2003 (9) TMI 739 - HC - VAT and Sales Tax

High Court revises Tribunal's order for penalty assessment, emphasizes accurate calculation under U.P. Sales Tax Act.

Kamla Trust Versus Commissioner of Sales Tax, UP., Lucknow

Kamla Trust Versus Commissioner of Sales Tax, UP., Lucknow - [2006] 146 STC 462 (All) Issues:Violation of section 4-B(2) of the U.P. Sales Tax Act, 1948 - Quantum of penalty under section 4-B(6) for assessment year 1982-83.Analysis:The judgment involves a revision under section 11 of the U.P. Sales Tax Act, 1948 against the Tribunal's order for the assessment year 1982-83. The applicant, a rice manufacturer holding a recognition certificate under section 4-B of the Act, purchased paddy from both registered and unregistered dealers. The applicant availed exemption under section 4-B on all paddy purchases but violated section 4-B(2) by dispatching rice outside the State of U.P. for sale on consignment basis. The assessing authority initiated penalty proceedings and levied a penalty of Rs. 2,25,000, considering the minimum penalty leviable as the tax amount of Rs. 28,63,298.93. The applicant's appeals were dismissed, leading to the revision before the High Court.The applicant contended that there was no default under section 4-B(2) due to purchases from unregistered dealers and argued for the minimum penalty due to the absence of intent. However, the Court found no merit in this argument as the applicant availed exemption on all paddy purchases without paying any tax, as confirmed by the assessing authority. The Court noted that for the assessment year 1982-83, the maximum penalty leviable was double the tax amount as per section 4-B(6) of the Act. The Tribunal justified the penalty of Rs. 2,25,000 based on the understanding that the maximum penalty was three times the tax.The High Court, after hearing the arguments, concluded that the issue of penalty quantum required reconsideration by the Tribunal. The Court directed the Tribunal to reassess the penalty amount, considering the provisions applicable during the relevant year and other relevant factors. Consequently, the revision was allowed in part, setting aside the Tribunal's order for the assessment year 1982-83 and remanding the matter back to the Tribunal for a fresh decision on the penalty quantum.In summary, the judgment addresses the violation of section 4-B(2) of the U.P. Sales Tax Act, 1948 and the quantum of penalty under section 4-B(6) for the assessment year 1982-83. The Court upheld the penalty imposition but directed the Tribunal to reconsider and determine the penalty amount based on the relevant provisions and factors, highlighting the importance of accurate penalty calculation in accordance with the law.