2020 (3) TMI 251 - HC - VAT and Sales Tax

Imposition of penalty - goods were traceable to bonafide dealer and entered in books of accounts - whether the goods were being carried with valid documents as prescribed under the Trade Tax Act and if not then whether the seizure/penalty proceedings are valid in the present set of circumstances or not? HELD THAT - A perusal of Rule 83 (4) (a) gives the details of the documents which are mandatory during transportation of goods. In the present case undoubtedly it has nowhere been challenged that the petitioner was not carrying mentha oil. It has been submitted that he had purchased the said oil from three farmers from Fatehpur. To substantiate the said transaction three purchase vouchers were produced before the authorities which provides the quantum of the oil, name and address of seller and the date of sale. No other document was produced by him and at that stage no other document was existing. A fair reading of Rule 83 (4) (a) clearly indicates that in the present circumstances the vouchers were the only documents which could have indicated the transaction as stated by the revisionist - In view of the fact that it has been admitted that vouchers were duly presented before the mobile squad immediately on receipt of the show cause notice at the first instance, it cannot be said that the goods were being transported with intention to evade tax. Revision allowed.

Summary

Issues Involved:
Determining the validity of seizure and penalty proceedings under the Trade Tax Act based on the transportation of goods without proper documentation.

Detailed Analysis:

Issue 1: Validity of Seizure and Penalty Proceedings
The revisionist, a registered dealer of mentha oil, faced seizure of goods by the mobile squad due to lack of proper documentation during transportation. The revisionist argued that he had purchased the oil from farmers with printed purchase vouchers, which were presented to the authorities. The Assessing Authority imposed a penalty after rejecting the revisionist's contentions, leading to subsequent rejections by the Deputy Commissioner and the Tribunal.

Issue 2: Compliance with Trade Tax Rules
The Tribunal upheld the seizure based on Rule 83 of the U.P. Trade Tax Rules, requiring specific documents during transportation. The revisionist contended that the purchase vouchers carried by the proprietor fulfilled the documentation requirements, as they detailed the transaction with the farmers. It was emphasized that the vouchers were promptly provided to the authorities upon request, indicating no intent to evade tax.

Issue 3: Interpretation of Rule 83 (4) (a)
Rule 83 (4) (a) mandates carrying specific documents while transporting goods. The revisionist's reliance on the purchase vouchers as the sole documentation for the mentha oil transaction was deemed sufficient, as no other documents were available at the time. The revisionist's compliance with presenting the vouchers promptly upon inspection further supported the argument against tax evasion intentions.

Conclusion:
The High Court found the orders of the Tribunal, First Appellate Authority, and Assessing Authority to be inconsistent with the Trade Tax Act provisions. The Court allowed the revision, emphasizing the adequacy of the purchase vouchers in demonstrating compliance with documentation requirements and refuting any tax evasion motive during the transportation of goods. The judgment favored the revisionist, highlighting the importance of adhering to legal documentation standards under the Trade Tax Act.