2013 (3) TMI 400 - HC - VAT and Sales Tax

High Court Reinstates Appellate Authority Decision, Finds Penalty Unwarranted

M/s Atlas Laboratories & Pharmaceuticals Ltd., Versus The Commissioner, Commercial Tax, Uttarakhand, Dehradun

The High Court allowed the revision, setting aside the Tribunal's judgment and reinstating the original decision of the Appellate Authority. The Court ... Non registration under sales tax - Plant and machinery imported by the assessee though under Form ‘C’ but without registration - penalty levied - Held that:- As the assessee had registration under the Central Sales Tax Act for importation of the subject plant and machinery. Assessee, therefore, committed no offence while importing the subject plant and machinery. If the assessee did not commit any offence while importing the subject plant and machinery, merely because the assessee held out that it has not applied for registration of plant of machinery under the Central Sales Tax Act, no prudent person can proceed on the basis that the assessee committed any offence and, accordingly, is liable to be penalized. Issues:1. Registration under Central Sales Tax Act and State VAT Act for imported items.2. Penalty imposition for non-registration under Central Sales Tax Act.3. Applicability of penalty for importation of plant and machinery.4. Accuracy of information provided to Assessing Officer.5. Reduction of penalty by the Appellate Authority.6. Decision of the Tribunal on penalty imposition.Analysis:1. The case involved the registration of the assessee under the Central Sales Tax Act and State VAT Act for imported items. The assessee had imported various items using Form 'C' issued by the Department during the assessment year 2006-2007. The assessment was conducted in 2010, where the assessee was asked to demonstrate its registration under the Central Sales Tax Act for the imported materials.2. The assessee initially admitted to not applying for registration under the Central Sales Tax Act for plant and machinery imported under Form 'C'. Consequently, a penalty was imposed on the assessee for importing these items without proper registration. However, upon appeal, it was revealed that the assessee was indeed registered under the Central Sales Tax Act for the importation of plant and machinery, as evidenced by the original registration certificate.3. The Appellate Authority determined that while the plant and machinery were covered under the registration, other imported materials were not. Therefore, the penalty was reduced to only cover the items not included in the registration. The Tribunal, however, upheld the penalty imposition based on the incorrect information provided by the assessee to the Assessing Officer regarding the registration status of the plant and machinery.4. It was established that the assessee had the necessary registration for importing the plant and machinery, indicating no offense was committed in their importation. The Tribunal's decision to impose a penalty based on the incorrect information provided by the assessee was deemed unjustified.5. The Appellate Authority's decision to reduce the penalty only for the items not covered under the registration was considered appropriate, as it aligned with the actual registration status of the assessee under the Central Sales Tax Act.6. Ultimately, the High Court allowed the revision, setting aside the Tribunal's judgment and reinstating the original decision of the Appellate Authority. The Court concluded that penalizing the assessee for importing plant and machinery, for which it was duly registered, was unwarranted based on the incorrect information provided during the assessment.