2022 (5) TMI 6 - HC - VAT and Sales Tax

Penalty proceedings initiated under section 54(1)(14) of the UP VAT Act - books of accounts was not produced whereas the requirement of documents to be carried during transit of goods u/s 50(4) of the Act - filing of all the columns of form 38 for the purposes of section 50 of the Act was not mandatory prior to amendment made in clause (a) and clause (b) of subsection (2) of section 50 of UPVAT Act, or not - Intent to evade tax, present or not - HELD THAT - The Division Bench of this Court in M/S. RAMA PULSES VERSUS STATE OF UP. AND OTHERS 2009 (10) TMI 885 - ALLAHABAD HIGH COURT has held that the intention to evade payment of tax has been found to be necessary ingredient before imposing the penalty under the Act. The material on record shows that no such intention to evade payment of tax was there. The penalty order cannot be sustained in the eyes of law - revision allowed.

Summary

Issues:
1. Interpretation of penalty provisions under section 54(1)(14) of the UP VAT Act.
2. Compliance with documentation requirements under section 50(4) of the Act.
3. Consideration of maximum penalty and relevant legal precedents.

Issue 1:
The revisionist challenged the penalty imposed under section 54(1)(14) of the UP VAT Act, arguing that all necessary documents were present during the transit of goods, and there was no intention to evade tax. The Tribunal upheld the penalty, citing non-compliance with certain form requirements. The revisionist contended that the penalty was unjustified as all prescribed documents were available, and any discrepancies were minor. The Standing Counsel supported the Tribunal's decision, asserting that the dealer contravened regulations, justifying the penalty.

Issue 2:
The Court analyzed the documentation requirements under section 50(4) of the Act, emphasizing the need for carrying prescribed declarations or documents during the import of goods. It noted that amendments to this provision postdated the incident in question. The Court found that all necessary documents were present during the goods' interception, and any discrepancies did not indicate an intention to evade tax, as the Department was aware of the goods' import.

Issue 3:
Legal precedents, including the judgments in K.M.G.S. Road Signs and Rama Pulses cases, were considered. The Division Bench highlighted the necessity of proving an intention to evade tax before imposing penalties under the Act. It referenced the interpretation of penalty provisions in the context of document requirements, emphasizing the importance of establishing a deliberate attempt to evade tax. The Court concluded that no such intention was evident in the present case, aligning with the legal principles outlined in previous judgments.

In light of the above analysis and legal considerations, the Court set aside the penalty order, ruling in favor of the revisionist. The judgment emphasized the significance of proving intent to evade tax before imposing penalties under the Act, highlighting the importance of compliance with documentation requirements and the absence of any such intention in the present case.