2015 (4) TMI 77 - HC - VAT and Sales Tax

Penalty under Section 54 (1) (14) of the U.P. Value Added Tax Act, 2008 - goods were not accompanied by Form-38 - Intention to evade tax - Held that - From a perusal of the order of the Joint Commissioner, Faizabad Zone, Faizabad dated 28.02.2011 as well as the order of the Tribunal dated 23.11.2011 it will be seen that absolutely no finding has been given either by the Assessing Officer or by the Tribunal as to whether there was an intention on the part of the Food Corporation of India-revisionist to evade tax. In my opinion the provisions of Section 54 sub-section 1 clause 14 are mandatory and the Taxing Authorities are under an statutory obligation to examine the material on record and discuss the merits of the matter and record a clear finding with regard to the intention of the dealer or importer as to whether there was or was not an intention to evade tax. Both the orders of the Assessing Authority, Appellate Authority as well as Tribunal are silent on this aspect of the matter and therefore the orders dated 28.02.2011, 22.06.2011 and 23.11.2011 are illegal and in violation of the mandatory provisions of Section 54 (1) (14) of the VAT Act, 2008 and are accordingly set aside. The matter is remitted to the Assessing Authority to reconsider the matter in the light of the observations made above and the law laid down by the Division Bench of this Court in the case of M/S. Rama Pulses (2009 (10) TMI 885 - ALLAHABAD HIGH COURT), within a period of two months from the date of receipt of the certified copy of this order. - Decided in favour of assessee.

Summary

Issues:
- Interpretation of Section 54 (1) (14) of the U.P. Value Added Tax Act, 2008 regarding penalty imposition for tax evasion.
- Examination of the necessity of proving intent to evade tax by the dealer or importer.
- Application of legal precedents in determining the intention to evade tax.
- Compliance with statutory obligations by Taxing Authorities in recording findings on intent to evade tax.

Analysis:

The judgment by the High Court of Allahabad pertains to revisions filed against the order of the Commercial Tax Tribunal regarding penalty proceedings initiated under Section 54 (1) (14) of the U.P. Value Added Tax Act, 2008. The case involves the Food Corporation of India, which imported wheat consignments into Uttar Pradesh without the required documentation, leading to the imposition of a substantial penalty by the Assessing Authority.

The revisionist argued that a mandatory finding on the intention to evade tax by the dealer or importer is necessary under Section 54 (1) (14). Citing legal precedents, including a Division Bench decision, it was contended that the absence of such a finding renders the penalty invalid. On the other hand, the respondent emphasized the implicit intent to evade tax due to the lack of proper documentation accompanying the consignments, justifying the penalty imposed.

The Court analyzed the statutory provisions of Section 54 (1) (14) and the precedents cited, distinguishing the applicability of a Supreme Court judgment on a similar issue. It concluded that the Assessing Authority must explicitly examine and record findings on the intent to evade tax, as mandated by the law. The Court found the previous orders deficient in addressing this crucial aspect and deemed them illegal, setting them aside and remitting the matter for reconsideration within a specified timeframe.

In light of the observations made and the legal principles cited, the revisions were allowed, highlighting the importance of adhering to statutory obligations and ensuring a thorough examination of intent in tax evasion cases. The judgment underscores the significance of due process and proper findings in penalty proceedings under tax laws, emphasizing the need for a clear determination of intent to evade tax by the concerned authorities.