9911796707
TMI Blog2024 (9) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... by the manufacturer, who is placed in Himachal Pradesh where the excise duty is exempted. In the circumstances, the valuation of goods i.e. purchase price for any person would be comparatively much lower than that of other places where excise duty is payable. It is also not a case of the State authorities that the invoices were different for the appellant in comparison to other distributors. Once there is no finding in this regard, a presumption cannot be drawn that the invoices were under valued merely because MRP rate mentioned on the product was on a much higher side. So far as the dealer is concerned, namely the appellants, they would further sell the goods to various distributors. If the sale price is comparatively low, the case of tax evasion would arise - to presume that there is an evasion of tax at the level of the person who is a dealer going to further sell the goods to a distributor, is a farfetched presumption. The action of the respondents imposing penalty on such a presumption would be an exercise of arbitrary power - the question is answered in favour of the appellants. Whether on the facts and in the circumstances of the case, the learned Tribunal was justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(b) of the Punjab VAT Act 2005 (hereinafter to be referred as the Act of 2005 ), which reads as under:- 51. Establishment of information collection centres or check posts and inspection of goods in transit:- (7) (a). The officer detaining the goods under sub-section (6), shall record the statement, if any, given by the consignor or consignee of the goods or his representative or the driver or other person Incharge of the goods vehicle and shall require him to prove the genuineness of the transaction before him in his office within the period of seventy-two hours of the detention. The said officer shall, immediately thereafter, submit the proceedings alongwith the concerned records to the designated officer for conducting necessary enquiry in the matter; (b) The designated officer shall, before conducting the enquiry, serve a notice on the consignor or consignee of the goods detained under clause (a) of sub-section (6), and give him an opportunity of being heard and if, after the enquiry, such officer finds that there has been an attempt to avoid or evade the tax due or likely to be due under this Act, he shall, by order, impose on the consignor or consignee of the goods, a penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statement, if any, given by the owner of the goods or his representative or the driver or other person incharge of the goods vehicle or vessel and shall require him to produce proper and genuine documents as referred to in sub-section (2) or sub-section (4), as the case may be, before him in his office on a specified date on which date the officer shall submit the proceedings along with the connected records to such officer as may be authorised in that behalf by the State Government for conducting necessary enquiry in the matter. The said officer shall, before conducting the enquiry, serve a notice on the owner of the goods and give, him an opportunity of being heard and if, after the enquiry. such officer finds that there has been an attempt to evade the tax due under this Act, he shall, by order, impose on the owner of the goods a penalty not exceeding one thousand rupees or twenty per centum of the value of the goods, whichever is greater, and in case he finds otherwise he shall order the release of the goods . 4. The relevant extract from the judgment of Full Bench of this Court in Mool Chand Chuni Lal (supra) are quoted as under:- 4. It will be noticed at once that Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act before the liability to pay the tax has arisen. A scheme or device to evade the tax may start operating long before the actual liability to pay the tax arises. As soon as the scheme or device, is set in motion there is an attempt to evade the tax due under the Act and it will not be necessary to wait till the liability to pay the tax actually arises. If an attempt to evade tax is discovered earlier, the liability to be subjected to penalty is straightaway attracted. In our view, there is no repugnancy between the provision for levy of penalty under Section 14-B (7) when an attempt to evade the tax is discovered and the general scheme of the Act which provides for the levy of tax at the point of first sale within the State. 5. In Xcell Automation vs Government of Punjab (2007) 5 VST 308, a Division Bench of this Court having noticed the Full Bench judgment of this court in Mool Chand Chuni Lal (supra) took into consideration the law laid down by Hon ble the Supreme Court in Sodhi Transport Co. vs State of U.P. (1986) 62 STC 381 (SC); Delite Carriers (Regd.) vs State of Haryana (1990) 77 STC 170 (SC); and also considered the judgment in Commissioner of Sales Tax vs P.T. Enterpri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the cast iron castings carried by it were not cast iron liable to tax at the first stage, could not be held to be requiring no adjudication or frivolous or mala fide. It is not relevant as to what is the interpretation finally taken on this subject and we do not express any conclusive opinion at this stage but having not concealed any information, having furnished all the information, having placed reliance on the judgments of the honourable Supreme Court and since the matter did require serious consideration, adjudication by the checkpost officer was not called for. Invocation of jurisdiction for imposing penalty on the allegation of attempt at tax evasion in such a situation was not permissible. 10. In the present case, the appellant was duly registered under the Punjab VAT Act 2005 (as applicable to UT Chandigarh) and engaged in purchase and distribution of medicines. It purchased two types of medicines, namely, QMOL and MG from M/s R. K. Laboratories Private Limited, Nalagarh, for further selling to various distributors in Chandigarh. The goods were in transit from Hiamchal Pradesh to Chandigarh when the same were checked at Chandigarh. The driver produced the requisite in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 2%. Since the imposition of excise tax exempted in the State of Himachal Pradesh, presumption cannot be drawn on the said basis. 13. Learned counsel for the appellants has also relied on Division Bench judgment of this Court in C WP No. 1576 of 2002 Gujarat Ambuja Cements Limited and others vs the State of Haryana decided on 30.08.2007, to submit that tax applies only when the actual sale occurs. He has also relied on State of Rajasthan and another vs Rajasthan Chemists Association (2006) 6 SCC 773 , where a similar issue arose and the Supreme Court held that the tax was to be based on actual sale and not on the anticipated future sales. 14. Learned counsel for the respondents have relied on the judgment in Mool Chand Chuni Lal (supra) and also on the judgment passed by Allahabad High Court in M/s Radha Fragrance vs Union of India and 4 others 2023 (97) GST 1015 . The Allahabad High Court held that if there is a gross under valuation of goods, the conclusion can be drawn that the goods were under valued to evade tax. 15. Learned counsel for the respondents have supported the order passed by the authorities and submitted that the Assistant Commissioner of Excise Taxation had calc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson would be comparatively much lower than that of other places where excise duty is payable. It is also not a case of the State authorities that the invoices were different for the appellant in comparison to other distributors. Once there is no finding in this regard, a presumption cannot be drawn that the invoices were under valued merely because MRP rate mentioned on the product was on a much higher side. So far as the dealer is concerned, namely the appellants, they would further sell the goods to various distributors. If the sale price is comparatively low, the case of tax evasion would arise. Further it is to be noticed that the price of a medicine is not necessary on the basis of the MRP as purchased by the retailer which is on two stages ahead as the dealer would sell the product to a distributor, who would further sell it to a whole seller and subsequently from whole seller the product will be further transferred to the retailer. Each stakeholder would keep their own margin of profit. Thus, to presume that there is an evasion of tax at the level of the person who is a dealer going to further sell the goods to a distributor, is a farfetched presumption. The action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
