2022 (3) TMI 1653 - HC - VAT / Sales Tax

Penalty under Section 15-A(1)(o) UPVAT Act quashed as diesel used only in generators for manufacturing, no sale or evasion

The HC allowed the revision, set aside the order imposing penalty under s.15-A(1)(o) of the UPVAT Act and quashed the penalty. The court found the ... Levy of penalties u/s 15-A(1)(o) of UPVAT Act - possible further misuse of the declaration Form 31 - applicant was found involved in evasion of tax by S.I.B. authorities on a number of occasions - fault of the Ex U.P. Clearing agent in view of the judgments of this Hon'ble Court in the cases of M/s Flosyn Fragrances, Noida, Vs. Commissioner of Trade Tax [2004 (11) TMI 584 - ALLAHABAD HIGH COURT] and M/s Pepsico India Holding Ltd. Vs. Commissioner of Trade Tax [2003 (5) TMI 493 - ALLAHABAD HIGH COURT] - intent to evade tax or not - HELD THAT:- Admittedly, the applicant is not a dealer for sale or purchase of diesel oil and the same was imported for the use in generator sets for production of electricity. The applicant is engaged in the business of manufacture and sale of N.W.F. (narrow woven fabric). There is nothing on record to suggest that the diesel oil was ever sold by the applicant. It is neither the raw material of the N.W.F. (narrow woven fabric) nor the applicant has ever found selling the diesel oil other than the use. Thus the Tribunal was not justified in drawing the adverse inference against the applicant that the diesel oil has been imported with the intention to evade the tax. Since the goods in question was imported for the use in generator sets for producing the electricity, no intention can be attributed for evasion of tax. The Impugned order is set aside and penalty is quashed - the revision is allowed. Revision challenges order dated 30.9.2006 of the Commercial Tax Tribunal, Noida, in penalty proceedings under Section 15-A of the UP VAT Act. Two questions were framed: whether penalty under section 15-A(1)(o) can be imposed 'on the basis of possible further misuse of the declaration Form 31' and whether penalty can be imposed 'due to the fault of the Ex U.P. Clearing agent.' The revisionist, a manufacturer of N.W.F. (narrow woven fabric), imported diesel oil for use in generator sets to produce electricity and was not a dealer in diesel; there is 'nothing on record to suggest that the diesel oil was ever sold.' The Tribunal drew an adverse inference from improper/unspecified filling of Form 31 when goods were intercepted on three occasions. The Court held that where diesel was imported for consumption in production and 'no intention can be attributed for evasion of tax,' the Tribunal was not justified in drawing the adverse inference. Impugned order set aside and penalty quashed.