2013 (9) TMI 984 - HC - VAT and Sales Tax

Court upholds decision, stresses proper enquiry before penalty. Lack of evidence renders penalty unjustified.

The High Court dismissed the revision petition, emphasizing the necessity of a proper enquiry before imposing a penalty under section 78(5) of the Act. ... Contravened section 78(2) of the Rajasthan Sales Tax Act, 1994 - The assessing authority after taking into account the documents submitted at the time of checking felt satisfied that the nature of transaction is not a consignment of goods as stock transfer, simplicitor and found that the same is a inter-State sale of goods - Held that:- On close scrutiny of the matter, when the documents were available at the time of checking, without making enquiry about the genuineness of documents, so as to conclude that these are spurious or false documents, obviously it was not desirable from the assessing authority to conclude that it is a case of violation of section 78(2) of the Act of 1994. Therefore, in these circumstances, invoking the provisions contained under section 78(5) for imposition of penalty is obviously out of question. In this view of the matter, law laid down by this court in Juharmal Badri Lai's case[2005 (11) TMI 456 - RAJASTHAN HIGH COURT] in my considered opinion is fully applicable in the facts and circumstances of the instant case. Thus, no question of law is involved in this revision petition, and consequently, no interference with the impugned order passed by learned Tax Board is warranted. - there is no force in the revision petition - Decided against Revenue. Issues:Violation of section 78(2) of the Rajasthan Sales Tax Act, 1994 - Imposition of penalty under section 78(5) - Revision petition challenging the impugned judgment and order dated August 18, 2011, passed by the learned Tax Board, Ajmer - Appeal by the respondent-assessee allowed by the Deputy Commissioner, Appeals, Commercial Taxes, Kota - Appeal by the petitioner-Revenue dismissed by the learned Tax Board - Adjudication of whether penalty imposition was justified.Analysis:1. Violation of Section 78(2) of the Act:The case involved a situation where goods were being transported from Bundi to Punjab, and the assessing authority concluded it was an inter-State sale of goods, not a consignment or stock transfer. The petitioner argued that the nature of the transaction constituted a violation of section 78(2) of the Act, leading to the imposition of a penalty under section 78(5). However, the respondent contended that the documents available at the time of checking satisfied the requirements of section 78(2), and no penalty should be imposed without proper enquiry.2. Imposition of Penalty under Section 78(5):The appellate authority allowed the appeal by the respondent-assessee, finding no grounds for penalty imposition under section 78(5). The Tax Board concurred with this decision, leading to the petitioner-Revenue challenging the judgment. The petitioner argued that once a violation of section 78(2) is established, penalty imposition is mandatory under section 78(5), emphasizing the need for a proper enquiry before penalty imposition.3. Revision Petition and Judicial Review:The High Court examined the matter, considering the arguments presented by both parties. The court referred to a previous decision highlighting the importance of holding a proper enquiry before imposing a penalty under section 78(5). The court noted that without establishing the documents as false or forged, penalty imposition was not justified. The court concluded that no question of law arose in the case, and the impugned order by the Tax Board did not warrant interference.In summary, the High Court dismissed the revision petition, emphasizing the necessity of a proper enquiry before imposing a penalty under section 78(5) of the Act. The court found that in the absence of evidence proving the documents as false or forged, penalty imposition was not justified, and no legal grounds existed for interference with the Tax Board's decision.