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2024 (9) TMI 763 - HC - VAT / Sales TaxLevy of penalty on the revisionist - ex parte penalty order was passed against the assessee - existence of mens rea or not - HELD THAT - Before imposing penalty under Section 48 (8) of the Act, the Tax Assessment Officer has to be satisfied that the goods were imported in contravention of Section 48, is an attempt to evade assessment or payment of tax due or likely to be due under the Act. In this backdrop, the Tribunal, thereafter, proceeded to examine the alleged Declaration Form (Form DVI) of the import to the officer of the Trade Tax Department. The Import Declaration Form (Form XVI) was not in force, and its legal position will be like a waste paper, and in this backdrop, the Tribunal held that the trader had made the open contravention of the provisions of Section 48 (2). The Tribunal held that under Section 48A, the Import Declaration Form has to be given by the importer duly filled in and signed before the import of goods to the consignor. There is no provision in the Uttarakhand Value Added Tax Act, 2005 to produce new prevailing import declaration form before the Inquiry Officer, and hence, subsequent new declaration form produced by the assessee, along with his reply to the show-cause notice, cannot be a ground not to impose penalty on the assessee. After perusing the order of the Tribunal, it is worth highlighting that imposition of penalty is on the ground that the trader was importing the goods with an import declaration form, which was invalid Form-XVI, and trip-sheet under Section 48A had not been prepared. The very fact that when the goods are seized as per the provisions of Section 43 of the VAT Act, the provisions of Section 48 would require to be examined, which deals with the power to seize goods. Even in Section 43 (5), where an order of penalty has to be passed, an opportunity of hearing has to be given, and the officer has to be satisfied that there was an attempt to willfully not show the goods in accounts, register and other documents, and only then the penalty has to be imposed not exceeding 40% of the value of goods. After seizure of the goods under Section 43 (4), the Assessing Authority has to give a show-cause notice as to why show-cause notice should not be imposed, and after giving notice, an opportunity of hearing as per Section 43 (5) has to be given, and after examining the evidence, a finding has to be given whether there was willful attempt to evade tax. On issuance of show-cause notice, the trader had produced the valid declaration form (Form XVI). It is the case of the trader that he had sent the material to Mysore for job work. The job work was not done and the material was being brought back to the Uttarakhand without the job work. Hence, there was no payment made for the job work, and it was not the case of import of goods to the State of Uttarakhand. The goods, which were sent from Uttarakhand, were being brought back to Uttarakhand without job work. Hence, the nature of goods had not been changed, and it was the case of invalid declaration form, which was made basis to impose penalty. Castrol India Ltd. another vs. Commissioner, Commercial Tax 2012 (4) TMI 585 - ALLAHABAD HIGH COURT , was a case where under the U.P. VAT Act, 2008, the goods had been seized on the sole ground that the goods were not being accompanied by the Import Declaration Form (Form 38) under Section 50 of the Act. However, the original form was enclosed with the reply, and the Allahabad High Court held that the object of issuance of show-cause notice under Section 50(4) of the Act was to give to the party concern not only an opportunity to submit an explanation as to why the security may not be demanded, but also to explain why the goods may not be seized, and if in response to such a show-cause notice, the party produces necessary documents so as to remove the discrepancy, if any, found at the time of checking, the authorities are legally bound to consider the same before ordering for the seizure of the goods. The ratio of the above judgment is applied to the facts of the present case that at the time of seizure, an invalid declaration form (Form XVI) was produced. However, subsequently, pursuant to the show-cause notice, the valid import declaration form (Form XVI) was produced, and it was not the case of the Assessing Officer that the valid import declaration form was fake, or there was discrepancy in the documents. In the present case, keeping in view the above judgment referred to by learned counsel for the revisionist, the revision(s) is being allowed, and the order of the Tribunal is being set-aside.
Issues Involved:
1. Legality of the penalty imposed by the Deputy Commissioner (Assessment)-2, Commercial Tax, Haridwar. 2. Validity of the judgment of the Commercial Tax Tribunal, Bench Dehradun. 3. Compliance with Section 48 of the Value Added Tax Act. 4. Examination of mens rea in the imposition of penalty. 5. Consideration of subsequent submission of valid documents. Issue-Wise Detailed Analysis: 1. Legality of the penalty imposed by the Deputy Commissioner (Assessment)-2, Commercial Tax, Haridwar: The revisionist challenged the penalty order of Rs. 10.00 lakhs imposed by the Deputy Commissioner (Assessment)-2, Commercial Tax, Haridwar. The penalty was based on the use of an outdated Form-16 during the transportation of rubber tires, which was declared obsolete on 20/02/2013. The Mobile Squad Authority issued a show-cause notice, and an ex parte penalty order was passed under Section 48 (8) of the Value Added Tax Act. 2. Validity of the judgment of the Commercial Tax Tribunal, Bench Dehradun: The Commercial Tax Tribunal set aside the judgment of the First Appellate Authority, which had found the revisionist to be a bona fide dealer and concluded that the conditions for imposing a penalty under Section 43 (5) were not met. The Tribunal imposed a penalty of Rs. 10.00 lakhs, stating that the trader had contravened Section 48 (2) by using an invalid Form-16 and failing to prepare a trip-sheet under Section 48A. 3. Compliance with Section 48 of the Value Added Tax Act: The Tribunal examined whether the goods were imported in contravention of Section 48, which requires the importer to furnish a declaration in the prescribed form before importing goods. The Tribunal noted that the outdated Form-16 was legally invalid and akin to waste paper. The Tribunal held that the trader had made an open contravention of Section 48 (2) by not using the current form and not preparing the trip-sheet. 4. Examination of mens rea in the imposition of penalty: The Tribunal observed that no account books were produced for verification, indicating an intention to evade tax. The Tribunal emphasized that the responsibility of the importer-trader was to produce relevant evidence before the Assessing Authority. The Tribunal imposed the penalty on the grounds that the goods were imported with an invalid Form-16 and without a trip-sheet, suggesting an attempt to evade tax. 5. Consideration of subsequent submission of valid documents: The revisionist argued that the goods were being returned from Mysore without any job work due to the termination of an agreement, and there was no intention to evade tax. The revisionist produced a new Form-16 in response to the show-cause notice. The Tribunal, however, held that the subsequent submission of the new form could not be a ground to avoid the penalty. Judgment Analysis: The High Court examined the provisions of Section 48 (8) of the Act, which mandates an opportunity of hearing and the satisfaction of the Assessing Officer that there was an attempt to evade tax before imposing a penalty. The Court referred to precedents where subsequent submission of valid documents was considered sufficient to avoid penalties. The Court found that the Tribunal's finding of an attempt to evade tax was incorrect, given the subsequent submission of the valid Form-16 and the explanation provided by the revisionist. Conclusion: The High Court allowed the revision, set aside the order of the Tribunal, and emphasized the need for the Assessing Officer to consider the evidence and explanation provided by the trader before imposing a penalty. The Court highlighted that the penalty should not be imposed solely on the grounds of using an outdated form without examining the intent to evade tax.
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