2024 (6) TMI 957 - HC - VAT and Sales Tax

Penalty u/s 43 of the Value Added Tax Act - some transaction has not been recorded in books of accounts - HELD THAT - The Tribunal while referring to section 42 (3) of the Uttarakhand Value Added Tax Act held that the Mobile Unit had not entered the business premises of the trader as there was no business activity going on. The Mobile Unit had only enquired regading the tax of trade in the business premises, which is not barred by the provisions contained under section 43 (3) of the Uttarakhand VAT Act. Another ground taken by the assessee was that there was a family dispute and on account of this, the accounts books were kept at home, however, no evidence was led to show that there was any family dispute. Subsequently and lastly, the ground taken by the learned counsel for the revisionist that as per the assessment order dated 10.11.2020, there is no contravention of the provisions of VAT Act, and in this backdrop the penalty order should be set aside, and in the alternative, he is praying that the penalty be reduced from 40% to 20% - this was the case of evasion of tax without maintaining the accounts books with regards to the entry of the goods, which was being carried in the truck. Hence, the assessment order cannot be made a ground to escape from the penalty proceedings, which was initiated on account of the non production of the account books with respect to carrying the goods from unregistered dealer. There is no ground made out to interfere in the impugned order passed by the Tribunal. Since the revisionist has already paid the penalty under protest as receipt Annexure no. 2, no ground is further made out to reduce the penalty from 40% to 20% - Revision dismissed.

Summary

Issues involved: Revision against penalty order u/s 43 of Value Added Tax Act.

The judgment pertains to a revisionist, M/s Kalka Ji Enterprises, challenging a penalty order imposed under section 43 of the Value Added Tax Act. The revisionist's appeal against the penalty was dismissed by the Commercial Appellate Tribunal, leading to the penalty of Rs. 96,080 being upheld. The case originated from the inspection of a truck loaded with scrap by Department Officials, where discrepancies were found regarding business activities and transactions. The penalty was imposed on the revisionist for allegedly trading goods with the intention to evade tax.

The first issue addressed in the judgment was the legality of imposing the penalty under section 43 of the Act. The revisionist argued that the penalty was unjust as the inspection was conducted by an Officer below the rank of Joint Commissioner, and the search conducted should not be the basis for imposing the penalty. The court referred to section 43(5) of the Act, which allows the imposition of a penalty not exceeding forty percent of the value of goods if they were wilfully omitted from being shown in the accounts.

The second issue involved the inspection of business premises by the Mobile Unit. The Tribunal referred to section 42(3) of the Uttarakhand Value Added Tax Act, which prohibits entering, inspecting, or searching business premises without authorization from the Commissioner or a designated officer. The Tribunal found that the Mobile Unit's actions were within the legal boundaries as they were only inquiring about tax matters and not conducting a full inspection of business activities.

The third issue addressed was the revisionist's claim of a family dispute leading to the absence of account books at the business premises. However, the court noted that no evidence was presented to substantiate this claim. Lastly, the revisionist sought to set aside the penalty order citing a previous assessment order, but the court held that the penalty proceedings were initiated due to the lack of account books regarding goods obtained from an unregistered dealer.

In conclusion, the court found no grounds to interfere with the Tribunal's order upholding the penalty. The revisionist's payment of the penalty under protest further weakened the argument for a reduction in the penalty amount. Therefore, the revision was dismissed, and the penalty of 40% was upheld.