2021 (11) TMI 68 - HC - VAT and Sales Tax

Penalty proceedings initiated - Stock transfer - contravention of provision of Section 28-A of the Act, 1948 who intends to import goods in the State of U.P. from outside the State of U.P. without obtaining prescribed form of declaration and with the intention to evade payment of tax - Section 15- A(1)(o) of U.P. Trade Tax Act, 1948 - HELD THAT - This Hon'ble Court in the case of Sarvashri Ramesh Chand Santosh Kumar Vs. Commissioner of Trade Tax, U.P. Lucknow 2010 (7) TMI 906 - ALLAHABAD HIGH COURT held that the penalty under Section 15-A(1)(o) of the Act, 1948 could not be imposed if the dealer not found to have contravened the provision of Section 28-A of the Act, 1948. The Court has further held that if the documents have produced along with the reply to the show cause notice, there is no attempt to evade tax and imposed the penalty is bad. The case in hand, revisionist along with reply to show cause notice has filed the documents but no weightage was given to it and the seizure order was passed. Once the documents were produced before passing of the seizure order, it cannot be said that the revisionist had any intention to evade payment of tax or made any contravention of the Act. The impugned order is hereby set aside and the questions of law are answered accordingly in favour of revisionist - revision allowed.

Summary

Issues:
Challenge to penalty imposed under Section 15-A(1)(o) of U.P. Trade Tax Act, 1948 for assessment year 2004-2005.

Detailed Analysis:

1. Background and Submissions:
The revisionist, a Public Limited Company engaged in manufacturing and trading, challenged a penalty of ?4.00 lacs imposed under Section 15-A(1)(o) of the Act, 1948. The penalty arose from a stock transfer of goods from Aurangabad to Kanpur, where discrepancies in documentation led to the penalty order. The revisionist contended that all necessary documents were provided before the seizure order, thus negating any intent to evade tax.

2. Contentions and Counter-arguments:
The revisionist argued that the penalty was unjustified as all relevant documents were submitted before the seizure order. Conversely, the Standing Counsel supported the penalty, citing discrepancies in the documents submitted during the trip-sheet (Behti) process as grounds for the penalty and seizure.

3. Court's Analysis and Ruling:
The Court examined the case, noting that the revisionist's goods, while passing through different states, had discrepancies in documentation at the Uttar Pradesh check-post. Despite the revisionist's submission of all required documents before the seizure order, the penalty was imposed under Section 15-A(1)(o) of the Act, 1948. The Court referenced previous judgments to emphasize that the penalty cannot be imposed if there was no contravention of Section 28-A of the Act, and the intent to evade tax was not established.

4. Precedents and Legal Interpretation:
Citing cases like M/s. Ashish Trading Company and ITI Limited, the Court highlighted that the mere absence of a declaration form does not warrant a penalty. It stressed that if documents are produced before the seizure, the penalty under Section 15-A(1)(o) is not justified. The Court emphasized that the intention to evade tax must be proven, and the mere absence of certain documents does not imply such intent.

5. Final Verdict and Order:
In light of the facts presented, the Court allowed the revision, setting aside the penalty order and ruling in favor of the revisionist. Any amount deposited as per the penalty order was directed to be refunded within two months. The judgment underscored the importance of proving intent to evade tax before imposing penalties under the relevant provisions of the Act, emphasizing compliance with documentation requirements.