TaxTMI 
TaxTMI 
2016 (7) TMI 544
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.... seizure of goods being dispatched by the revisionist 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 mainta....
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....­ 4 122/2016 446/2013 15/01/16 2010­11 93,000/­ 37,200/­ 37,200/­ Penalty @ 40% on 93,000/­ 5 123/2016 440/2013 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 ....
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....d to hold that a discrepancy in "batch numbers" would not justify a seizure of goods. Learned counsel further submitted that the imposition of penalty merely on an allegation of a discrepancy in the "batch numbers" did not find favour with this Court and referred to the judgments rendered in M/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 ....
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....aid down in Jagatjit, the Tribunal proceeded to uphold the orders passed by the assessing uthority as well as the first appellate authority. Section 48 of the VAT Act confers a power upon an authorized officer to seize goods in circumstances enumerated in sub section (1). The same reads as under: " 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 per....
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....e serial No., date of issue, signature of the person authenticating tax invoice, name and address of the purchaser, Taxpayer-s identification Number of purchaser, if any, description of goods, quantity or measure of goods, value of goods, other charges, if any, amount of discount, if any, rate of tax, amount of tax charged, total amount of tax invoice and signature of person 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 ....
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.... that it is not the case of the respondents that the goods did not carry a date of manufacture/batch number and the only allegation was of a discrepancy/disconnect between the particulars finding mention in the tax invoice and the actual goods found on a vehicle. The Court at this stage must also note a submission advanced by the learned standing counsel to the effect that some tax invoices had also not been pre-authenticated as required under the provisions of Rule 44, a fact which finds mention in the order of the assessing 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 sect....
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....ta may not ipso facto apply to tax adjudications, at the same time issues which have been decided principally inter partes cannot be ignored. If the same discrepancies were found in Assessment Year 2010-11 to be insufficient to justify an imposition of penalty in that year, the Court finds no reason why the same principle would not apply to Assessment Year 2009-10. At least the assessing authority, the first appellate authority and the Tribunal do not record any finding as to why the said decision was not applicable or for that matter 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 an....
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.... VAT Act or the Rules. As noted above, no such requirement stands placed upon the revisionist under the VAT Act. In fact the authorities themselves noted that the requirement of mentioning the date of manufacture and batch number was one which stood imposed by virtue of the provisions of a separate statute. In view of the above, this Court is of the firm view that Jagatjit is not an authority for the proposition that a wrong mention of/discrepancy in the batch number or date of manufacture would warrant the imposition of penalty under the VAT Act. Additionally the 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 Couns....