2011 (11) TMI 574 - HC - VAT and Sales Tax

Court rules in favor of consignor in tax penalty case under section 78(5) Act of 1994.

The court ruled in favor of the consignor, holding that no penalty could be imposed under section 78(5) of the Act of 1994. It was determined that the ... Seizure of goods - contravention of section 78(2) - Non availability of ST-18A form - Held that:- goods in fact were being supplied and indeed supplied to the Principal Medical Officer, Tonk and Chief Medical and Health Officer, Tonk. It is also not in dispute that the form 18A was to be supplied by the consignee-Principal Medical Officer, Tonk and Chief Medical and Health Officer, Tonk recording the use of the goods in issue by the Department of the Government of Rajasthan. There was not and could not be any intent to evade tax in the facts of the case and in fact no such allegation was even made. The consignee Department was to supply the ST-18A form which it did not for which no penalty can be levied on the non-petitioner. Consequently, no penalty under section 78(5) of the Act of 1994 could have been levied and was rightly so held by the Tax Board. decided against Revenue. Issues:1. Contravention of section 78(2) of the Act of 1994 - Seizure of goods and penalty proceedings.2. Impleadment of consignor in the proceedings.3. Non-supply of ST-18A form by the consignee - Liability for penalty under section 78(5) of the Act of 1994.Analysis:1. The case involved the seizure of goods and initiation of penalty proceedings under section 78(4) of the RST Act due to the contravention of section 78(2) of the Act of 1994. The goods, pillows of foam, were being transported without the required ST-18A form, leading to the seizure and penalty proceedings against the goods incharge and driver of the vehicle.2. During the proceedings, an application for impleadment was made by one Balveer Singh Tyagi on behalf of the consignor. The consignor argued that the goods were legitimately supplied to the Principal Medical Officer and Chief Medical and Health Officer of Tonk, with no intent to evade tax. It was contended that the State Government's failure to provide the necessary ST-18A form should not result in penalizing the consignor for the lack of documentation.3. The court examined the facts and confirmed that the goods were indeed supplied to the intended government departments without any tax evasion motive. It was established that the consignee, being a government department, was responsible for providing the ST-18A form, which they failed to do. As a result, the court held that no penalty could be imposed on the consignor under section 78(5) of the Act of 1994. The court upheld the decision of the Rajasthan Tax Board, stating that no error was committed in dismissing the revision petition, as there was no merit in challenging the order.This judgment clarifies the importance of compliance with statutory requirements in the transportation of goods and emphasizes the responsibility of the consignee, especially when dealing with government departments, in providing necessary documentation to avoid penal consequences for the consignor.