2018 (7) TMI 1764 - HC - VAT and Sales Tax

Penalty u/s 56 (4)(b) read with section 60(4)(b) of the Bihar Value Added Tax Act 2005 - alleged violation of the provision of Section 16(2) of the Bihar Vat Act 2005 - prohibition on sale of all vehicles with B.S. III engines - The simple case of the petitioner is that after the e-suvidha declaration was already generated and handed over to the transport authority, the petitioner came to know about the judgment of the Hon ble Apex Court in the case of M.C. Mehta 2001 (3) TMI 1063 - SUPREME COURT OF INDIA and informed that with effect from 01.04.2017, the petitioner would not be able to sell the vehicles of Bharat Stage III. Held that - Neither in the counter affidavit nor in course of submission before this court the respondent authorities or on their behalf it could be prima facie demonstrated that the petitioner had cancelled the esuvidha declaration generated on 28.03.2017 with any intention to play fraud upon the taxing authorities. There is no answer to the contention of the petitioner that with effect from 01.04.2017, the vehicle loaded on the truck in question were reduced to scraps and were not marketable, if this is the position and not denied by the respondents, this court would be constraint to hold and declare that cancellation of the e-suvidha declaration by the petitioner was only a bona fide act without there being any intention to play fraud with the taxing authorities. Both respondent no. 2 as well as respondent no. 4 have failed to consider the facts and circumstances - No element of fraud or intention to evade tax may be found from the conduct of the petitioner - we have no hesitation in holding Annexure-7 as well as Annexure-11 to the writ application as wholly illegal and without jurisdiction. Application allowed.

Summary

Issues:
Setting aside penalty order under Bihar Value Added Tax Act 2005, quashing appeal dismissal order, refund of penalty amount under protest.

Analysis:
The petitioner, a partnership firm, sought to set aside a penalty order imposed under sections 56(4)(b) and 60(4)(b) of the Bihar Value Added Tax Act 2005 and quash an appeal dismissal order. The petitioner, an authorized dealer of Atul Auto Ltd., Rajkot, generated e-suvidha declaration for transporting goods to Muzaffarpur. The goods, including Auto three wheelers with BS III engines, were intercepted at a check post due to a Supreme Court judgment prohibiting the sale of such vehicles. The petitioner explained that the goods were reduced to scrap and not marketable, supported by a consigner's certificate. However, respondent no. 4 imposed a penalty of ?9,33,470 for alleged violation of Section 16(2) of the Act.

The petitioner, aggrieved by the penalty, deposited the amount under protest and generated e-suvidha declaration to return the goods to the consigner. An appeal before respondent no. 2 was dismissed, leading to the writ application. The petitioner argued that the cancellation of e-suvidha declaration was due to the Supreme Court judgment, rendering the goods unmarketable. Respondent authorities contended that the goods were transported without a correct declaration, leading to seizure under sections 16(4)(a) and 56(4)(a) of the Act.

The court found that the cancellation of e-suvidha declaration was a bona fide act after learning of the Supreme Court judgment. It noted that the loaded vehicles were reduced to scraps and were not marketable on interception. The petitioner's actions did not indicate fraud or tax evasion. Therefore, the court held the penalty and appeal dismissal orders as illegal and without jurisdiction. Both orders were quashed, and respondent no. 4 was directed to refund the penalty amount within a month.

In conclusion, the court allowed the writ application, setting aside the penalty order, quashing the appeal dismissal order, and directing the refund of the penalty amount paid under protest.