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TMI Blog2016 (7) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion is purely conjectural and based entirely upon the two discrepancies referred to above. The Court has no hesitation to hold that the imposition of penalty upon the assessee on account of a discrepancy in the batch numbers and date of manufacture was clearly unjustified and unwarranted in the facts and circumstances of the case. The orders of the assessing authority, the first appellate authority as also that of the Tribunal sustaining the levy of penalty upon the revisionist, therefore cannot be sustained. - Decided in favor of assessee. - Sales/Trade Tax Revision No. 119 of 2016 - - - Dated:- 12-7-2016 - Hon'ble Yashwant Varma, J. For the Applicant : Rahul Agarwal For the Opposite Party : C.S.C. Sales/Trade Tax Revision No. 120 of 2016; Sales/Trade Tax Revision No. 121 of 2016; Sales/Trade Tax Revision No. 122 of 2016; Sales/Trade Tax Revision No. 123 of 2016; Sales/Trade Tax Revision No. 125 of 2016; Sales/Trade Tax Revision No. 126 of 2016; Sales/Trade Tax Revision No. 127 of 2016; Sales/Trade Tax Revision No. 128 of 2016; Sales/Trade Tax Revision No. 131 of 2016; Sales/Trade Tax Revision No. 124 of 2016 and Sales/Trade Tax Revision No. 129 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily led to the seizure of consignments and ultimately culminated in orders imposing penalty. The assessing authority not accepting the explanation furnished by the revisionist proceeded to levy penalty on the errant consignments constraining the revisionist to prefer appeals which came to be dismissed by the first appellate authority. Aggrieved by the decision of the first appellate authority the revisionist preferred Second Appeals before the Tribunal which dismissed as many as six appeals by a common judgment and order dated 15 January 2016. To view the facts in a clearer perspective, the details of the revisions, details of the second appeals, the value of consignments, the amount of penalty imposed and moneys deposited, may be viewed from the following chart: - S. N o. CTR NO. Second Appeal No. Order of the Tribunal A.Y. Consig. Amount Penalty Amount Amount Deposited Amount Stayed Remarks 1 119/2016 438/2013 15/01/16 2009 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 440/2013 15/01/16 2009 10 1,30,000/ 52,000/ 32,500/ 19,500/ Penalty @ 40% on 1,30,000/ Learned counsel for the revisionist referring to the provisions of the VAT Act has contended that there existed no circumstance, which warranted the imposition of penalty upon the revisionist. He submitted that no provision of the VAT Act or the Rules framed thereunder required or obliged the revisionist to disclose the date of manufacture or the batch number of the soft drinks. He submitted that a discrepancy in the details falling under the aforementioned two heads did not justify the imposition of penalty. It was his submission that the articles in question were duly recorded and reflected in the Books of Account and carried a uniform rate of tax. It was submitted that there was no intention to evade payment of tax and therefore also the order of the assessing authority as affirmed by the Tribunal as well as the first appellate authority were rendered unsustainable. Learned counsel submitted that the authorities below have clearly erred in seeking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n identical circumstances was set aside by the Tribunal while recording that neither the VAT Act nor the Rules framed thereunder required a disclosure of batch numbers and consequentially held that penalty had been wrongly imposed. He submitted that apart from the fact that the said judgment rendered by the Tribunal related to Assessment Year 2010-11, there was no distinguishing feature which may have justifiably weighed with the Tribunal to take a discordant view and uphold the levy of penalty in the facts of the present case. Learned Standing Counsel refuting the above submissions contended that the assessing authority had proceeded to hold that apart from the two discrepancies mentioned above, some of the invoices had also not been pre-authenticated as was mandatorily required under the provisions of the Rules. He submitted that the assessing authority had recorded a categorical finding that the action of the revisionist was clearly aimed at evasion of tax and that the consignment of goods without a proper recordal in the Books of Accounts was clear and apparent. It was his submission that irrespective of the reasons assigned by the Tribunal, in light of the conclusion so r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his business. iii. which are found in any place of business, vehicle, vessel or any other building or place, and such goods are accompanied by any tax invoice or sale invoice or any other document pertaining to value of goods, as the case may be, containing value of goods undervalued to the extent more than fifty percent of the value of goods prevalent at the relevant time in the local market area where the said transaction had taken place, with intention to evade payment of tax. The power to impose penalty stands enshrined in sub section (5) which reads as follows: (5) If such authority, after taking into consideration the explanation, if any, of the dealer or, as the case may be, the person in charge and after giving him an opportunity of being heard, is satisfied that the said goods were omitted from being shown in the accounts, registers and other documents referred to in sub-section (1) or not traced to any bonafide dealer or not properly accounted for by any dealer or the documents issued by a bonafide dealer with respect to the accompanying goods contained wrong particulars or the goods are undervalued to the extent of more than fifty percent of the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts, registers or other documents. In terms of sub section (5) the authority proceeds to levy penalty upon being satisfied that- (a) the goods were omitted from being shown in the accounts; or (b) the goods are not traceable to any bona fide dealer; or (c) the goods are not properly accounted for by any dealer; or (d) the documents issued by any dealer contained wrong particulars; or (e) the goods are undervalued to the extent of fifty percent of the value of the goods prevalent at the relevant time in the local market. Rule 44 mandates that the following particulars must find mention in a tax invoice: - (a) name and complete address of the seller dealer (b) name and address of the branch or depot from where goods were sold (c) Taxpayers Identification Number (TIN) of the selling dealer (d) Tax invoice number and date of issue (e) Signature of the person authenticating the tax invoice (f) name and address of the purchasing dealer (g) TIN number of the purchasing dealer (h) a description of the goods (i) quantity or measure of the goods (j) value of the goods (k) rate of tax (l) amount of tax charged (m) total a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o uphold and affirm the orders of the assessing authority and the first appellate authority. Having dealt with the peripheral issue, which was more technical in character, the Court now proceeds to deal with the primary issue which pivots around the provisions of section 48 (5). A close reading of sub section (5) establishes that while it sets out the circumstances in which penalty may be imposed [clauses (a) to (e) as extracted and deconstructed above] all the clauses are qualified and circumscribed by the words with intention to evade payment of tax . The phrase with intention to evade payment of tax flows and attaches to each of the circumstance which attracts a levy of penalty under sub section (5). The Court however finds that the Tribunal has nowhere recorded its conclusion that the act of the revisionist was with an intent to evade payment of tax. As would be evident from a reading of sub section (5) the act or omission of the assesse must necessarily be aimed at intent to evade tax. Every bona fide mistake or accidental slip/omission is not intended by the statute to justify the imposition of a penalty. A reading of the orders impugned would establish that no ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpretation of judgments and which has been repeatedly so recognised is that the endeavor to understand the law declared in a judgment must be made bearing in mind the factual backdrop in which it came to be rendered. The true essence of a judgment must be extracted and understood bearing in mind the facts against which it came to be rendered. This principle itself is based on the Latin maxim Secundum Subjectam Materiam. It is this basic principle which, in the opinion of this Court, has been completely lost sight of by the Tribunal. Jagatjit came to be rendered by a learned Judge of the Court upon a difference of opinion between two learned Judges constituting a Bench of the Court. The issue in Jagatjit was whether the Court while exercising its powers under Article 226 of the Constitution should interfere with an order of seizure of goods. This is evident from the following extracts of the judgment:- 11. The question, therefore, for consideration is whether on the facts of the case any ground for interference by this Court was made out in exercise of its jurisdiction under Article 226 of the Constitution of India. 29. In the result, I respectfully agree with the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax, 1993 U.P.T.C. 368 and M/s. Great Glen Distilleries Wineries v. Commissioner of Sales Tax 1995 U.P.T.C. 699 that the seizure of goods was not justified in cases where there is merely a difference of batch number of the goods. The learned Standing Counsel placed reliance on M/s. Jagatjit Industries Ltd. v. State of U.P., 1997 U.P.T.C. 1011 in which the question was whether on the facts of that case the High Court should exercised its jurisdiction under Article 226 of the Constitution of India for quashing the notices of seizure. It was held that the necessary facts have to be found by the authorities under the Act and, therefore, the High Court should not interfere under Article 226 of the Constitution of India. The view taken by this Court in the aforesaid cases has neither been considered nor a different view taken. Therefore the aforesaid judgments are applicable to the facts of the present case in which the dealer preferred by appeal to the Tribunal in terms of Section 10(2) of the Act and the Tribunal has recorded a finding of fact that the goods were duly recorded in the books of account of the dealer. This finding is not open to challenge in the present revision petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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