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TMI Blog2017 (6) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... authority which discretion must be exercised taking into account relevant factors. The authority committed an error in imposing penalty on the assessee under sub-sections 7 and 12 of Section 34 and the Tribunal committed an error in confirming part of such penalty - appeal allowed - decided in favor of appellant. - Tax Appeal No. 805 of 2012 - - - Dated:- 8-6-2017 - Mr. Akil Kureshi and Mr. Biren Vaishnav JJ. For the Appellant : MR TANVISH BHATT, ADVOCATE FOR M/S WADIAGHANDY CO, ADVOCATE For the Opponent : MR PRANAV TRIVEDI, ASST GOVERNMENT PLEADER ORAL JUDGMENT ( PER : HONOURABLE MR . JUSTICE AKIL KURESHI ) 1. This appeal is filed by the assessee to challenge the judgement of the Value Added Tax Tribunal ( the Tribunal for short) dated 06.09.2012. At the time of admission of appeal, the following substantial questions of law were framed: (1) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that penalty could be imposed in the case of the appellant under section 34(7) of the VAT Act as well as under section 34(12) of the VAT Act? (2) Whether on the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act was brought into effect shortly before the period of tax default, certain amendments were made in the relevant taxing provisions. Even the consultants were not clear about the tax liability under such circumstances and that the other dealers in the State were not paying taxes. The assessee also relied on a provisional assessment order dated 13.06.2007 for the period between 22.05.2006 to 31.03.2007 in which also the authority had not raised any tax demand. According to the assessee, these factors when seen cumulatively would demonstrate that it was a pure bona fide error in not paying the tax and the assessee had no mala fide intention of avoiding tax liability. The assessee also argued that had the product been exported from the State of Gujarat admittedly there would have been no tax liability. It was, therefore, contended that the authority committed a serious error in imposing penalty that too at the highest possible rate prescribed under the statute. 2.3 The Tribunal by the impugned judgement allowed the appeal in part. The Tribunal did not accept the assessee s contention that there was no intention on the part of the assessee to avoid tax. However, taking note of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new law. There also two amendments were made on 10.05.2006. Section 14B was introduced providing for the facility for composition of tax on agriculture produce. Simultaneously sub-section 4 was inserted in Section 9 on the same date providing that in case of a dealer or a commission agent who purchases taxable goods from a commission agent to whom permission for payment of lump sum tax is granted under Section 14B and the goods so purchased are not resold with the State then such dealer or the commission agent shall be liable to pay purchase tax on the turn over of such purchases at the prescribed rate. In other words, while purchasing goods from an agent who has availed of the facility of composition of tax, the purchasing dealer would not pay tax on sale of such product as long as the product is not sold within the State. Accordingly, if the assessee had sold the goods within the State or exported from the State, in either case there would have been no tax liability. 6. On 22.05.2006, the assessee had written to the Commissioner of Sales Tax pointing out that the Isabgul purchased by the assessee are sent to Abu Road for processing. The by-product such as Psyllium husk and cat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le tax liability. Though this letter did not contain very clearly certain crucial information, it did bring to the notice of the department that the assessee was sending the goods to Abu Road for processing, receiving only the by-products such as psyllium husk and cattle feed and exporting the goods by raising invoices from Ahmedabad. The department was not acting in an advisory capacity and therefore cannot be faulted for not replying to such a letter. Nevertheless, this letter did bring on record certain information which was relevant and this would mean that there were no clandestine transactions by the assessee. 8. Yet another important aspect of the matter is that the competent authority had carried out provisional assessment on 13.06.2007. This order though short is significant and contains important details such as the total turnover of the assessee, the fact that the Isabgul purchased was transferred to its branch at Abu Road and from where it was being exported. Despite such facts, the competent authority raised no demand of tax on sale of such goods, instead limited the demand to a DEPB benefit of some ₹ 4,75,000 and odd. 9. All these factors when seen cumulat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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