Allahabad High Court
M/S Delhi Textiles vs Commissioner Commercial Tax Up Lucknow on 7 January, 2020
Equivalent citations: AIRONLINE 2020 ALL 620
Author: Alok Mathur
Bench: Alok Mathur
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No. - 42 Case :- SALES/TRADE TAX REVISION No. - 118 of 2010 Revisionist :- M/S Delhi Textiles Opposite Party :- Commissioner Commercial Tax Up Lucknow Counsel for Revisionist :- N. C. Gupta Counsel for Opposite Party :- C.S.C. Hon'ble Alok Mathur,J.
1. Heard Sri N.C. Gupta, learned counsel for the revisionist as well as Sri Bipin Kumar Pandey, learned Standing Counsel for the respondent.
2. By means of this revision the revisionist has challenged the order dated 02.01.2010, passed by the Commercial Tax Tribunal, whereby the second appeals preferred by the revisionist as well as the revenue have been rejected and the Tribunal had up held imposition of penalty as modified by the First Appellate Authority. This revision relates to assessment year 2005-06.
3. Facts of the case in brief are that the revisionist is a partnership form engaged in the business of manufacture and sale of textiles and is registered under Section 8-A of the U.P. Trade Tax Act, 1948 (hereinafter referred to as the "Act, 1948") as well as under the Central Sales Tax Act. The revisionist has given order for supply of the machine for cloth procesing to M/s Disha Enterprises Delhi and therefore, the aforesaid machine was purchased by M/s Disha Enterprises Delhi from M/s Romex Machine, TTC Area Thaney, Mumbai, Maharashtra. The said machine was booked by Vishal Haryana Road Lines and same was transported by vehicle alongwith bill no. 52, dated 08.03.2006, which was in the name of M/s Disha Enterprises, A-9 West Jyoti Nagar, 100 Feet Road, delhi and thereafter the same for delivery to the revisionist, for which M/s Disha Enterprises issued bill no. 0347, dated 13.03.2006 and bill no. 832000 and along with that import declaration Form No. 1520870.
4. Contention of revisionist is that the driver of the vehicle inadvertently left behind the papers of M/s Disha Enterprises and Form relating to import of the machine from the State of Delhi to the State of Uttar Pradesh and at the relevant point of time had only paper of import of machine from Maharashtra to Delhi. The officers of the revenue intercepted the vehicle on 13.03.20065 and the goods were detained due to the fact that the vehicle was not carrying all the papers and declaration form as required under the law. Admittedly, an amount of Rs.1,99,923/- was deposited as security and goods were released.
5. The assessing authority issued show cause notice to the revisionist and passed an order imposing penalty by means of order dated 10.10.2007 under Section 15A(1)(o) of the Act, 1948, for Rs.1,99,923/-.
6. Aggrieved by the order of the assessing authority, the revisionist preferred an appeal under Section 9 of the Act, 1948 against the penalty order. The First Appellate Authority partly allowed the appeal of the revisionist and reduced the penalty to Rs.99,223/- by means of order dated 6th March, 2009.
7. Against the order of the First Appellate Authority, the revisionist as well as the revenue preferred second appeal before the Trade Tax Tribunal (hereinafter referred to as "the Tribunal"). The Tribunal rejected both the appeals. Hence this revision.
8. Learned counsel for the revisionist vehemently urged that it was only due to inadvertence that the driver of the vehicle was not carrying the relevant documents and the same were duly produced before the assessing authority and therefore, there was no intention on the part of the revisionist to evade tax, and therefore, penalty under Section 15A of the Act, 1948, could not have been imposed. It has further been submitted on behalf of revisionist that subsequently the machine was not found in working condition and the same was returned back to M/s Disha Enterprises, New Delhi and therefore in fact there was no sale. It is further submitted that the machine in question was being purchased for production for non taxable goods and in the light of the various provisions of the Act, 1948, the transaction i.e. purchase of the machine in question was not taxable and therefore there was no loss of revenue to the State Government and looking into the entire facts of the case it cannot be said that there was any intention to evade tax.
9. The First Appellate Authority, looking into the aforesaid facts reduced the penalty to Rs.99,923/-.
10. Learned Standing Counsel has submitted that the second appeals preferred by the revisionist as well as revenue were rejected by the Tribunal, up holding the order of the First Appellate Authority.
11. Heard learned counsel for the parties and perused the record.
12. The assessing authority has imposed penalty on the revisionist only on account of the fact that the driver of the vehicle on which the goods in question were being transported, was not carrying the relevant Form-31/documents prescribed for inter-State sale which was mandatory for the revisionist to carry. The Assessing Authority has concluded that there was clear intention on the part of revisionist to evade tax, inasmuch as there were full chances that the said Form being misused by the revisionist by subsequently using he same for importing machines on subsequent occasion, and therefore, in exercise of power under Section 15A of the Act, 1948, penalty was imposed.
13. The revisionist has submitted that he had filed a detailed explanation indicating that the said transaction was not taxable and it is only due to human error that the driver was not carrying the relevant documents and subsequently the declaration Form-31 and other relevant documents were produced before the assessing authority at the very first instance. Thus, there was no intention to evade tax.
14. The First Appellate Authority accepted the submissions of the revisionist and only on this score reduced the penalty amount. Being aggrieved by the findings recorded by the First Appellate Authority, the revenue preferred second appeal before the Tribunal. It is relevant to note that the Tribunal rejected the appeal preferred by the revenue and has not interfered with the findings of fact recorded by the First Appellate Authority in this regard, inasmuch as, the Tribunal has also up held the finding of First Appellate Authority that the machine when not found in working condition was returned back, meaning thereby that the revisionist could not had gained any thing from the said transaction.
15. The only reason for up holding the reduced penalty is a finding recorded by the Tribunal that by not carrying the relevant documents indicates the intention of the revisionist to evade tax.
16. Considering the entire facts and circumstances of the case, it is clear that the First Appellate Authority has recorded findings of fact that the goods were being imported for production of non taxable goods and therefore import of said machine is not liable to be taxed. Secondly, that the said machine was not found in working condition and therefore the same was returned to M/s Disha Enterprises, therefore there was no sale on which such penalty can be imposed.
17. Aforesaid facts, in the opinion of this Court, should have been considered by the Tribunal in their proper perspective and in case explanation given by the revisionist are accepted, then it is clear that it indicates that there was no intention to evade tax. Though the Tribunal was not relying on any document which may have given rise of any occasion for the assessing authority to initiate such proceedings,but looking into the fact that the revisionist at the very first instance produced the entire documents before the assessing authority, indicates that the revisionist fulfilled all the conditions as prescribed under the Act, 1948 and even then penalty has been imposed by the assessing authority.
18. Learned counsel for the revisionist has placed reliance on the judgment in the case of Commissioner of Sales Tax Vs. S/S Haring India Limited, Mohan Nagar, Ghaziabad, 1988 UPTC 1343, wherein the Court in para 8 of the judgment has observed as under :
"8. The provisions of Section 28-A (6) as it stood at the material time have been a subject matter of consideration by a Division Bench of this Court in Jain Shudh Vanaspati Ltd. Ghaziabad v. State of U.P. and others, 1983 UPTC (1) 198. Commenting upon the provision contained in Section 28-A as it stands after enactment of U.P. Act No. 33 of 1979, with which we are concerned, it was observed as under :
"The provision contained in Section 28-A as it stands after enactment of U.P. Act No. 33 of 1979 are materially different. It cannot be said that there is any assumption underlying therein that the goods to which the provision of Section 28-A applies has actually been sold inside the State and the section does not authorise the sales tax authorities either to seize the said goods or to penalise the importer thereof on any such assumption. Its present basis is the attempt to evade tax. The power to detain the goods and levy penalty in respect thereof cannot be exercised merely for the reason that the said goods were not accompanied by the requisite documents or that the documents accompanying them were false. This power can be exercised only if the goods detained are not accompanied by the requisite documents or that the documents accompanying themm are false and if there is material before the detaining authority to indicate that the goods are being imported in an attempt to evade assessment or payment of tax due or likely to be due under the Act."
At another place it was again observed as under :
"These provisions make it absolutely clear that the power to seize and detain the goods under sub-section (6) of Section 28-A cannot be exercised merely because the goods, when they reach the check post, were not accompanied by the declaration form contemplated by Section 28-A(1). The real occasion to detain the goods under sub-Section (6) arises only if the goods are not accompanied by the requisite documents and thee is material before the Check Post Officer on which he can reasonably record a satisfaction that the person importing the goods was attempting to evade assessment or payment of sales tax due or likely to be due."
19. The revisionist has further relied upon the judgment passed by the Uttrakhand High Court in the case of M/s Polyplex Corporation Limited Vs. Commissioner of Trade Tax, 2003 NTN (Vol. 23) 1061, where the Court has relied on various judgment passed by this Court has concluded that there should be clear finding of fact by the concerned authority that the goods were been transported with intention to evade tax due or likely to be due under the Act and unless such a finding is recorded no penalty can be imposed.
20. Considering the submissions of learned counsel for the parties as well as various legal pronouncements discussed above, it is clear that there was no clear finding recorded by the authorities concerned to the effect that there was intention to evade tax under the Act. The finding of fact recorded by the Tribunal have not been rebutted by the revenue and therefore they have attained finality.
21. It is clear that the machine in question was found not in working condition and has been returned back and even otherwise no concluded transaction took place on which penalty could have been imposed by the revenue.
22. In the light of the above, the revision succeeds and impugned order dated 02.01.2010, passed by the Tribunal is hereby set aside.
23. The revision stands allowed.
Order Date :- 7.1.2020 A. Verma (Alok Mathur, J.)