2013 (10) TMI 46 - HC - VAT and Sales Tax

Penalty - Evasion of tax - Inter state sales during the movement of goods - Held that - When the goods had moved from Harihar party, it had disclosed the destination at Rajpura. Rajpura party, as per the petitioner, is the second purchaser. It is, however, clear from the documents that goods right from the very start had been booked to be delivered at Rajpura to the second purchaser. It is not the case that the goods were booked for Ludhiana and during transit, by making endorsement on the documents, were sold and, therefore, delivered to the second purchaser. - The petitioner has remained unsuccessful in setting out a case of it being a sale in transit from the documents. Regarding penalty, contention of the petitioner is that since there was no deliberate disregard of statutory obligations, it is a case where no penalty was imposeable - Held that - This argument again has no merit. - the petitioner, though adjournment had been sought for explaining apparent dichotomy in documents which had raised suspicion on genuineness of documents and for furnishing original G.R., no one came forward resulting in conclusion of proceedings ex-parte against the petitioner. Unlike in the cited authority, the petitioner in the present case had played hide and seek with the Assessing Officer. Power of the AO - held that - it is clear enough that the Assessing Officer did not go into the nature of the transaction which was not his domain but had confined himself to his field of duty and functions of ascertaining genuineness of documents and thus he had rightly done so. - levy of penalty confirmed.

Summary

Issues:
1. Imposition of penalty under Section 14-B(7) of the Punjab General Sales Tax Act, 1948.
2. Dispute regarding the nature of the transaction - inter-State sale or intra-State sale.
3. Allegations of evasion of tax and violation of principles of natural justice.
4. Adjudication of penalty and legality of the impugned orders.

Analysis:
1. The petitioner sought a writ to quash the order imposing a penalty of Rs. 64,000 under Section 14-B(7) of the Punjab General Sales Tax Act, 1948. The petitioner argued that no attempt to evade tax was made and claimed it was an inter-State sale, thus no penalty should be levied. The petitioner contended that the Assessing Officer and Appellate Authorities misconstrued the matter. The petitioner also alleged a violation of natural justice, equity, and fair play. However, the court found that the penalty was imposed based on the genuineness of documents and the lack of cooperation from the petitioner.

2. The dispute revolved around whether the transaction was an inter-State sale or intra-State sale. The court analyzed the documents and found that the goods were booked for delivery at Rajpura, indicating that the sale was intended for the second purchaser at Rajpura from the beginning. The court noted discrepancies in the documents and concluded that the sale to the Rajpura party was known to all parties involved before the actual movement of goods. The court determined that the penalty was rightfully imposed based on the facts of the case.

3. The petitioner claimed that there was no deliberate disregard of statutory obligations and, therefore, no penalty should be imposed. However, the court found that the petitioner failed to cooperate with the authorities and did not provide the necessary documents to prove the genuineness of the transaction. The court highlighted that the Assessing Officer acted within his jurisdiction in imposing the penalty based on the discrepancies in the documents and the lack of cooperation from the petitioner.

4. The court dismissed the petition after considering the arguments presented by both parties. It upheld the imposition of the penalty under Section 14-B(7) of the Punjab General Sales Tax Act, 1948, based on the findings related to the nature of the transaction and the genuineness of the documents. The court emphasized that the Assessing Officer acted appropriately in his role and found no merit in the petitioner's claims, leading to the dismissal of the petition.