TaxTMI 
TaxTMI 
2010 (4) TMI 998
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.... The main job of its Pune branch is simply to procure orders from various customers of Maharashtra State and supplied the vehicles after receiving the same from its head office and factory in Punjab. The assessee claimed that its Pune branch office receives the vehicles sent by the factory from Punjab and enters the same in its stock. Its sale is, thereafter, made by raising the invoice at its branches and vehicles are sold at "all inclusive price". The buyer does not pay any extra transportation charges or other related expenses. It was alleged that the Pune branch of the assessee received a contract of supplying of seven vehicles with different specifications and for supply of 15 Nos. of prison vans with certain specifications to Maharashtra Police. Consequently, the assessee manufactured the vehicles, as per requirement, in its factory in Punjab and was in process of sending the same to Maharashtra State. On May 7, 2001, these new vehicles were stopped and checked at ICC, Jharmari (Lalru) by the Taxation Officer. The drivers of the vehicles produced all the relevant documents relating to the goods. According to the State authorities, as the documents covering the goods wer....
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....ended with some amount of vehemence that the drivers of the vehicles had voluntarily approached the ICC, Jharmari and produced/submitted all the relevant documents, depicting the quantity and value of the goods at ICC, which were duly recorded in computer record of the Department, so, the question of any evade/avoid the tax, did not arise at all. The argument further proceeds that the appropriate authority had no jurisdiction to impose penalty, during the course of summary proceedings under section 14B of the Act, which only required the proper accounting of transaction in the books of consignor or consignee. Once the drivers of the vehicles have reported and submitted the relevant documents at the ICC, then the detaining officer is not entitled to take cognizance of the fact that the transaction is inter-State sale or otherwise. According to the learned counsel for the assessee, the proceedings under section 14B are summary in nature and can only be invoked, if there is cogent material on record and a specific finding, that there has been an attempt to avoid and evade tax, before invoking the penalty clause and such intricate question cannot be decided in the summary proceeding un....
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.... officer shall, immediately thereafter, submit the proceedings along with the concerned records to such officer, as may be authorized in that behalf by the State Government for conducting necessary enquiry in the matter." Sub-clause (ii) of sub-section (7) further posits that "the officer authorized by the State Government shall, before conducting the enquiry, serve a notice on the consignor or the consignee of the goods detained under clause (i) of sub-section (6), and give him an opportunity of being heard and if, after the enquiry, such officer finds that there has been an attempt to avoid or evade the tax, 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 of the goods and the vehicle, if not already released, after recording reasons in writing and shall decide the matter finally within a period of fourteen days from the commencement of the enquiry proceedings". According to sub-clause (iii), the officer referred to in clause (ii), before conducting the enquiry, shall serve a noti....
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....he assessee and not otherwise, which is condition precedent. Hence, the production and genuineness of the documents or otherwise is co-related and condition precedent for invoking the penal provision under this section. An identical question arose before a Full Bench of this court in Mool Chand Chuni Lal's case [1977] 40 STC 238. Having interpreted the relevant provisions and relying upon the judgment of this court in the case of Dunlop India Limited v. State of Punjab [1972] 30 STC 597, it was held that the amended section 14B(7) of the Act for levy of penalty is not based on any assumption that the goods were transported after sale within the State. Its basis is the attempt to evade tax and it prescribes a condition precedent for the levy of penalty. The condition precedent is that the authorized officer should record a finding that there has been an attempt to evade the tax due under the Act. The goods which are to be detained are also specified in section 14B(6) as goods meant for trade and not covered by proper and genuine documents. Sequelly, in Prakash Roadlines (P) Ltd.'s case [1991] 83 STC 49 (Karn), it was observed that "mere failure to produce documents on ....
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....Reliance can also be placed upon the judgment of this court in Anand Refrigeration Co. (P) Limited's case [2010] 30 VST 235 in this regard. There is another aspect of the matter, which can be viewed from a different angle. As indicated above, section 14B(7) of the Act envisaged different situations for levying penalty. That means, there is a provision for levying a penalty in this respect, but penalty should not ordinarily be imposed only on the ground that such provision exists in statute. It should only be imposed if the party either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation, (which are totally lacking in the case in hand). Penalty will not be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on consideration of all the relevant circumstances. The honourable apex court in Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 has ruled that "even if a minimum penalty is prescribed, the authority competent to impose the pena....