2023 (6) TMI 233 - HC - VAT and Sales Tax

Penalty under Section 76(9) of the RVAT Act - Contrary views for same offence - in the case of the petitioner against whom the demand has been restored while in case of the driver, the appeal filed by the Department has been dismissed for the same offence - production of VAT 47, an afterthought - HELD THAT - It is undisputed that for the same offence, the penalty imposed upon the driver under Section 76(9) of the RVAT Act has been set aside. Further, as per settled position of law, penalty is not to be applied automatically in each case. To invoke penal provision, the Revenue has to necessarily conduct investigation, afford opportunity of defence/hearing to the assessee and inspect/analyse the documents. The same are sine qua non for imposition of penalty. Imposition of penalty can never be said to be automatic or per se. The foundational facts and premises for the imposition of such penalty and for upholding such penalty have to be established by the Revenue and the burden of the same also lies upon the Revenue. In the case in hand, the learned Tax Board had erroneously reached the conclusion that the production of VAT 47 subsequently was merely an afterthought as the VAT 47 was produced the same day and the reference of the particular VAT 47 was also reflected in the invoice dated 29.08.2012, which was produced on the spot of inspection. The imposition of penalty would have been valid if the declaration forms later produced were found to be false or fabricated but since that is not the case, the penalty was wrongly imposed by the Assessing Officer and wrongly upheld by the learned Tax Board. The lis in question is also squarely covered by the judgment of Apex Court in case of D.P. Metals 2001 (10) TMI 881 - SUPREME COURT , where it was held that The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature, and in dealing with the contention raised by a citizen that the taxing statute contravenes article 19, courts would naturally be circumspect and cautious as such there cannot, in the present case, be any valid challenge to the rate of penalty provided for in section 78(5) of the Act. The question of law framed hereinabove is answered in favour of the petitioner-assessee and against the respondent-revenue - Revision allowed.

Summary

Issues involved:
The judgment involves the question of whether the Rajasthan Tax Board was justified in taking contrary views for the same offense in two cases, one involving the petitioner where the demand was restored, and the other involving the driver where the appeal filed by the Department was dismissed for the same offense.

Summary:

Issue 1: Imposition of penalty under Section 76(6) of RVAT Act
The petitioner-assessee was penalized for not producing the prescribed format No. VAT 47 along with other relevant documents during a check of goods being transported. The penalty was imposed under Section 76(6) of RVAT Act, but the petitioner's appeal was initially allowed by the Appellate Authority. However, the Tax Board reversed this decision and maintained the penalty, leading to further applications for rectification which were also dismissed.

Issue 2: Allegation of afterthought in producing VAT 47 form
The petitioner's counsel argued that the production of VAT 47 form was not an afterthought as it was produced shortly after the inspection, and the relevant documents submitted at the time of inspection already referenced the VAT 47 form. It was contended that the penalty was wrongly imposed and that the Tax Board erred in its conclusion regarding the timing of producing the VAT 47 form.

Issue 3: Discrepancy in penalty imposition for the same offense
The petitioner's counsel highlighted that while the penalty was imposed on the petitioner-assessee, a similar case against the driver of the vehicle for the same offense resulted in the penalty being set aside by the Appellate Authority. This discrepancy raised questions about the consistency in penalty imposition for identical offenses.

Precedents and Legal Arguments:
The petitioner's counsel relied on various judgments, including the Apex Court judgment of State of Rajasthan vs. D.P. Metals, to support their argument that the penalty imposition was unjustified. The counsel argued that the foundational facts for penalty imposition were not established by the Revenue, and the burden of proof lay with them.

Judgment:
After considering the arguments and precedents cited, the Court ruled in favor of the petitioner-assessee, quashing and setting aside the Tax Board's orders imposing the penalty. The Court emphasized that penalty imposition cannot be automatic and must be supported by proper investigation and analysis of documents. The judgment highlighted the importance of establishing the grounds for penalty imposition and concluded in favor of the petitioner-assessee based on legal principles and precedents cited.