2018 (12) TMI 1232 - HC - VAT and Sales Tax

Court rules penalty unjustified under U.P. Trade Tax Act for lack of intent to evade tax

S/S Colgate Palmolive India Ltd. Versus The Commissioner Commercial Tax, U.P.

The Court ruled in favor of the assessee, holding that the penalty imposed under Section 15A(1)(o) of the U.P. Trade Tax Act, 1948 for the A.Y. 2007-08 ... Imposition of penalty u/s 15A(1)(o) of the U.P. Trade Tax Act, 1948 - no intent to evade payment of tax - Held that:- There was no evidence led by the revenue to establish that non-production of Form-31 at the first instance was a conscious act by the assessee. The further evidence that had been led by the assessee to establish that the transaction was one of stock transfer and was duly disclosed, merited acceptance. The fact that the assessee had filled up Form D-3 under the Haryana Act disclosing the transportation of goods to the statutory authority does appears to have raised presumption in it's favour that the transaction was not proposed to be concealed. Penalty may be imposed under Section 15A(1)(o) of the Act for contravention of Section 28A(6) of the Act, an intention to evade is sine qua non before the goods may be seized, by virtue of section 28A (6) of the Act - In the facts of the present case, there is no finding has been shown to have been recorded as to intention to evade tax. Penalty appears to have been levied merely on account of absence of Form 31 being produced at the first instance, when the goods reached the entry check post at Bhopura. Revision allowed. Issues:Imposition of penalty under Section 15A(1)(o) of the U.P. Trade Tax Act, 1948 for the A.Y. 2007-08 without evidence of intention to evade tax.Detailed Analysis:Issue 1: Imposition of PenaltyThe revision was filed by the assessee challenging the penalty imposed under Section 15A(1)(o) of the U.P. Trade Tax Act, 1948. The Tribunal affirmed the penalty, citing the absence of Form-31 (import declaration form) as a contravention of Section 28A of the Act. However, the assessee contended that the transaction was a stock transfer, supported by documents like stock transfer invoice, lorry receipt, and Form D-3 under the Haryana Act. The Tribunal reduced the penalty but upheld it based on the absence of Form-31.Issue 2: Arguments of the AssesseeThe assessee argued that the disclosure of the transaction as a stock transfer was evident from the documents submitted. They highlighted that the road permit issued under the Haryana Act disclosed the transportation of goods to a statutory authority. The assessee also stated that the import declaration form (Form-31) was produced promptly upon receiving the show-cause notice, negating the need for penalty under Section 15A(1)(o) of the Act.Issue 3: Revenue's SubmissionThe Standing Counsel contended that the non-production of Form-31 amounted to a contravention of Section 28A, justifying the penalty. The revenue emphasized that since the assessee did not produce Form-31, it was in violation of the Act.Issue 4: Court's Analysis and DecisionThe Court noted the lack of evidence to establish that the non-production of Form-31 was a deliberate act by the assessee. It acknowledged that the transaction was disclosed as a stock transfer, supported by documents. Moreover, the Court emphasized that the intention to evade tax is essential before seizing goods under Section 28A(6) of the Act. As no finding of intent to evade tax was recorded, the penalty was deemed unjustified. Referring to previous court decisions, the Court ruled in favor of the assessee, stating that the penalty under Section 15A(1)(o) could not be imposed in this case.ConclusionThe Court answered the question of law in favor of the assessee, allowing the revision and directing the refund of any penalty amount deposited. The judgment emphasized the importance of evidence of intent to evade tax before imposing penalties under the U.P. Trade Tax Act, 1948.