penalty imposed by the Assessing Authority. The case involved the seizure of goods due to Form 38 being filled with magic ink, leading to an alleged intent to evade tax. The Tribunal, relying on precedent, emphasized that the Act does not specify the type of ink for forms and that proper documentation accompanied the goods, including invoices and bilty. The Tribunal found no justification for penalty imposition based on the assumption of Form 38 reusability.

The Enforcement Authorities seized goods due to the use of magic ink in Form 38, inferring an intent to evade tax. However, the Tribunal's decision was based on the Assessee's proper documentation, including photo copies of account books and other necessary documents like invoice and bilty, which were found to be duly filled with proper ink. The Tribunal cited a previous judgment to argue against the penalty, highlighting that all entries were substantiated by additional documents, indicating no illegality in the transportation of goods.

The Revenue contended that the use of magic ink in Form 38 demonstrated an intent to evade tax. Nonetheless, the High Court noted that despite the magic ink in Form 38, other accompanying documents were in order, and the Assessee had maintained proper accounts of the transaction. The Court emphasized that the mere assumption of Form 38 reusability did not warrant penalty imposition, especially when all necessary documentation and accounts were in order. Consequently, the revision was dismissed summarily, upholding the Tribunal's decision in favor of the Assessee.