TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 544
X X X X Extracts X X X X
X X X X Extracts X X X X
....isionist and a consequential levy of penalty under Section 48(5) of the U.P. VAT Act, 2008 VAT Act. Since common questions of law arose from these revisions, they with the consent of parties were heard together and are being disposed of by this judgment. The facts leading upto the passing of the impugned order fall within a narrow compass. The revisionist is engaged in the manufacture of soft drinks, fruit juices and other aerated beverages. It is registered both under the VAT Act as well as the Central Sales Tax Act, 1956. It was its case that during the peak summer months there is a heightened demand for soft drinks as a result of which the revisionist is compelled to engage additional contract labour on a temporary basis at its factory at Dasna, District Ghaziabad. This labour, the revisionist submits, is engaged for loading and dispatching of consignments to its various stockists and distributors situate across the States of U.P. and Uttarakhand. It was the case of the revisionist that the dispatches of soft drinks were duly accounted for in the Books of Account and that all transactions stood duly reflected in the records maintained by it. During the course of oral submission....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../2013 15/01/16 2009­10 1,86,000/­ 46,500/­ 46,500/­ Penalty @ 25% on 1,86,000/­ 6 125/2016 445/2013 15/01/16 2009­10 2,00,000/­ 80,000/­ 80,000/­ Penalty @ 8% on 15,000/­ 7 126/2016 441/2013 15/01/16 2009­10 1,35,210/­ 26,926/­ 26,926/­ Penalty @ 25% on 26,926/­ & 8% on 40,450 8 127/2016 442/2013 15/01/16 2009­10 96,600/­ 24,150/­ 24,150/­ Penalty @ 25% on 96,000/­ 9 128/2016 439/2013 15/01/16 2009­10 1,86,000/­ 46,500/­ 46,500/­ Penalty @ 25% on 1,86,000/­ 10 129/2016 440/2013 15/01/16 2009­10 1,30,000/­ 52,000/­ 32,500/­ 19,500/­ Penalty @ 40% on 1,30,000/­ Learned counsel for the revisionist referring to the provisions of the VAT Act has contended that there existed no circumstance, which warranted the imposition of penalty upon the revisionist. He submitted that no provision of the VAT Act or the Rules framed thereunder required or obliged the revisionist to disclose the "date of manufacture" or the "batch number" of the soft drinks. He submitted that a dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../S. Great Glen Distilleries And Wineries Ltd., Varanasi Vs. Commissioner of Sales Tax [1995 U.P.T.C.699] as well as Sir Shadi Lal Enterprises Ltd., Shamli Vs. The Trade Tax Tribunal, Muzaffarnagar Bench, Muzaffarnagar & Others [1997 U.P.T.C.297]. Learned counsel further referred to a more recent judgement rendered by a learned Single Judge of this Court in Nokia India Pvt. Ltd. 2005 NTN (28). Learned counsel then lastly drew the attention of the Court to a judgment rendered by the Tribunal inter partes on 9 May 2012 wherein an imposition of penalty in identical circumstances was set aside by the Tribunal while recording that neither the VAT Act nor the Rules framed thereunder required a disclosure of "batch numbers" and consequentially held that penalty had been wrongly imposed. He submitted that apart from the fact that the said judgment rendered by the Tribunal related to Assessment Year 2010-11, there was no distinguishing feature which may have justifiably weighed with the Tribunal to take a discordant view and uphold the levy of penalty in the facts of the present case. Learned Standing Counsel refuting the above submissions contended that the assessing authority had proceed....
X X X X Extracts X X X X
X X X X Extracts X X X X
...." Section 48. Power to seize goods.--- (1) An officer authorised under sub-section (1) of section 45 shall have the powers to seize any goods - i. which are found in a dealer's place of business, vehicle, vessel or any other building or place; or ii. which, such officer has reason to believe to belong to the dealer and which are found in any place of business, vehicle, vessel or any other building or place, but are not account for by the dealer in his accounts, registers or other documents maintained in the ordinary course of his business. iii. which are found in any place of business, vehicle, vessel or any other building or place, and such goods are accompanied by any tax invoice or sale invoice or any other document pertaining to value of goods, as the case may be, containing value of goods undervalued to the extent more than fifty percent of the value of goods prevalent at the relevant time in the local market area where the said transaction had taken place, with intention to evade payment of tax." The power to impose penalty stands enshrined in sub section (5) which reads as follows: "(5) If such authority, after taking into consideration the explanation, if any....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n issuing tax invoice." Undisputedly, the levy of penalty is liable to be tested on the strength of the provisions engrafted in sub sections (1) and (5) of section 48. A deconstruction of sub section (1) would indicate that an assesse faces the specter of seizure in the following circumstances: - (a) where the officer has reason to believe that goods belonging to the dealer, (b) are not accounted for by the dealer in his accounts, registers or other documents. In terms of sub section (5) the authority proceeds to levy penalty upon being satisfied that- (a) the goods were omitted from being shown in the accounts; or (b) the goods are not traceable to any bona fide dealer; or (c) the goods are not properly accounted for by any dealer; or (d) the documents issued by any dealer contained wrong particulars; or (e) the goods are undervalued to the extent of fifty percent of the value of the goods prevalent at the relevant time in the local market. Rule 44 mandates that the following particulars must find mention in a tax invoice: - (a) name and complete address of the seller dealer (b) name and address of the branch or depot from where goods were sold (c) Taxpayers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g authority. As is evident from the order of the Tribunal, the Court finds that this omission, as is noted therein was only in respect of two invoices. As rightly contended by the learned counsel for the revisionist, this could not have justified an imposition of penalty on the value of the entire consignment. More importantly, this factor has not weighed with the Tribunal while it proceeded to uphold and affirm the orders of the assessing authority and the first appellate authority. Having dealt with the peripheral issue, which was more technical in character, the Court now proceeds to deal with the primary issue which pivots around the provisions of section 48 (5). A close reading of sub section (5) establishes that while it sets out the circumstances in which penalty may be imposed [clauses (a) to (e) as extracted and deconstructed above] all the clauses are qualified and circumscribed by the words "with intention to evade payment of tax". The phrase "with intention to evade payment of tax" flows and attaches to each of the circumstance which attracts a levy of penalty under sub section (5). The Court however finds that the Tribunal has nowhere recorded its conclusion that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....distinguishable. The last issue which then remains is whether Jagatjit is an authority for the proposition that a discrepancy in batch numbers was a circumstance relevant for imposition of penalty. The Tribunal has proceeded on the basis that Jagatjit does lay down this law. It is trite to note that a judgment is not to be read as Euclid's theorems. One of the primary rules of interpretation of judgments and which has been repeatedly so recognised is that the endeavor to understand the law declared in a judgment must be made bearing in mind the factual backdrop in which it came to be rendered. The true essence of a judgment must be extracted and understood bearing in mind the facts against which it came to be rendered. This principle itself is based on the Latin maxim "Secundum Subjectam Materiam. It is this basic principle which, in the opinion of this Court, has been completely lost sight of by the Tribunal. Jagatjit came to be rendered by a learned Judge of the Court upon a difference of opinion between two learned Judges constituting a Bench of the Court. The issue in Jagatjit was whether the Court while exercising its powers under Article 226 of the Constitution should i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Court finds that Jagatjit was duly noted and distinguished in Central Distillery. The learned Judge held: "4. It is admitted that the goods were accompanied by the documents referred to above and the only ground of seizure was that the batch numbers of the goods were different. It has been held by this Court in Lipton India Ltd. v. Commissioner of Sales Tax, 1993 U.P.T.C. 368 and M/s. Great Glen Distilleries & Wineries v. Commissioner of Sales Tax 1995 U.P.T.C. 699 that the seizure of goods was not justified in cases where there is merely a difference of batch number of the goods. The learned Standing Counsel placed reliance on M/s. Jagatjit Industries Ltd. v. State of U.P., 1997 U.P.T.C. 1011 in which the question was whether on the facts of that case the High Court should exercised its jurisdiction under Article 226 of the Constitution of India for quashing the notices of seizure. It was held that the necessary facts have to be found by the authorities under the Act and, therefore, the High Court should not interfere under Article 226 of the Constitution of India. The view taken by this Court in the aforesaid cases has neither been considered nor a different view taken. Ther....