2009 (1) TMI 806 - AT - VAT and Sales Tax

Tribunal upholds lawful seizure of excavator, reduces penalty under VAT Act, emphasizes tax delinquency penalties

The Tribunal affirmed the seizure of the excavator as lawful due to the requirement of a way-bill for entry into West Bengal. The penalty under Section 77 ... Seizure of Volvo excavator - penalty order - Held that:- In the instant case admittedly, the vehicles were brought within the West Bengal without any way-bill for the purpose of using those in transport business. Therefore, such vehicles cannot be the 'personal effects' of the petitioner for the purpose of exemption under rule 210 of the Rules 1995. Hence, in our opinion, the vehicles since were not 'personal effects' the production of way-bill at the check-post before the entry within the West Bengal was necessary.' It is a capital asset which could be sold or used in works contract.The point No. (i) is thus answered in the negative and the act of seizure is affirmed. The petitioner produced the consignment note and invoice showing payment of Central sales tax. So the contravention of the regulatory provision of the taxing law was not deliberate. The contravention not being deliberate on consideration of the petitioner's sufferance of loss due to detention of the goods, the penalty should be reduced to one per cent of the approximate saleable value of the goods as assessed which comes to ₹ 54,540. The bond furnished by the petitioner stands discharged. The bank guarantee furnished by the petitioner be released within a month on realization of the reduced penalty amount. Issues:1. Seizure of Volvo excavator by Sales Tax Officer.2. Penalty order under section 77 of the VAT Act, 2003.Analysis:1. Seizure of Volvo Excavator:The petitioner, an unregistered dealer, brought a newly purchased excavator from outside West Bengal for use in his business. The excavator was seized by the Sales Tax Officer at a check-post for non-production of an endorsed way bill. The petitioner argued that the excavator was his personal effect and no way-bill was necessary. The Tribunal analyzed the definition of 'personal effects' under the WBVAT Rules, 2005, and concluded that the excavator was not a personal effect but a capital asset. As it was not a personal effect, the production of a way-bill was necessary before entry into West Bengal. Therefore, the seizure was deemed lawful.2. Penalty Order under Section 77 of the VAT Act, 2003:The penalty was imposed for non-production of the way-bill at 30% of the invoiced price and cost of transportation. The Tribunal considered the provisions of the law and upheld the valuation done by the Sales Tax Officer. The petitioner argued that since he had produced the invoice and consignment note, there was no intention to evade tax. However, the Tribunal referred to previous judgments emphasizing that intention or mens rea is not essential for imposing a penalty for tax delinquency. The penalty was reduced to one percent of the approximate saleable value of the goods due to the petitioner's sufferance of loss. The Tribunal held that the penalty was justified due to the possibility of tax evasion and the contravention of regulatory provisions.In conclusion, the Tribunal affirmed the seizure of the excavator and modified the penalty order, reducing it to Rs. 54,540. The bond furnished by the petitioner was discharged, and the bank guarantee was to be released upon realization of the reduced penalty amount. The judgment was agreed upon by both the Judicial Member and the Technical Member of the Tribunal.