2026 (2) TMI 775 - HC - VAT / Sales Tax

Intention to evade tax requires more than documentary mismatches; absence of intent defeats penalty and sustains the appeal.

The article addresses challenges to a tribunal order refusing penalty for an alleged attempt to evade tax under Section 14B(7)(ii) of the Punjab General ... Evasion of tax - penalty u/s 14B(7)(ii) of PGST - requirement of intention to evade - effect of reporting goods at Information Collection Center (ICC) on allegation of evasion - scope of appeal u/s 68 of Punjab Value Added Tax Act, 2005 - HELD THAT:- We are of the considered opinion that there is no factual or legal infirmity in the impugned order passed by learned Tribunal. The respondent-dealer presented goods along with documents before ICC Banur. ETO, ICC duly entered goods in the record and issued ST-XXIV-A. The goods were not detained by ETO, ICC whereas were subsequently detained while in transit. Had there been intention to evade tax, the dealer might have not reported the goods at ICC. The Tribunal has rightly noticed this fact and concluded that dealer cannot be alleged to have attempted to evade payment of tax merely because there is handwritten entry or cutting in the invoice with respect to GR or truck number. It is undisputed that goods were found in the same truck and with GR which was disclosed in the invoice. In these circumstances, it cannot be concluded that there was evasion of tax. Penalty under Section 14B(7)(ii) of PGST can be imposed in case of intention to evade payment of tax. Thus, we are of the considered opinion that the instant appeals deserve to be dismissed and accordingly dismissed. Issues: (i) Whether the Tribunal's order is sustainable despite not setting out, in detail, the arguments of the State and the respondent; (ii) Whether the Tribunal was bound to discuss the counsel's arguments in its order while allowing the respondent's appeal.Issue (i): Whether the Tribunal's order is sustainable despite not setting out, in detail, the arguments of the State and the respondent.Analysis: Relevant statutory framework includes Section 68 of the Punjab Value Added Tax Act, 2005 which empowers appeals to the High Court, and Section 14B and Section 14B(7)(ii) of the Punjab General Sales Tax Act, 1948 which deal with detention, inquiry and imposition of penalty for attempt to evade tax. The factual record shows goods were reported at the Information Collection Centre and ST-XXIV-A was issued; detention occurred later in transit. The Tribunal examined the factual matrix including issuance of the ST-XXIV-A, presence of goods in the same truck with the disclosed GR, and the effect of handwritten alterations in the invoice. The absence of detailed reproduction of each oral submission does not by itself render the Tribunal's conclusion unsustainable where the order reflects consideration of the factual and legal position and answers the core question of whether there was an attempt to evade tax.Conclusion: The Tribunal's order is sustainable and the omission of detailed recital of counsel's arguments does not vitiate the decision in favour of the respondent.Issue (ii): Whether the Tribunal was bound to discuss the counsel's arguments in its order while allowing the respondent's appeal.Analysis: Section 14B(7)(ii) of the Punjab General Sales Tax Act, 1948 permits imposition of penalty only upon formation of opinion that there was an attempt to evade tax. The material facts show reporting at the Information Collection Centre and issuance of ST-XXIV-A, goods being found in the same truck and accompanied by the disclosed GR. The Tribunal considered these facts and concluded that handwritten alterations or mismatches in invoice particulars, without more, do not establish the requisite intention to evade tax. Where the Tribunal addresses and decides the substantive factual and legal issues, it is not obligatory to record verbatim or elaborate discussion of every submission before arriving at a reasoned conclusion.Conclusion: The Tribunal was not bound to recite each argument; its reasoned conclusion that there was no intention to evade tax is justified.Final Conclusion: The appeals challenging the Tribunal's finding of no attempt to evade tax are without merit and the Tribunal's order upholding that conclusion stands affirmed.Ratio Decidendi: Where goods are reported at the Information Collection Centre and an ST-XXIV-A is issued and the goods are found in the same truck with the disclosed GR, mere documentary mismatches or handwritten alterations in invoices do not, by themselves, constitute sufficient proof of intention to evade tax for imposition of penalty under Section 14B(7)(ii) of the Punjab General Sales Tax Act, 1948.