2023 (4) TMI 707 - HC - VAT and Sales Tax

Levy of penalty u/s 51(7)(b) of the Punjab VAT Act - goods imported in Punjab on the basis of RC number of other dealers - documents were not genuine - attempt to evade tax - HELD THAT - The facts in the present case which cannot be disputed are that on the GRs and invoices M/s. Arihant Industrial Equipment, Amritsar was the consignee of the goods and had made sale in transit to M/s. Bhushan Thukral. The GRs were self in account of Crompton Greaves Ltd. and in the GRs there was mentioning of M/s. Arihant Industrial Equipment, Amritsar. The Tribunal held that if the sale made by M/s. Arihant Industrial Equipment to M/s. Bhushan Thukral was to be treated as transit sale, then first these facts would be endorsed in favour of M/s. Arihant Industrial Equipment and then by M/s. Arihant Industrial Equipment to M/s. Bhushan Thukral with proper endorsement - Both the above said dealers were based in Punjab. There were no documents to show that it was a transit sale by M/s. Arihant Industrial Equipment to M/s. Bhushan Thukral during the course of inter-State trade. Even if the sale is taken as transit sale by M/s. Arihant Industrial Equipment to Bhushan Thukral, Govt. contractor, can it be taken as inter-State sale for the purpose of tax? - HELD THAT - The goods were purchased from M/s. Crompton Greaves Ltd. and it was M/s. Arihant Industrial Equipment, Amritsar who had purchased the goods from M/s. Crompton Greaves Ltd. and during the course of transit of goods, the goods were delivered to M/s. Bhushan Thukral, Govt. contractor at Ludhiana. The detaining officer need not to go in the issues of absence of documents, whether the sale was in transit or whether M/s. Arihant Industrial Equipment had accepted any price of sale from M/s. Bhushan Thukral. He was only required to see the documents that it was a case of inter-State sale which in the present case is not in dispute as the goods were travelled from Nasik to Amritsar. In M/S THYSSEN KRUPP ELEVATOR (INDIA) PVT. LTD. VERSUS STATE OF PUNJAB AND ANOTHER 2010 (9) TMI 873 - PUNJAB AND HARYANA HIGH COURT , the goods were being transported from Maharashtra to State of Punjab. The goods were detained on the ground that the transaction in question was clearly of intra-State sale in the State of Punjab as the goods were to be used in the works to be executed in the State of Punjab. The writ petition was allowed by not giving plea of alternative remedy to the respondents on the ground that once the petitioner had furnished all the information and there was a dispute of taxability, there could not be any attempt of tax evasions. Appeal allowed.

Summary

Issues Involved:
The judgment involves issues related to VAT Tribunal's order, inter-State sale transactions, transit sales, tax evasion allegations, and penalty imposition under Section 51(7)(b) of the Punjab VAT Act.

VAT Tribunal's Order:
The appellant challenged the orders dated 11.08.2006 and 19.08.2008 before the Tribunal, which dismissed the appeal based on various grounds. The Tribunal found discrepancies in the documents, including vehicle changes, lack of proper sale documents, and suspicions of tax evasion. The Tribunal concluded that the documents in favor of M/s. Bhushan Thukral were not genuine, leading to the penalty imposition under Section 51(7)(b) of the Punjab VAT Act.

Inter-State Sale Transactions:
The appellant cited legal precedents to argue that the nature of the sale, whether inter-State or intra-State, should be determined based on specific criteria. The Tribunal's decision was challenged based on judgments highlighting the importance of correct classification of transactions, especially in cases involving goods movement across states.

Transit Sales and Tax Evasion Allegations:
The case involved transit sales from M/s. Arihant Industrial Equipment to M/s. Bhushan Thukral, with allegations of tax evasion due to discrepancies in documents and lack of proper endorsements. The Tribunal upheld the penalty under Section 51(7)(b) of the Punjab VAT Act, emphasizing the need for accurate documentation in transit sales to avoid tax evasion.

Penalty Imposition under Section 51(7)(b) of the Punjab VAT Act:
The Tribunal's decision to impose a penalty under Section 51(7)(b) was based on the perceived lack of authenticity in the documents related to the sale transactions. The appellant argued that the penalty was unjustified, citing legal precedents and emphasizing the importance of correctly identifying inter-State sales to prevent tax evasion.

Conclusion:
In light of the legal arguments presented and the precedents cited, the appeal was allowed, and the Tribunal's order dated 19.11.2009 was set aside. The judgment highlighted the significance of accurate documentation and proper classification of transactions, especially in cases involving inter-State sales and transit transactions.