2015 (12) TMI 529 - HC - VAT and Sales Tax

High Court Upholds Penalty for Tax Documentation Discrepancies

M/s Eastman International Versus State of Punjab And Another

The High Court upheld penalty orders imposed under Section 51(7)(b) of the Punjab Value Added Tax Act on a registered dealer for discrepancies in ... Detention of goods - Evasion of tax - Transportation of goods by ingenuine documents - Held that:- After considering the entire material on record and the documents, it has been recorded that the documents accompanying the goods were not genuine. The goods which were intercepted by the detaining officer were meant for trade. The dealer had made an attempt to evade the payment of tax by transporting the goods by ingenuine documents. - Though the quantity in both the bills was the same but the rates and amounts varied. It was concurrently concluded by all the authorities that the transaction was an attempt to evade tax on the part of the appellant. - The only attempt on the part of the learned counsel for the appellant is to reappraise the evidence. We do not find that the findings of fact recorded by the authorities below are illegal or perverse in any manner. The view taken by them is a plausible view which cannot be faulted. No substantial question of law arises - Decided against Assessee. Issues:1. Appeal under Section 68 of the Punjab Value Added Tax Act, 2005 against penalty orders.2. Justification of penalty for genuine documents and bonafide intention.3. Imposition of penalty for minor discrepancies despite proper compliance.4. Accounting of rejected goods as per legal provisions.5. Penalty for avoiding unnecessary expenses in transportation.6. Requirement to reload rejected goods and transport them.7. Challenge to lower courts' orders as perverse and contrary to evidence.Analysis:1. The appellant filed an appeal under Section 68 of the Punjab Value Added Tax Act, 2005 against penalty orders dated 29.10.2009, 26.11.2012, and 25.11.2013. The appellant raised substantial questions of law regarding the justification of penalty for genuine documents, minor discrepancies, proper accounting of rejected goods, avoiding unnecessary expenses, reloading rejected goods, and the correctness of lower courts' orders.2. The appellant, a registered dealer engaged in general order supplies, sold raw rubber to a buyer. The goods were detained during transportation by the Excise and Taxation Officer, leading to penalty imposition under Section 51(7)(b) of the PVAT Act. The appellant's contention was that there was no intention to evade tax as rejected goods were sold to another buyer.3. The authorities found discrepancies in the documents accompanying the goods, indicating an attempt to evade tax. Both bills had notes of goods being rejected, although the quantity was the same. The Tribunal affirmed the penalty, stating that the discrepancies were significant, and the appellant's explanations were not convincing.4. The appellant argued for a reevaluation of the evidence, challenging the findings of the lower authorities. However, the High Court upheld the penalty, stating that the lower courts' conclusions were reasonable and not legally flawed. No substantial question of law was found, leading to the dismissal of the appeal.5. The High Court's decision emphasized the importance of genuine documentation and compliance with tax laws to avoid penalties. The judgment highlighted the need for dealers to accurately account for goods, follow proper procedures, and avoid actions that may raise suspicion of tax evasion. The case serves as a reminder of the consequences of non-compliance and the significance of transparency in business transactions.