2023 (10) TMI 1103 - HC - VAT and Sales Tax

Penalty under Section 14-B(7) PGST Act quashed for alleged forged documents without proper investigation

M/s Gopi Chand Krishan Kumar Bhatia Versus State of Haryana and Ors.

The HC quashed a penalty imposed under Section 14-B(7) of PGST Act, 1948 for alleged submission of forged documents. The petitioner imported badam and ... Quashing of penalty - forged document or not - necessary document not considered on the sole ground that it was produced after 08 days and presumption has been made that it was a forged document - import of badam for which the additional duty of custom is paid and this duty is also refunded. HELD THAT:- In M/s Anand Refrigeration Co. (P) Ltd’s case [2010 (1) TMI 1116 - PUNJAB AND HARYANA HIGH COURT], the Division Bench has considered Section 14-B (7) of PGST Act, 1948 and held that the combined reading of these provisions would reveal that the appropriate authority under the Act, is under legal obligation to conduct an enquiry after serving a notice to the consignor or consignee and give him an opportunity of being heard. If after the enquiry, such officer finds that there has been an attempt to avoid or evade the tax due or likely to be due under this Act, he shall, by order, impose on the consignor or consignee of the goods, a penalty, which shall not be less than twenty per cent and not more than thirty per cent of the value of the goods and in case he finds otherwise, he shall order the release the goods and the vehicle. In the present case, the only ground for imposing penalty was given that the document (P-8) was given by the petitioner after 08 days. However, giving the documents after 08 days would not make it a forged document. Further the invoice has been issued by a Company from U.S.A. The finding that this invoice is forged and fabricated has been given without verifying the contents of the invoice (P-8). This finding cannot be given without enquiry and there was no attempt of evading tax. Moreover, the petitioner was importing the badam for which he has paid the additional duty of custom and this duty is also refunded. Petition allowed. Issues Involved:1. Quashing of penalty orders dated 25.02.2008, 18.02.2009, 03.03.2010, and 20.01.2010.2. Legitimacy of the import documents and the imposition of penalties under Section 31(8) of the Haryana Value Added Tax Act.3. Comparison with the precedent set in M/s Anand Refrigeration Co. (P) Ltd. vs. State of Punjab.Summary:Issue 1: Quashing of Penalty OrdersThe petitioner challenged the penalty orders dated 25.02.2008, 18.02.2009, 03.03.2010, and 20.01.2010, seeking their quashing. The penalties were imposed for allegedly transporting goods without proper documentation.Issue 2: Legitimacy of the Import Documents and PenaltiesThe petitioner, engaged in trading Badam and Badam Giri, imported Badam from outside India. The goods were sent for job work and then stored in cold storage. During transit, the goods were detained due to the absence of prescribed documents. The petitioner argued that the goods were not for sale but for storage, hence no tax was involved. Despite presenting purchase bills and other documents, the authorities imposed a penalty of Rs. 4,95,000/- and advance tax of Rs. 2,06,250/- under Section 31(8) of the HVAT Act, totaling Rs. 7,01,250/-. The appellate authorities and the Haryana Tax Tribunal dismissed the appeals without addressing the petitioner's arguments, relying instead on the Supreme Court decision in State of Rajasthan v. M/s D.P. Metals.Issue 3: Comparison with PrecedentThe petitioner referenced the Division Bench judgment in M/s Anand Refrigeration Co. (P) Ltd. vs. State of Punjab, where it was held that penalty cannot be imposed merely for non-production of genuine documents unless there is a specific finding of an attempt to evade tax. The High Court found this precedent applicable, stating that the penalty should not be imposed without a specific finding of tax evasion. The court noted that the document in question (P-8) was produced eight days later but held that this delay did not render it forged. The invoice from a U.S. company was not verified for authenticity before concluding it was fabricated.ConclusionThe court allowed the petition, setting aside the penalty orders dated 25.02.2008, 18.02.2009, 03.03.2010, and 20.01.2010, as there was no attempt to evade tax and the findings were made without proper inquiry. The pending miscellaneous applications were also disposed of.