2020 (3) TMI 1126 - HC - VAT and Sales Tax

Levy of penalty - storage of goods even in an undisclosed unregistered godown - Section 66 of the Tripura Value Added Tax Act, 2004 - petitioner opted for Compounding of Offences - HELD THAT - In the present case, it was not merely a case of the goods being found at an unregistered godown, as can be seen from the detention order the allegations also were that on the date of the raid the petitioner failed to produce relevant documents regarding compliance of the provisions of the VAT Act in respect of transport of taxable goods. Section 75 of the VAT Act makes several acts and omissions by a dealer punishable. Had the petitioner contested the notice on merits and opposed the proposal for imposing penalty or handing down punishment, all aspects could have been gone into. The petitioner instead opted for compounding of offence. Thereupon the Superintendent of Taxes passed the composition order. Petitioner now cannot challenge it on merits. Petition dismissed.

Summary

Issues Involved:
Challenge to revisional order rejecting composition order, jurisdiction of Superintendent of Taxes to levy penalty, maintainability of revision petition after opting for compounding of offence.

Analysis:
The petitioner challenged a revisional order rejecting a composition order passed by the Commissioner of Taxes. The petitioner, engaged in the business of electric items, had goods seized for violation of VAT rules. The detention order detailed the violations and directed the petitioner to appear for compounding the offence. The Superintendent of Taxes accepted the request, levying a sum of ?2,61,000. The petitioner filed a revision petition contending that no penalty could be imposed under Section 66 of the VAT Act for storing goods in an undisclosed unregistered godown. The revisional authority dismissed the petition, stating the petitioner failed to declare the godown after obtaining registration, violating rules. The authority held that once the offence was compounded, challenging it on merits was not permissible.

The petitioner argued that the Superintendent of Taxes lacked jurisdiction to levy any penalty under Section 66 of the VAT Act. The petitioner claimed that despite opting for compounding, the revision petition was maintainable due to the jurisdictional issue. The Court acknowledged that lack of jurisdiction could be raised even if a party did not contest the proceedings before an authority. However, once the offence was compounded, all factual submissions were foreclosed. The Court noted that the detention order alleged failure to produce relevant documents regarding compliance with VAT Act provisions, making the case more than just goods found in an unregistered godown. The Court emphasized that the petitioner, by opting for compounding, waived the right to challenge the composition order on merits. Therefore, the petition was dismissed, and any pending applications were disposed of accordingly.