2009 (4) TMI 890 - HC - VAT and Sales Tax

Court affirms exemption for manufacturing goods, dismisses penalty challenge under Act of 1954

The court upheld the decisions of the lower authorities, emphasizing the exemption for goods purchased for manufacturing purposes and dismissed the ... No examination of the matter in its entirety and objectivity - whether the relevant material on record has altogether been ignored? Held that:- No error has been committed by both the authorities below while setting aside the order passed by the assessing authority because, at the time of physical verification, bill and bilty of 10 electric motors were produced for perusal and according to proviso to rule 62A(3), for the goods which are purchased for production there was no requirement of declaration form ST-18A. In this view of the matter, it is obvious from the facts of the present case that electric motors were purchased and were in transit for the purpose of generating electricity for manufacturing thread, therefore, there is no illegality in the orders impugned which may give rise to any question of law to be decided by this court. Moreover, the question of mens rea is totally irrelevant in this case. Thus both the authorities below set aside the order passed by the assessing authority for the reason that goods purchased were required by the respondent dealer for generating electricity to manufacture thread and there is exemption provided under proviso to rule 62A(3), therefore, in this matter there was no requirement of declaration form ST-18A. Tax revision dismissed. Issues:Challenge to judgment by Assistant Commercial Taxes Officer regarding penalty imposition under section 22A(7) of the Act of 1954 for goods not accompanied by necessary documents during transit.Analysis:The revision petition challenges the Rajasthan Tax Board's judgment upholding the Deputy Commissioner (Appeals)'s decision to set aside the penalty imposed by the assessing authority on the respondent company for not having proper documentation during transit. The assessing authority imposed a penalty of Rs. 15,600 under section 22A(7) of the Act of 1954 due to the absence of a bill or bilty of the goods carried in the vehicle, as well as the non-submission of form ST 18-A. The Deputy Commissioner (Appeals) found no mens rea on the part of the assessee for tax evasion, leading to the order being set aside. The Tax Board, Ajmer, affirmed this decision, prompting the revision petition.The petitioner's counsel argued that the authorities below failed to consider the relevant material on record, leading to the imposition of the penalty in accordance with the law. They contended that the orders were based on incomplete examination and lacked objectivity. The petitioner emphasized that the goods lacked the required documents under section 22A of the Act of 1954 during physical verification, justifying the penalty.Conversely, the respondent's counsel argued that the goods, 10 electric motors, were purchased for manufacturing cotton thread and were not intended for sale. They cited rule 62A(3) of the Rules of 1955, which exempts certain goods from the requirement of form ST-18A if purchased for specific purposes like manufacturing or generating electricity. The Deputy Commissioner (Appeals) accepted the respondent's explanation that the goods were for manufacturing thread, and the Tax Board upheld this decision, deeming the penalty unjustified for a minor amount.The court analyzed the proviso to rule 62A(3) exempting goods purchased for manufacturing from the requirement of form ST-18A. It concluded that the electric motors were bought for generating electricity to manufacture thread, falling under the exemption. The court found no error in the decisions of the lower authorities, as the goods were intended for production, not sale, justifying the setting aside of the penalty. The court dismissed the revision petition, emphasizing the irrelevance of mens rea in this context and distinguishing the case from previous judgments cited by the petitioner's counsel.In summary, the court upheld the decisions of the lower authorities, emphasizing the exemption for goods purchased for manufacturing purposes and dismissing the revision petition challenging the penalty imposition.