2023 (3) TMI 1028 - HC - VAT and Sales Tax

Levy of penalty upon the appellant under Section 51 (7) (b) of the Punjab VAT Act - penalty levied on the ground that there was mens rea to evade tax in the present case as the goods meant for trade were being transported by the dealer without proper and genuine documents with an intention to evade tax - HELD THAT - It transpires that the department had committed a mistake by not involving M/s K.S. Steel Tubes Ltd. regarding transaction of goods from its premises without invoice. At the time of detention of vehicle and goods the driver had produced the computerized invoice which could have been destroyed after the vehicle had left the limits of Punjab and this fact has gone unaccounted. This invoice was not held to be genuine. More so after about one week the documents were produced before the designated officer during inquiry showing purchase of goods by the appellant firm from various parties and kanda parchis. No such document was produced before the competent authority when the goods were released after accepting the bank guarantee. Once the appellant was taking the responsibility of getting the goods released it was its own duty/responsibility to immediately produce the correct invoice. In this case proper invoice had not been produced rather it was a computerized invoice which was produced after a gap of almost 10/20 days. Hence the penalty has been rightly imposed upon the appellant as the computerized invoice could have been easily destroyed. In the facts of the present case the driver had produced the invoice as well as G.R. The invoice was computerized one. The fact that the goods were loaded from the premises of M/s K.S. Steel Tubes was also substantiated by the statement of Manoj Sehgal Manager of that firm - Keeping in view the statement given by the driver and the manager (Manoj Sehgal) penalty has been rightly imposed by the competent authority as the appellant did not produce any invoice/document immediately after the goods were seized on 26.02.2009. This Court is of the view that the impugned order has rightly been passed by the Tribunal and no illegality much less perversity has been found therein. No substantial question of law arises for consideration - Appeal dismissed.

Summary

Issues:
The issues involved in the judgment are the imposition of penalty under Section 51 (7) (b) of the Punjab VAT Act on the grounds of alleged tax evasion during the transportation of goods, the ownership of the goods in question, and the validity of the documents produced by the appellant.

Imposition of Penalty:
The appellant, a registered dealer under the Punjab Value Added Tax Act, was penalized for allegedly attempting to evade tax during the transportation of iron pipes to another state. The penalty was imposed based on the belief that the goods were being transported without proper documentation to evade tax, as indicated by the driver's statement regarding the origin of the goods. The appellant contested this penalty, arguing that they were the rightful owner of the goods and had taken necessary steps to release the goods by providing a bank guarantee. The appellant relied on legal precedent to support their claim that penalties cannot be imposed solely on the basis of a driver's admission without proper examination of relevant documents.

Ownership of Goods:
The dispute regarding the ownership of the goods arose when the driver stated that the goods were loaded from the premises of another entity, M/s K.S. Steel Tubes. The appellant argued that despite this statement, they should be considered the owner of the goods since they took responsibility for releasing the goods by providing a bank guarantee. The appellant emphasized that no action was taken against M/s K.S. Steel Tubes, further supporting their claim of ownership. However, the state counsel contended that the driver's statement and additional evidence pointed towards the involvement of M/s K.S. Steel Tubes in the transaction, raising doubts about the appellant's ownership.

Validity of Documents:
The validity of the documents presented by the appellant, including a computerized invoice and G.R., was called into question during the proceedings. The state counsel argued that the computerized invoice was suspect, as it could have been easily manipulated or destroyed after the goods left Punjab's jurisdiction. The delay in producing certain documents, such as a proper invoice, raised concerns about the authenticity of the appellant's records. The court noted that the appellant's failure to promptly provide accurate documentation supported the imposition of the penalty, as it suggested potential attempts to conceal information or evade tax obligations.

Conclusion:
After considering the arguments presented by both parties, the court upheld the decision to impose the penalty on the appellant. The court found that the appellant's delayed submission of crucial documents, coupled with discrepancies in the information provided, justified the penalty under Section 51 (7) (b) of the Punjab VAT Act. The court determined that no substantial legal question arose from the case, leading to the dismissal of the appeal.