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TMI Blog2019 (4) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... had not supplied the full particulars as required by sub-section 7 of Section 22 of the Act, in view of prohibition contained in Sub-section 8 of Section 22 of the Act, so as to entail imposition of penalty?" 4. The admitted facts in this regard are, during the A.Y. 2008-09, the assessee had amongst others performed 68 transactions of sale, against different Sale Invoices. These transactions gave rise to penalty proceedings against the assessee/appellant under Section 54(1)(5) of the U P VAT Act, 2008 (hereinafter referred to as the 'Act'). 5. Section 54(1)(5) of the Act, reads as under: "Section 54. Penalties in certain cases.- (1) The assessing authority, if he is satisfied that any dealer or other person, as the case may, has committed the wrong described in column 2 of the table below, it may, after such inquiry, if any, as it may deem necessary and after giving dealer or person reasonable opportunity of being heard, direct that such dealer or person shall, in addition to the tax, if any, payable by him, pay by way of penalty, a sum as provided in column 3 against the same serial no. of the said table: Sl. No. Wrong Amount of penalty (1) (2) (3) 1. --- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered dealers, the appellant should have issued the Tax Invoice. In not doing so, it had acted in collusion with the purchasing dealers and deprived the revenue of tax on value addition. 11. Sri Piyush Agrawal, learned counsel for the appellant submitted, a Tax Invoice could be issued only to a registered purchasing dealer. For that purpose, by virtue of Section 22 (7) of the Act, the obligation to make available to the seller, the details of name, address and TIN, was on the purchasing dealers. Unless those details had been first made available by the purchasing dealer, the assessee/selling dealer was helpless and he could not have issued the Tax Invoice. In fact, if such Tax Invoice had been issued (without such details), it would have been null and void and it may have further exposed the selling dealer to penal consequences. He would also submit, the selling dealer/assessee was not in a position to refuse to perform the sale transaction unless the purchaser first made available to it the details required for the purpose of issuance of Tax Invoice. On the contrary, in absence of those details being made available, the selling dealer was obligated to issue a Sale Invoice, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson wronged, not limited to the damages suffered. (See Aiyar, P. Ramanatha: The Law Lexicon, 2nd Edn., p. 1431.)" 15. A plain reading of Section 54(1), Table entry 5 of the Act suggests, penalty may be imposed on the selling dealer or the purchasing dealer for non-issue of either the Tax Invoice or the Sale Invoice or the Purchase Invoice. The circumstances in which such penalty may be imposed on the selling dealer are contained in sub-clause (i) of Table entry 5 being, either upon his failure to issue a Tax Invoice or a Sale Invoice or upon his deliberate non-issuance of the those documents. On the other hand, the circumstances in which penalty may be imposed on a registered purchasing dealer are contained in sub-clauses (ii) and (iii) of that Table entry being, either upon his deliberately not obtaining a Tax Invoice from a registered dealer, on purchase made from the latter [(under sub-clause (ii)], or upon non-issuance of a Purchase Invoice to an unregistered selling dealer - on purchase made from such dealer [(under sub-clause (iii)]. However, no penalty may be imposed on a purchasing dealer in case of non-issue of the Sale Invoice (to him), by that registered selling dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement for issuance of a Tax/Sale Invoice. Further, if such person is not required to do anything in this regard, his inaction, even if proven, may invite a penal action on the selling dealer, in the event of non-issue of a Tax Invoice. In the latter construction, the word "deliberately" used in that sub-clause may be rendered redundant or superfluous, which construction of the statute must, in the first instance, be avoided. Therefore, the nature of obligation and duty cast by the Act with regard to issuance of a Tax invoice; a Sale invoice and; Purchase invoice calls for a deeper and careful scrutiny. 21. Under section 2(aj) of the Act, the term "Tax Invoice" has been defined to mean a "bill or a cash memo issued in the prescribed form and manner by a registered selling dealer to a registered purchasing dealer" or to certain other specified persons. However, Sale Invoice is not defined under the Act. The incidence and levy of tax arise under sections 3, 4 and 5 of the Act, section 22 thereof and the relevant Rules framed under the Act, relate to issuance of Tax Invoice, Sale Invoice and Purchase Invoice. 22. Section 22 of the Act reads as under: "22. Tax invoice, Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oice in respect of sales made by him, issue to the purchaser sale invoice in the prescribed manner containing such particulars as may be prescribed. (5) Every dealer referred to in sub-section (1) shall charge amount of tax payable separately on every tax invoice. However, the dealer referred in sub-section (3) may charge tax separately. (6) Office copy of tax invoice, sale invoice, as the case may be, prepared by the selling dealer and copies of tax invoice, sale invoice, as the case may be, received by the purchasing dealer shall be preserved by them for the period provided under sub-section (3) of section 21. (7) Every dealer, while making purchase of any goods from a registered dealer, shall give his name, address and Taxpayers' Identification Number, if any, to the selling dealer. (8) The dealer, making sale of goods to any purchaser referred to in sub-section (1), shall not issue tax invoice to such purchaser unless the purchaser has furnished his name, complete address and Taxpayers' Identification Number. (9) Where a dealer liable to pay tax makes purchase of any taxable goods from a person other than a registered dealer and if the person selling such goods does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on every Tax Invoice, in case of Sale Invoice, tax may or may not charge tax separately. 27. Rule 44(1) of the Rules framed under the Act, prescribes the details to be filled up in the Tax Invoice. Similarly, Rule 44(2) of the Rules prescribes the details to be filled up in the Sale Invoice. Then, the first proviso to sub-Rule 2 provides, in the event of sales made to unregistered dealers, in excess of certain value, other than by account payee cheque, the selling dealer may obtain and retain a copy of the identification proof of the purchaser. 28. Thus, whether a registered selling dealer would issue a Tax Invoice or a Sale Invoice does not depend on the free choice of the contracting parties but, it is predetermined/prescribed by the Act/law. In case of taxable and vat-able goods sold by a dealer (not admitted to compounding), primarily, that obligation hinges on whether the selling and the purchasing dealers are registered dealers or unregistered dealers. While, a Tax Invoice would have to be necessarily issued when a sale is performed between two registered dealers, a Sale Invoice may be issued when the sale is performed by a registered dealer to an unregistered dealer or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arn of those facts, on his own and therefore, he may never be saddled with that obligation. It would be wholly unreasonable to expect him to either have the industry or the requirement to make such exact inquiries, while conducting his business of trading in goods. To cast such an obligation on the selling dealer would be to impose an unreasonable condition and in the context of trading activities and also the value added scheme of taxation, an unnatural condition as may, if allowed to exist, obstruct free trade in goods. 34. Facts specified under section 22(1)(i) to (v) and 22(7) of the Act are special facts known to the person to whom they pertain i.e. the purchasing dealer. Uptill after the purchasing dealer discloses those facts to the selling dealer or unless those facts are known to the selling dealer from before - arising from past dealings or other circumstance, the selling dealer may remain oblivious to those special facts in the knowledge of the purchasing dealer. In the absence of such a disclosure being made by the purchasing dealer, in the context of the statutory provisions as noted above, the selling dealer may assume, such a purchaser to be an unregistered dealer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at case there would be no breach on part of the selling dealer in not issuing a Tax Invoice. No penalty shall be imposed on the registered selling dealer for not issuing a Tax Invoice. [clause (i) of section 54(1)(5) of the Act read with section 22(1) (i) to (v) and section 22(7) & (8) of the Act] and Rule 41(1) and Rule 41(2) of the Rules] (c) However, in such circumstance [noted in point (b) above], or while transacting a sale to an unregistered dealer, if the registered selling dealer fails to issue a Sale Invoice, it may attract penalty on him for the breach of failure to issue a Sale Invoice. [clause (i) of section 54(1)(5) of the Act read with section 22(1) (i) to (v), section 22(3) and section 22(7) & (8) of the Act]. (d) also, in the fact scenario noted in point (b) above, if the purchasing dealer though registered or one covered under section 22(1)(i) to (v) of the Act, did not disclose such fact/s and details to the registered dealer he may be penalised for the breach of deliberately not obtaining a Tax Invoice [under clause (ii) of section 54(1)(5) read with section 22(7) of the Act]. (e) if however, it is found, the registered selling dealer had colluded with the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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