2023 (10) TMI 420 - HC - VAT and Sales Tax

Levy of penalty on revisionist - no intent to evade the payment of tax - HELD THAT - Admittedly, the goods were intercepted during transportation from State of Telangana to Ghaziabad, U.P. and at the time of interception the goods were accompanying with all required documents along with form 38. The purpose of form 38 is that the department should know that the goods are being imported from one State to another State. Some defects were pointed out by the department i.e. the name of the goods was not properly mentioned in form 38 and the allegation was made that the form was filled with magical ink which will be evaporated on high temperature and therefore the presumption has been drawn that the form can be re-used. On the said observation, the goods were seized and penalty was imposed. This Court in Sale / Trade Tax Revision No. 5 of 2020 (Commissioner, Commercial Tax, U.p. Vs. S/S Atul Trading Company 2020 (3) TMI 820 - ALLAHABAD HIGH COURT held that Even Form 38 was found to be duly filled up evidencing the transaction under which the goods were being imported. The assessee had duly produced his books of accounts in which the transaction in question is duly accounted for. In such circumstances, merely on assumption that Form 38 could be re-used, the Assessing Officer was not justified in imposing penalty. In view of aforesaid identical case, the allegation that form which was filled with magical ink can be re-used, cannot be accepted by this Court - revision allowed.

Summary

Issues:
The issues involved in the judgment are the justification of levying penalty on the revisionist for tax evasion and the scrutiny of the legality of seizing goods due to discrepancies in form 38.

Levying Penalty Issue:
The revisionist, engaged in trading food grains and spices, faced penalty proceedings under Section 54 of UP VAT Act due to discrepancies in form 38 accompanying goods purchased from a dealer in Telangana. The revisionist argued that the discrepancy was due to the selling dealer's error and that all necessary documents were provided. The authorities alleged that the form could be re-used to evade tax, leading to the penalty imposition. However, the Court found that the interception of goods was based on assumptions and not justified by the evidence presented, ultimately dismissing the revision.

Seizure of Goods Issue:
The Court examined the legality of seizing goods based on the presumption that form 38 was filled with magical ink, allowing for potential re-use and tax evasion. Referring to a previous case, it was established that the presence of other valid documents, such as invoices and bilty, along with a properly filled form 38, indicated compliance with import regulations. The Court emphasized that the Assessing Officer's penalty imposition solely on the assumption of form re-usability was unjustified, as the transaction was properly documented and accounted for by the revisionist.

Conclusion:
In light of the precedent set by a similar case, where the legality of seizing goods based on magical ink allegations was refuted, the Court allowed the revision and answered the substantial question of law accordingly. The judgment highlighted the importance of proper documentation and accounting practices in trade transactions, emphasizing the lack of legal grounds for penalty imposition in this scenario.