TaxTMI 
TaxTMI 
2019 (4) TMI 3
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....ld have issued the Tax Invoice though the purchasing dealers had not supplied the full particulars as required by sub-section 7 of Section 22 of the Act, in view of prohibition contained in Sub-section 8 of Section 22 of the Act, so as to entail imposition of penalty?" 4. The admitted facts in this regard are, during the A.Y. 2008-09, the assessee had amongst others performed 68 transactions of sale, against different Sale Invoices. These transactions gave rise to penalty proceedings against the assessee/appellant under Section 54(1)(5) of the U P VAT Act, 2008 (hereinafter referred to as the 'Act'). 5. Section 54(1)(5) of the Act, reads as under: "Section 54. Penalties in certain cases.- (1) The assessing authority, if he is satisfied that any dealer or other person, as the case may, has committed the wrong described in column 2 of the table below, it may, after such inquiry, if any, as it may deem necessary and after giving dealer or person reasonable opportunity of being heard, direct that such dealer or person shall, in addition to the tax, if any, payable by him, pay by way of penalty, a sum as provided in column 3 against the same serial no. of....
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.... 10. The Tribunal rejected the aforesaid submission on the reasoning, since undisputedly the purchasing dealers were registered dealers, the appellant should have issued the Tax Invoice. In not doing so, it had acted in collusion with the purchasing dealers and deprived the revenue of tax on value addition. 11. Sri Piyush Agrawal, learned counsel for the appellant submitted, a Tax Invoice could be issued only to a registered purchasing dealer. For that purpose, by virtue of Section 22 (7) of the Act, the obligation to make available to the seller, the details of name, address and TIN, was on the purchasing dealers. Unless those details had been first made available by the purchasing dealer, the assessee/selling dealer was helpless and he could not have issued the Tax Invoice. In fact, if such Tax Invoice had been issued (without such details), it would have been null and void and it may have further exposed the selling dealer to penal consequences. He would also submit, the selling dealer/assessee was not in a position to refuse to perform the sale transaction unless the purchaser first made available to it the details required for the purpose of issuance of Tax Invoice. On t....
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....term "penal" is suggestive of punishment and may also include any extraordinary liability to which the law subjects a wrongdoer in favour of the person wronged, not limited to the damages suffered. (See Aiyar, P. Ramanatha: The Law Lexicon, 2nd Edn., p. 1431.)" 15. A plain reading of Section 54(1), Table entry 5 of the Act suggests, penalty may be imposed on the selling dealer or the purchasing dealer for non-issue of either the Tax Invoice or the Sale Invoice or the Purchase Invoice. The circumstances in which such penalty may be imposed on the selling dealer are contained in sub-clause (i) of Table entry 5 being, either upon his failure to issue a Tax Invoice or a Sale Invoice or upon his deliberate non-issuance of the those documents. On the other hand, the circumstances in which penalty may be imposed on a registered purchasing dealer are contained in sub-clauses (ii) and (iii) of that Table entry being, either upon his deliberately not obtaining a Tax Invoice from a registered dealer, on purchase made from the latter [(under sub-clause (ii)], or upon non-issuance of a Purchase Invoice to an unregistered selling dealer - on purchase made from such dealer [(under sub-clause (....
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.... or comparable circumstances. Hence, a question arises whether there exists any obligation on the purchasing dealer to do certain positive acts to establish the requirement for issuance of a Tax/Sale Invoice. Further, if such person is not required to do anything in this regard, his inaction, even if proven, may invite a penal action on the selling dealer, in the event of non-issue of a Tax Invoice. In the latter construction, the word "deliberately" used in that sub-clause may be rendered redundant or superfluous, which construction of the statute must, in the first instance, be avoided. Therefore, the nature of obligation and duty cast by the Act with regard to issuance of a Tax invoice; a Sale invoice and; Purchase invoice calls for a deeper and careful scrutiny. 21. Under section 2(aj) of the Act, the term "Tax Invoice" has been defined to mean a "bill or a cash memo issued in the prescribed form and manner by a registered selling dealer to a registered purchasing dealer" or to certain other specified persons. However, Sale Invoice is not defined under the Act. The incidence and levy of tax arise under sections 3, 4 and 5 of the Act, section 22 thereof and the relevant....
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....e amount prescribed in this behalf; or [See Rule 44(4)] (ii) purchaser of goods demands sale invoice; or (iii) any other law prescribes for issue of sale invoice in respect of sale of any goods; or (iv) selling dealer as a practice issues sale invoice in respect of sales made by him, issue to the purchaser sale invoice in the prescribed manner containing such particulars as may be prescribed. (5) Every dealer referred to in sub-section (1) shall charge amount of tax payable separately on every tax invoice. However, the dealer referred in sub-section (3) may charge tax separately. (6) Office copy of tax invoice, sale invoice, as the case may be, prepared by the selling dealer and copies of tax invoice, sale invoice, as the case may be, received by the purchasing dealer shall be preserved by them for the period provided under sub-section (3) of section 21. (7) Every dealer, while making purchase of any goods from a registered dealer, shall give his name, address and Taxpayers' Identification Number, if any, to the selling dealer. (8) The dealer, making sale of goods to any purchaser referred to in sub-section (1)....
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....is restrained from issuing a Tax Invoice. 26. Then, by virtue of section 22(3) of the Act, all dealers except those falling under sub-section (1) shall issue Sale Invoice to the purchaser. Also, under sub-section (5) while issuing a Tax Invoice, the selling dealer is further obligated to charge amount of tax payable separately on every Tax Invoice, in case of Sale Invoice, tax may or may not charge tax separately. 27. Rule 44(1) of the Rules framed under the Act, prescribes the details to be filled up in the Tax Invoice. Similarly, Rule 44(2) of the Rules prescribes the details to be filled up in the Sale Invoice. Then, the first proviso to sub-Rule 2 provides, in the event of sales made to unregistered dealers, in excess of certain value, other than by account payee cheque, the selling dealer may obtain and retain a copy of the identification proof of the purchaser. 28. Thus, whether a registered selling dealer would issue a Tax Invoice or a Sale Invoice does not depend on the free choice of the contracting parties but, it is predetermined/prescribed by the Act/law. In case of taxable and vat-able goods sold by a dealer (not admitted to compounding), primarily, that oblig....
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.... Act as also from a common sense/practical point of view, the name, address, TIN and other facts as may give rise to the obligation under clauses (i) to (v) of Section 22(1) of the Act, by very nature of those informations, would have to be disclosed to the selling dealer, by the purchasing dealer only. 33. The selling dealer has no means to learn of those facts, on his own and therefore, he may never be saddled with that obligation. It would be wholly unreasonable to expect him to either have the industry or the requirement to make such exact inquiries, while conducting his business of trading in goods. To cast such an obligation on the selling dealer would be to impose an unreasonable condition and in the context of trading activities and also the value added scheme of taxation, an unnatural condition as may, if allowed to exist, obstruct free trade in goods. 34. Facts specified under section 22(1)(i) to (v) and 22(7) of the Act are special facts known to the person to whom they pertain i.e. the purchasing dealer. Uptill after the purchasing dealer discloses those facts to the selling dealer or unless those facts are known to the selling dealer from before - arising from pa....
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....ng dealer must have disclosed to that selling dealer or the latter must be shown to know from before, the facts specified in section 22(1)(i) to (v) and/or section 22(7) of the Act. Otherwise, the selling dealer would not be obliged issue a Tax Invoice. It that case, he would assume the purchasing dealer to be an unregistered dealer and issue a Sale Invoice. In that case there would be no breach on part of the selling dealer in not issuing a Tax Invoice. No penalty shall be imposed on the registered selling dealer for not issuing a Tax Invoice. [clause (i) of section 54(1)(5) of the Act read with section 22(1) (i) to (v) and section 22(7) & (8) of the Act] and Rule 41(1) and Rule 41(2) of the Rules] (c) However, in such circumstance [noted in point (b) above], or while transacting a sale to an unregistered dealer, if the registered selling dealer fails to issue a Sale Invoice, it may attract penalty on him for the breach of failure to issue a Sale Invoice. [clause (i) of section 54(1)(5) of the Act read with section 22(1) (i) to (v), section 22(3) and section 22(7) & (8) of the Act]. (d) also, in the fact scenario noted in point (b) above, if the purchasing dealer though r....