2017 (5) TMI 128 - HC - VAT and Sales Tax

Detention of vehicle - Penalty u/s 13-A(4) of the U.P. Trade Tax Act, 1948 - whether Tribunal was justified in disbelieving documents produced on the day of interception of vehicle on the surmises and speculations of having been prepared after the detention of the vehicle, and without any substantive material on record to hold so? - Held that - It is settled that if the dealer before an order of seizure could be passed if produces relevant documents and materials to show that goods were duly accounted for and there was no intention to evade tax then the order of seizure or for imposing penalty would not ordinarily be passed - In view of the fact that the transaction was duly accounted for in the books of account, and the transaction could not be disputed effectively, the order passed by the Tribunal is not liable to be sustained - penalty set aside - decided in favor of assessee.

Summary

Issues:
1. Disbelief of documents produced on the day of interception of the vehicle.
2. Liability to pay penalty under section 13A(4) of the Act after presenting relevant documents post-interception.

Analysis:
1. The case involved the imposition of a penalty under section 13-A(4) of the U.P. Trade Tax Act on the assessee for not producing valid documents during the interception of a vehicle carrying rice meant for export. The assessee, a registered dealer with a rice mill, dispatched 95 bags of basmati rice to a company in Delhi. When the vehicle was intercepted, no supporting documents for the rice movement were provided. Despite later producing various documents including Form 9, gate pass, transit permit book, and purchase and sale registers, the explanation was deemed unconvincing primarily due to an error in describing the transport vehicle as a truck instead of a tractor trolley in the bilty.

2. The revisionist argued that as the transaction was duly recorded in the account books, there was no justification for imposing a penalty. It was clarified that the mention of a truck number in the bilty was due to a format requirement, and previous transactions using the same vehicle were accepted. The Tribunal upheld the penalty, emphasizing the error in the vehicle description. However, the law mandates that an order of penalty can only be passed if goods were omitted from the account registers after considering the dealer's explanation. In this case, the assessee promptly provided evidence of the accounted transaction, including Form 9 and gate pass, showing the vehicle registration number matching the intercepted vehicle.

3. The High Court, referencing a previous case, highlighted that penalty proceedings should not be initiated if the transaction was properly accounted for in the books. Considering that all relevant materials were presented, and the transaction's legitimacy was established, the Court ruled in favor of the assessee, stating that the penalty imposition was unjustified. The Court concluded that since the transaction was adequately recorded in the books of account, the penalty could not be upheld based solely on a technical error in the transport vehicle description.

In conclusion, the High Court held that the penalty imposition under section 13-A(4) was unwarranted in this case, as the transaction was appropriately documented in the account books, fulfilling the legal requirement to explain the goods' accountability.