2022 (5) TMI 557 - HC - VAT and Sales Tax

Levy and collection of Entry tax - Cigarette - applicability of provisions of Section 28-A to goods which are exempt under Section 4 of U.P. Trade Tax Act, 1948 - Whether the provisions of Section 6 of the U.P. Tax on Entry of Goods Act, 2000 cast an obligation on an Importer to carry Form- 31 in case of goods which are exempt under clause (a) of Section 4 of the U.P. Trade Taxt Act, 1948? - HELD THAT - Admittedly, along with goods in question, bill, bilti and Form-35 were present and no discrepancies were found in the said documents except the fact that Form-31 could not be produced which was duly submitted later on. All entries of dispatch of goods either outside the State or in the State of U.P. have been duly made in the books of account so there cannot be said to be any intention to evade payment of tax - Further this Court in the case of M/s Sarvashri Ramesh Chand Santosh Kumar vs. Commissioner of Trade Tax, U.P. Lucknow 2010 (7) TMI 906 - ALLAHABAD HIGH COURT has held that in absence of Form-31, the penalty cannot be justified. The intention to evade payment of tax is not there. Further recently, this Court in M/s Colgate Palmolive India Limited vs. Commissioner of Commercial/Entry Tax, Lucknow 2021 (11) TMI 68 - ALLAHABAD HIGH COURT has held that non availability of Form-31 cannot be a ground for levying of penalty under Section 15-A (1) (O) in absence of specific intention to evade payment of tax. In the case in hand, it is evidently clear from the record that all entries were made in the books of account of the revisionist and there was no intention to evade payment of tax, hence the penalty order passed by the Tribunal cannot be sustained in the eyes of law and is hereby quashed. The revision is allowed.

Summary

Issues:
1. Interpretation of provisions of Section 28-A and Section 6 of U.P. Trade Tax Act and U.P. Tax on Entry of Goods Act, 2000.
2. Validity of penalty imposed under Section 15-A (1) (O) for non-production of Form-31.

Analysis:

Issue 1:
The revisionist, engaged in the cigarette business, faced penalty proceedings for not producing Form-31 during the interception of goods. The revisionist argued that despite the initial absence of Form-31, it was later submitted along with all other necessary documents. The First Appellate Authority initially deleted the penalty, citing no intention to evade tax, but the penalty was reinstated on further appeal by the revenue. The Standing Counsel contended that under the Entry Tax Act, cigarettes are taxable, and thus, the penalty was justified. However, the Court examined the records and noted that all dispatch entries were properly recorded, indicating no intent to evade tax. Referring to previous judgments, including one involving M/s Sarvashri Ramesh Chand Santosh Kumar, the Court held that the penalty cannot be imposed in the absence of Form-31 if there was no intention to evade tax. The Court emphasized that the mere unavailability of Form-31 does not warrant a penalty under Section 15-A (1) (O) without specific intent to evade tax.

Issue 2:
The Court further cited various cases like M/s. Ashish Trading Company, ITI Limited, and Multitex Filtration Engineering Ltd., which emphasized that the imposition of penalties under Section 15-A (1) (O) requires evidence of an attempt to evade tax. In the present case, the revisionist had voluntarily submitted all relevant documents before the seizure order was issued, indicating no intent to evade tax. The Court held that since all entries were duly recorded in the revisionist's accounts, there was no intention to evade tax, thereby quashing the penalty imposed by the Tribunal. The Court allowed the revision and set aside the previous orders, emphasizing that the penalty order was not sustainable in light of the facts presented.

In conclusion, the Court ruled in favor of the revisionist, emphasizing the importance of evidence of intent to evade tax for the imposition of penalties under Section 15-A (1) (O) and highlighted the significance of complying with documentation requirements under the U.P. Trade Tax Act and related legislation.