1994 (10) TMI 276 - HC - VAT and Sales Tax

Court quashes penalty for technical breach under Sales Tax Act, stresses evidence of intent

The court allowed the revision petition and quashed the penalty imposed under section 15-A(1)(o) of the U.P. Sales Tax Act for non-compliance with rule ... - Issues:Levy of penalty under section 15-A(1)(o) of the U.P. Sales Tax Act, 1948 for non-compliance with rule 87-A regarding import of goods without declaration.Analysis:The revision petition challenged the order of the Sales Tax Tribunal dismissing the Second Appeal against the penalty imposed for importing goods without complying with rule 87-A. The revisionist contended that the goods were duly recorded in the books of account, and there was no intention to evade sales tax. However, the authorities did not accept this argument, stating that mens rea is not required for levying penalty under section 15-A(1)(o). The revisionist argued that since the purchases were accounted for and there was no dishonest intention, no penalty should be imposed, citing precedents where penalties were not levied for similar cases.The court considered the dealer's actions and noted that the goods were likely imported for use as raw material. It highlighted that the Revenue did not establish any tax avoidance resulting from the non-compliance with rule 87-A. The court emphasized that the authorities did not prove deliberate defiance of the law or contumacious behavior on the dealer's part. Referring to legal precedent, the court stated that penalties should not be imposed for technical or venial breaches without evidence of contumacious or dishonest conduct. In this case, the court found no indication of such conduct and deemed it a technical breach without justifying a penalty.Ultimately, the court allowed the revision petition and quashed the penalty, emphasizing that it is essential for Revenue officers to consider the circumstances of each case and not impose penalties unjustifiably. The judgment underscored the importance of maintaining taxpayer goodwill and cautioned against imposing penalties without sufficient grounds.This comprehensive analysis of the judgment highlights the key legal arguments, precedents cited, and the court's reasoning leading to the decision to quash the penalty in question.