2009 (4) TMI 879 - HC - VAT and Sales Tax

Court upholds Tribunal's decision on VAT penalty appeal; lack of evidence of tax evasion deemed not wrongdoing.

State of Punjab and another Versus Hindustan Steel Industries

The Court dismissed the appeal challenging a penalty imposed under section 51(7)(c) of the Punjab Value Added Tax Act. The Tribunal's decision to set ... Penalty imposed under section 51(7)(c) of the Punjab Value Added Tax Act - Held that:- In the absence of any evidence with regard to evasion of tax it cannot be concluded that mere change of route would lead to an inference that there was an attempt to evade tax. We are further of the view that the route has not necessarily been altered because if the goods vehicle had commenced its journey from Mandi Gobindgarh it was bound to cross LudhianaPhagwara-Nawanshahar-Balachaur. There was no necessity for the goods vehicle to reach Ropar. Therefore, in the face of the aforesaid findings of fact no substantial question of law would emerge from the order of the Tribunal under section 68(1) of the Act warranting admission of the appeal. Accordingly the appeal fails and the same is dismissed. Issues:Appeal under section 68 of the Punjab Value Added Tax Act, 2005 challenging penalty imposition under section 51(7)(c) based on interception of goods vehicle and documents produced.Analysis:The State filed an appeal challenging the penalty imposed under section 51(7)(c) of the Act based on the interception of a goods vehicle at village Kakowal Majri. The Tribunal set aside the penalty after finding that all required documents were shown by the driver during the interception. The Tribunal noted that the goods were being transported under a sale invoice to a firm in Himachal Pradesh, and all necessary documents, including computerized account books, were produced with no discrepancies found. The Tribunal emphasized that the non-production of the cash book did not imply the transaction's non-genuineness or the sale invoice being bogus.The Tribunal further highlighted the lack of enquiry from the consignee and concluded that the mere change of route did not automatically indicate an attempt to evade tax. The Tribunal's findings emphasized that no evidence suggested the transaction was not genuine, and the sale invoice was not bogus. The Tribunal also noted that the route taken by the goods vehicle did not necessitate reaching a specific destination, thus rejecting the presumption of tax evasion based solely on the change of route.Upon hearing both parties, the Court found no grounds for interference with the Tribunal's factual findings. It was established that all required documents were presented, and no discrepancies were found in the documents provided by the respondent-Department. The Court concurred with the Tribunal's view that the lack of evidence regarding tax evasion precluded the assumption of evasion based solely on a route deviation. The Court concluded that no substantial question of law arose from the Tribunal's order, leading to the dismissal of the appeal under section 68(1) of the Act. Consequently, the appeal was dismissed, and no order was deemed necessary regarding the condonation of delay in filing the appeal.