2022 (3) TMI 1213 - HC - VAT and Sales Tax

Levy of penalty u/s 54 (1) (19) of UP VAT Act - no finding recorded by the authorities including the Tribunal that the revisionist, falsely or fraudulently claims an amount as input tax credit - HELD THAT - The penalty proceedings have been initiated against the revisionist on the purchases made from various dealers as purchases were not verifiable for some reasons or the other and while passing the assessment order, the input tax credit was rejected therefore the penalty under Section 54 (1) (19) was initiated. On a pointed query to the counsels appearing on behalf of parties as to whether any revision against the aforesaid second appeals were preferred before this Court and what is the outcome of the same, the counsels were not aware of that and prayed that the matter may be remanded to the Tribunal so that same fact can be verified by the Tribunal. The matter is remanded to the Tribunal. The order of the Tribunal is modified to the extent that orders of penalty have been affirmed on the basis of purchases made may be verified and the Tribunal may record a specific finding as contemplated under Section 54 (1) (19) of UP VAT Act for confirming the imposition of penalty. The revisions are disposed of.

Summary

Issues:
1. Imposition of penalty under Section 54 (1) (19) of UP VAT Act without finding of fraudulent claim of input tax credit.

Detailed Analysis:
The judgment involves two revisions filed against the order passed by the Commercial Tax Tribunal for Assessment Year 2008-09 and 2009-10 under Section 54 (1) (19) of UP VAT Act. The primary question of law raised was whether the penalty could be imposed without a finding of falsely or fraudulently claiming an amount as input tax credit. The revisionist contended that they were entitled to claim input tax credit as a registered dealer, having purchased goods from a registered selling dealer with proper tax invoices and payments. However, the authorities rejected the claim without proving any fraudulent intent. The Tribunal imposed a maximum penalty without specifically addressing the fraudulent claim issue.

The learned Standing Counsel supported the Tribunal's decision, citing a previous judgment and arguing that the revisionist had purchased goods from an unregistered dealer, making the input tax credit claim false. The Tribunal's decision was based on the firm not being registered during the transaction period. The Court examined the records and noted that penalty proceedings were initiated due to unverifiable purchases, leading to rejection of input tax credit in the assessment order. The Tribunal confirmed penalties for most purchases but reduced the quantum. However, the Tribunal did not provide detailed findings on the acceptance of input tax credit or dropping penalties for certain purchases, merely referencing previous appeal numbers.

Upon querying the counsels about any revisions against the mentioned appeals and their outcomes, which they were unaware of, the Court remanded the matter to the Tribunal for verification. The Tribunal was directed to specifically record findings as required under Section 54 (1) (19) of UP VAT Act regarding the imposition of penalties based on purchases from specific parties. Consequently, the revisions were disposed of, and the question of law was answered accordingly.