Intention to evade tax required for VAT penalty; incomplete Form 38 alone cannot sustain penal action.

Incomplete Form 38, by itself, was held insufficient to justify penalty under the U.P. Value Added Tax Act, 2008. The Court reiterated that the earlier Division Bench view requiring a finding of intention to evade tax continued to apply under the VAT regime. It noted that an incomplete form may be relevant for seizure or detention of goods, but penalty under Section 54 requires notice, consideration of the material on record, an opportunity of hearing, and a recorded satisfaction that tax evasion was intended. The writ petition was dismissed, and the petitioner was relegated to the statutory remedy before the authority.

---

---

Issues: Whether, in proceedings under the U.P. Value Added Tax Act, 2008, incomplete Form 38 by itself justified penalty or whether the authority was required to record a finding of intention to evade tax before imposing penalty.

Analysis: The Court held that the earlier Division Bench view requiring intention to evade tax continued to govern the field even after enforcement of the VAT regime. It reiterated that incomplete Form 38 may be relevant for seizure or detention of goods, but it cannot by itself sustain a penalty. For penalty under Section 54, the authority must issue notice and then, on the basis of material on record and after affording an opportunity, record a satisfaction that there was an intention to evade payment of tax. The Court also noted that the writ petitioner should ordinarily pursue the statutory remedy of showing cause before the authority concerned.

Conclusion: Incomplete Form 38 alone was held insufficient for penalty, and proof of intention to evade tax was held necessary. The writ petition was dismissed and the petitioner was relegated to the statutory remedy.

---