2023 (1) TMI 382 - HC - VAT and Sales Tax

Levy of penalty under Section 58 (XIX) of VAT Act - existence of mens rea or not - suppression of value of goods - it is alleged that the declaration form produced by the assessee did not bear the seal and the original and duplicate copies of the declaration forms also bore different signatures of the seller - HELD THAT - The submission of Mr. Maulekhi, learned counsel for the State, that the value of the goods being transported was declared to be only Rs. 05 lakhs, whereas the actual valuation of the goods was to the tune of Rs. 16.38 lakhs, is not borne out from the records. In fact, the order under Section 58(XIX), passed by the Deputy Commissioner itself records that the value of the consignment was declared at Rs. 16,38,324/-. The submission of Mr. Maulekhi founded upon the factual finding recorded by the Deputy Commissioner (Commercial Tax) in the order imposing penalty under Section 58(XIX) to the effect that declaration form produced by the revisionist-assessee did not bear the seal, and that the original and duplicate copies of the declaration form also bears different signatures of the seller, also does not appear to be correct. We may observe that the same finding was also returned by the First Appellate Authority. There is absolutely nothing to show that there is any discrepancy in the original and the duplicate copy of the Form 16 declaration, placed on record. The said declaration forms bear the same signature of Sri Ram Krishna for Brij Lal and sons, the revisionist. Even the signatures of the seller appear to be the same to the naked eye. Both the copies also bear the seal of Brij Lal and sons, as also the official seal. Counsel for the respondent has also not been able to point out any difference in the two copies of the form. There are merit in the submission of learned Senior Counsel for the revisionist that since the aspect of the trip sheet not disclosing goods covered by the three bills in question, namely, bill Nos. 863, 864 and 865 was not mentioned in the show cause notice, the same cannot be made basis for imposing penalty - Considering the fact that this was a first such instance, as also the fact that the revisionist had produced the declaration from in Form 16 without any delay along with its reply to the show cause notice, the revisionist had rebutted the statutory presumption raised by Section 65 of the Act. Petition allowed.

Summary

Issues Involved:
1. Imposition of Penalty under Uttarakhand Value Added Tax, 2005.
2. Validity and Sufficiency of Documentation during Transportation of Goods.
3. Mens Rea and Intent to Evade Tax.
4. Procedural Lapses and Consequences.
5. Statutory Presumption under Section 65 of the Act.

Detailed Analysis:

1. Imposition of Penalty under Uttarakhand Value Added Tax, 2005:
The revisionist-assessee challenged the penalty imposed by the Deputy Commissioner (Assessment) - I, Commercial Tax, Haridwar for the Assessment Year 2008-09, which was confirmed by the Commercial Tax Tribunal, Dehradun. The penalty was imposed under Section 58(XIX) of the Uttarakhand Value Added Tax, 2005, due to the absence of Form 16 during the transportation of goods. The first appeal reduced the penalty from 40% to 20%, but the second appeal upheld the penalty, leading to the present revision.

2. Validity and Sufficiency of Documentation during Transportation of Goods:
The revisionist argued that the goods were accompanied by all necessary documents except Form 16, which was inadvertently left with the transporter. The Form 16 was subsequently produced along with the reply to the show cause notice. The authorities, however, found discrepancies in the signatures on the original and duplicate copies of Form 16 and noted that the trip sheet did not contain the particulars of the goods.

3. Mens Rea and Intent to Evade Tax:
The revisionist contended that there was no intent to evade tax, citing the first instance of such a lapse and the immediate production of Form 16. The Supreme Court's judgment in State of Rajasthan vs. M/s D.P. Metals was referenced, emphasizing that mens rea is essential for imposing a penalty. The judgment highlighted that mere procedural lapses without intent to evade tax should not attract penalties.

4. Procedural Lapses and Consequences:
The revisionist argued that procedural lapses, such as the absence of Form 16 or discrepancies in the trip sheet, should not automatically lead to penalties. The show cause notice did not mention the trip sheet discrepancy, and the trip sheet is the responsibility of the transporter, not the assessee. The revisionist relied on the judgment in Castrol India Limited vs. Commissioner, Commercial Tax, which stated that authorities must consider documents produced in response to show cause notices before ordering seizures or penalties.

5. Statutory Presumption under Section 65 of the Act:
Section 65 raises a rebuttable presumption that goods imported without a declaration form are intended to evade tax. The revisionist successfully rebutted this presumption by producing Form 16 and explaining the lapse. The court found no discrepancy in the signatures on Form 16 and noted that both copies bore the same signatures and seals.

Conclusion:
The court set aside the impugned judgment by the Commercial Tax Tribunal, finding the penalty based on erroneous factual findings. The revisionist was not liable for any penalty, and the revision petition was allowed. The court emphasized that procedural lapses without intent to evade tax should not attract penalties, aligning with the principles of natural justice and the legislative scheme of the Act.