2018 (12) TMI 231 - HC - VAT and Sales Tax

Court rules penalty on assessee illegal due to seller's penalty; assess only after satisfaction & hearing.

M/s Shubham Jewelers Versus Commercial Tax Tribunal Meerut

M/s Shubham Jewelers Versus Commercial Tax Tribunal Meerut - TMI Issues:1. Validity of penalty imposition on the assessee under Section 54(1)(14) of U.P. VAT Act, 2008.2. Jurisdiction to impose penalty on the assessee after penalty imposed on the seller.3. Interpretation of Section 54(1)(5) for penalty imposition in the case of import of goods.Analysis:1. The revision was filed against the Commercial Tax Tribunal's order under Section 54(1)(5) of the U.P. Value Added Tax Act, 2008. The questions of law admitted for revision focused on the validity of penalty imposition on the assessee.2. The assessee imported goods from a dealer in Rajasthan, and the goods were seized by the revenue authorities. A penalty was first imposed on the seller, and later on the assessee. The revision contended that penalty could only be imposed once, and the penalty on the seller exhausted the authority to impose further penalties on the assessee.3. The revenue authorities argued that penalty imposition on the assessee was valid under Section 54(1)(5) of the Act, which allows penalties on any person involved in infringing the law. The Act provides discretion to impose penalties on purchasers, sellers, or both, and the penalty could be imposed on each guilty party.4. The court analyzed Section 54(1)(5) and emphasized that penalties could be imposed after the Assessing Officer's satisfaction of a wrong committed by any dealer or person. The satisfaction must be recorded in writing after giving the concerned person a reasonable opportunity to be heard.5. The court found that the penalty imposed on the seller excluded the assessee, and the Assessing Officer's satisfaction was solely against the seller. Once satisfaction was recorded against the seller, no further penalty could be imposed on the assessee for the same transaction.6. The court noted that while seizure proceedings are summary in nature and may not bind the Assessing Officer, any intent to impose penalties on another party must be expressed before passing the penalty order. Since no notice was issued to the assessee during the penalty proceedings against the seller, the penalty imposed on the assessee was deemed illegal.7. The court allowed the revision, answering the questions of law in favor of the assessee and against the revenue. Consequently, the penalty imposed on the assessee was deleted.By thoroughly analyzing the provisions of the U.P. VAT Act, the court clarified the jurisdiction and limitations regarding penalty imposition, ensuring fairness and adherence to legal procedures in tax matters.