2017 (11) TMI 264 - HC - VAT and Sales Tax

Levy of penalty u/s 15A(1)(q) - allegation was that two consignment of paper which entered the State of U.P. on 20 and 23 July 1992, although accompanied with the appropriate declarations as envisaged under Section 28B, the requisite forms were not surrendered at the exit check post - Held that - the receipt of the goods at the Delhi office was not disputed. The respondents have sought to draw adverse inference from the circumstance that although the challan was dated 20 July 1992, the goods were received by the Delhi office only on 23 July 1992. Based on this singular circumstance the respondents have proceeded to levy penalty upon the assessee. Section 28B only puts in place a rebuttable presumption - in case an assessee is able to produce evidence which tends to indicate and establish that what is presumed is not correct, the purpose of the rebuttable presumption is over and the burden then shifts upon the Department. Once the burden shifts, it is in light of the evidence which may be led by the respective parties that the issue must be decided - This aspect of the matter has clearly been ignored by both the assessing authority as well as the Tribunal which appears to have proceeded on the misconceived assumption that the entire onus lay or stood placed upon the assessee. Once the receipt of the goods at the Delhi office was established by the assessee, the purpose of the rebuttal presumption raised by the provision was over. It was then for the respondents to establish that the goods had in fact not exited the State of U.P. Revision allowed - decided in favor of revisionist.

Summary

Issues:
1. Levy of penalty under Section 15A(1)(q) for failure to surrender declaration forms at the exit check post.
2. Interpretation of Section 28B regarding the rebuttable presumption related to the sale of goods within the state.
3. Burden of proof on the Department to establish the sale of goods within the state.
4. Application of legal precedents in determining the imposition of penalties under Section 15A(1)(q).

Detailed Analysis:
1. The judgment deals with two revisions arising from penalty proceedings under Section 15A(1)(q) due to the non-surrender of declaration forms at the exit check post for consignments entering the State of U.P. Despite appropriate declarations, the forms were not submitted, leading to the presumption that the goods were sold within the state, justifying the penalty imposed by the respondents.

2. The Court emphasized that Section 28B establishes a rebuttable presumption, as clarified in the case of Sodhi Transport Co. vs. State of U.P. The provision allows the transporter to present evidence disproving the presumption of sale within the state. The burden shifts to the Department once evidence challenges the presumption, necessitating a fair evaluation of facts to determine the actual sale location.

3. It was noted that both the assessing authority and the Tribunal erred by placing the entire onus on the assessee, disregarding the requirement for the Department to prove that the goods did not exit the state. Once the receipt of goods at the destination was confirmed by the assessee, the purpose of the rebuttable presumption ceased, shifting the burden of proof to the Department to establish the sale within the state.

4. Legal precedents, such as Commissioner of Trade Tax U.P. Lucknow vs. Ms. Gurjeet Singh and Vijay Lal Gupta vs. Commissioner of Trade Tax, U.P. Lucknow, were cited to support the argument that if evidence shows goods were not sold within the state, the presumption under Section 28B is rebutted, nullifying the basis for imposing penalties under Section 15A(1)(q). The judgments highlighted the importance of factual evidence in determining the applicability of statutory presumptions and the subsequent imposition of penalties.

In conclusion, the Court allowed both revisions, setting aside the penalty orders issued under Section 15A(1)(q) based on the failure to surrender declaration forms at the exit check post. The judgment underscored the need for a balanced assessment of evidence and the Department's burden to establish the sale location within the state, in line with the principles of rebuttable presumptions outlined in Section 28B and supported by relevant legal precedents.