2023 (2) TMI 545 - HC - VAT and Sales Tax

Penalty u/s 51 (7) (b) of the Punjab Value Added Tax Act, 2005 - evasion of tax - proper and genuine documents were issued by the vendor or not - goods consigned did not match with the goods mentioned in bills - HELD THAT - The driver of the vehicle had shown all the invoices at ICC, Ghanauli. Though in Form VAT-35 (transit slip), no declaration as to the transaction covered by invoice No.5173 was alleged to have been made by the driver but since the transaction between the vendor and the appellant was clearly reflected from the invoices and since CST had been duly paid, therefore, there could not be stated to be any evasion of tax. Nothing had been brought on record to prove that the goods were intended to be used or sold in the State of Punjab. Rather the material placed on record clearly indicated that 117 pieces of cast crank cases had been brought into the State of Punjab for job work while on transit and the remaining 10 pieces were also for transit purposes. The absence of any written agreement between the appellant and M/s Sahil for receiving goods at Mohali did not give rise to any inference that the goods were intended to be sold at Mohali. The mere possibility of a local sale would not clothe the officials of the respondents to take such an action when there was no material on record to indicate that an attempt was made by the appellant to deliver the goods at a different place and to sell them in the local market by evading payment of tax. Appeal allowed.

Summary

Issues:
1. Imposition of penalty under Section 51 (7) (b) of the Punjab Value Added Tax Act, 2005.
2. Discrepancy in the delivery of goods and invoicing leading to penalty imposition.
3. Appeal against the orders of the Tax Tribunal and subsequent dismissal.
4. Dispute regarding the intention of the goods being sold in the State of Punjab.
5. Legal interpretation of the purchase order terms and job work arrangements.

Analysis:

Issue 1: Imposition of penalty under Section 51 (7) (b) of the Punjab Value Added Tax Act, 2005.
The appellant appealed against the penalty imposed under Section 51 (7) (b) of the Punjab Value Added Tax Act, 2005, which was upheld by the Tax Tribunal. The penalty was imposed due to discrepancies in the delivery and invoicing of goods, leading to a total penalty of Rs.3,79,770/-.

Issue 2: Discrepancy in the delivery of goods and invoicing leading to penalty imposition.
The case involved a situation where goods were dispatched to M/s Sahil for job work, but there were discrepancies in the invoicing and delivery process. The appellant argued that there was no discrepancy in the goods purchased and those to be delivered, emphasizing that the fettling work was done as per the purchase order terms.

Issue 3: Appeal against the orders of the Tax Tribunal and subsequent dismissal.
The appellant appealed against the orders of the Tax Tribunal, which affirmed the penalty imposition. The appeal was made on the grounds that the invoices for the goods were issued, central sales tax was paid, and there was no intention to evade tax. The appellant's contention was that the penalty order should be set aside.

Issue 4: Dispute regarding the intention of the goods being sold in the State of Punjab.
The court analyzed the situation to determine if there was any intention to sell the goods in the State of Punjab. It was found that the goods were brought into Punjab for job work purposes and transit, with no evidence of local sales. The court concluded that there was no tax evasion or intention to sell the goods locally.

Issue 5: Legal interpretation of the purchase order terms and job work arrangements.
The court examined the terms of the purchase order and the job work arrangements to ascertain the responsibilities of the parties involved. It was noted that the goods were dispatched as per the purchase order terms, and the job work was carried out accordingly. The court emphasized that the absence of a written agreement for receiving goods at a specific location did not imply an intention to sell locally.

In conclusion, the court allowed the appeal, setting aside the impugned order passed by the Tax Tribunal, based on the lack of evidence of tax evasion or intention to sell the goods locally, and the adherence to the purchase order terms and job work arrangements.