2024 (6) TMI 367 - HC - VAT and Sales Tax

Challenge the Demand Notice - Inspecting Officer or Seizure Officer had jurisdiction under section 72 (4) or not - sufficient opportunity was afforded in breach of Rule 58 of the JVAT Rules or not - HELD THAT - The Legislative intention which appears on a glance at sub-section (6) of section 72 of the JVAT Act is clear and unambiguous and the alternative penalty of Rs. 5000/- is not intended to vest a general power in the officer authorized to impose penalty equal to three times of the tax leviable on goods, even though the goods in movement is not taxable in Jharkhand. If such an interpretation is given to the provisions under sub-section (6) of section 72 that shall amount to conferring arbitrary powers on the officer empowered who can misuse this power in any or every case. The alternative penalty of Rs. 5000/- provided under sub-section (6) of section 72 shall be imposed for committing breach under clause (a) sub-section (3) in cases where the goods in transportation is not liable to be taxed in Jharkhand. The statutory Authorities have however drawn an inference as to evasion of tax on mere non-production of Road Permit in Form JVAT-504B and approved demand of Rs. 4,76,710.00/- which is three times the tax leviable on such goods. While drawing such inference, the statutory Authorities clearly ignored the provisions under sub-section (6) of section 72 of the JVAT Act that there is an alternative amount of tax which can be imposed by way of penalty for violation of clause (a) of sub-section (3) of section 72 if the goods in movement are not taxable in Jharkhand. The order dated 5th December 2017 passed in Revision Case No. JR 115 of 2016 for the period 2013-14 is set aside and, consequently, the appellate order dated 2nd March 2016 and the Demand Notice dated 21st March 2014, are quashed - petitioner-Firm shall be saddled with the penalty of Rs. 5000/- and the balance amount of penalty deposited by it shall be refunded. Petition disposed off.

Summary

Issues involved: Challenge to order passed by Commercial Taxes Tribunal affirming order dismissing challenge to Demand Notice u/s JVAT Act.

Summary:
The petitioner-Firm, a transporter, challenged a Demand Notice issued by the Commercial Taxes Department for violation of JVAT Act. The Tribunal upheld the notice, citing the need for valid Road Permit to prevent tax evasion. The petitioner argued lack of jurisdiction and insufficient opportunity for explanation, but the Tribunal found evidence of tax evasion due to missing Road Permit. The petitioner contended that goods were not taxable in Jharkhand, but the Tribunal upheld the penalty. The petitioner-Firm approached the High Court to challenge these decisions.

The High Court analyzed Section 72 of the JVAT Act, emphasizing the need for proper documentation during transportation. It noted the lack of inquiry into the truthfulness of the petitioner's claims and the failure to establish tax liability in Jharkhand. The Court interpreted the provisions under Section 72(6) to limit penalties to cases where goods are taxable in Jharkhand, not for non-taxable goods. Citing a previous case, the Court clarified that penalties above Rs. 5000 cannot be imposed if no tax is payable on the transported goods.

In light of the interpretation of Section 72(6), the High Court set aside the orders upholding the Demand Notice and imposed a penalty of Rs. 5000 on the petitioner-Firm, refunding the excess penalty amount already deposited. The writ petition was disposed of accordingly.