2020 (1) TMI 799 - HC - VAT and Sales Tax

Commercial Tax Tribunal justified in deleting penalty under U.P. VAT Act. Intent to evade tax crucial.

The court determined that the Commercial Tax Tribunal was justified in deleting the penalty imposed under Section 54(1)(14) of the U.P. Value Added Tax ... Waiver of penalty levied under Section 54(1)(14) of U.P. Value Added Tax Act, 2008 - Form 38 had certain unfilled (blank) column - intent to evade tax or not - HELD THAT:- Non-filling up of column no. 6 i.e. not mentioning of bill / cash memo / chalan / invoice number may lead to an inference that in case of non-checking of goods the declaration form may be re-used for importing goods of same quantity, weight and value to evade payment of tax but it cannot be the sole ground to impose penalty under Section 54(1)(14) of the Act, 2008. Satisfaction has to be recorded after giving opportunity to the dealer / person and after considering all the relevant materials / evidences on record that there was an intention to evade payment of tax. The guilty mind is necessary to be established to impose penalty under Section 54(1)(14) of the Act, 2008. In the present case also the vehicle was accompanied by Form 38 and all other documents were being carried along with other documents and only due to human error column would remain unfilled. It was the duty of the Officer managing the Check Post who after discovering that some column of Form 38 found unfilled should have filled the same himself in the light of Circular dated 03.02.2009 and should have allowed the vehicle to proceed alongwith the goods - It is undisputed that the goods transported were the same which were mentioned in the various documents (bill/builty/challan etc.) carried by the driver of the vehicle. Revision dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal issue presented in this judgment is:(i) Whether, under the facts and circumstances of the case, the Commercial Tax Tribunal was legally justified in deleting the penalty levied under Section 54(1)(14) of the U.P. Value Added Tax Act, 2008Rs.2. ISSUE-WISE DETAILED ANALYSISRelevant legal framework and precedents:The legal framework revolves around Section 54(1)(14) of the U.P. Value Added Tax Act, 2008, which provides for the imposition of penalties for non-compliance with the Act's requirements, specifically relating to the transport of goods without proper documentation. The case also references Section 50 of the Act, which mandates the carrying of proper and genuine documents during the transportation of goods into the state.Precedents considered include the judgments in the cases of M/s Guljag Industries vs. Commercial Tax Officer and I.C.I. India Limited vs. Commissioner of Sales Tax, which discuss the implications of non-compliance with statutory requirements and the necessity of proving an intention to evade tax.Court's interpretation and reasoning:The court interpreted the provisions of the Act to require not just a procedural compliance but also an intention to evade tax for penalties to be justified. It emphasized that the mere non-filling of a column in Form 38, without evidence of intent to evade tax, does not warrant a penalty.Key evidence and findings:The evidence showed that the respondent had duly applied for and obtained Form 38 for the import of goods, and the only issue was the non-filling of Column 6. The driver carried all relevant documents that could verify the goods being transported, and there was no evidence of an intention to evade tax.Application of law to facts:The court applied the law by assessing whether the non-filling of Column 6 was indicative of an intent to evade tax. It concluded that since the goods were accompanied by all necessary documentation and there was no attempt to conceal the nature or value of the goods, the penalty was not justified.Treatment of competing arguments:The revenue argued that the blank column indicated an intention to reuse the form for tax evasion, supported by the precedent in M/s Guljag Industries. However, the court distinguished this case by emphasizing the necessity of proving mens rea (intent) for penalties under the U.P. VAT Act, unlike the statutory framework in the Guljag case.Conclusions:The court concluded that the imposition of the penalty was not justified as there was no evidence of an intention to evade tax. The tribunal's decision to delete the penalty was upheld.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning:'Non-filling up of column no. 6 i.e. not mentioning of bill / cash memo / chalan / invoice number may lead to an inference that in case of non-checking of goods the declaration form may be re-used for importing goods of same quantity, weight, and value to evade payment of tax but it cannot be the sole ground to impose penalty under Section 54(1)(14) of the Act, 2008.'Core principles established:The judgment establishes that for penalties under Section 54(1)(14) of the U.P. VAT Act, there must be evidence of intent to evade tax, not merely procedural non-compliance. The presence of all relevant documentation and the absence of intent to evade tax are critical factors in determining the justification for penalties.Final determinations on each issue:The court determined that the Commercial Tax Tribunal was justified in deleting the penalty, as the evidence did not support an intention to evade tax. The question of law was answered in favor of the assessee and against the revenue, affirming the Tribunal's order.