Tax invoice penalty under VAT law depends on purchaser disclosure and proof of deliberate breach before penalising the seller.

Penalty under Section 54(1)(5) of the U P VAT Act, 2008 is attracted only when its statutory ingredients are clearly proved. A registered selling dealer is not liable for not issuing a tax invoice where the purchaser has failed to furnish the name, address and TIN required under Section 22(7), because Section 22(8) prevents the seller from issuing a tax invoice unless those particulars are supplied. In such circumstances, the seller may treat the purchaser as unregistered and issue a sale invoice instead. The revenue must also establish knowledge of the purchaser's registered status, collusion, or some deliberate breach before penalty can be imposed.

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Issues: Whether penalty under Section 54(1)(5) of the U P VAT Act, 2008 could be sustained against a registered selling dealer for not issuing a tax invoice where the purchasing dealers had not furnished the particulars required under Section 22(7) of the Act and the seller had issued sale invoices instead.

Analysis: Penalty under Section 54(1)(5) is attracted only when the statutory ingredients are clearly established. The scheme of Section 22 of the Act makes the issue of a tax invoice dependent on the purchaser furnishing his name, address and TIN, and Section 22(8) restrains the seller from issuing a tax invoice unless those particulars are supplied. Where those particulars are not disclosed, the seller is entitled to treat the purchaser as unregistered and issue a sale invoice. On the facts found, there was no material to show that the assessee knew the purchasers were registered dealers or that there was any collusion. The revenue failed to establish a deliberate breach or any basis to penalise the selling dealer for issuing sale invoices in the circumstances.

Conclusion: The penalty could not be sustained against the assessee for the disputed transactions, and the questions of law were answered in favour of the assessee and against the revenue.

Ratio Decidendi: A registered selling dealer cannot be penalised for not issuing a tax invoice unless the purchaser first furnishes the particulars mandated by Section 22(7) of the U P VAT Act, 2008 or the dealer is otherwise shown to have knowledge of the purchaser's registered status or collusion; in the absence of such disclosure, issuance of a sale invoice does not attract penalty under Section 54(1)(5).

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