Uttarakhand High Court
Polyplex Corporation Limited vs Commissioner Of Trade Tax on 23 September, 2003
Equivalent citations: [2004]136STC389(UTTRA)
Author: M.M. Ghildiyal
Bench: M.M. Ghildiyal
JUDGMENT M.M. Ghildiyal, J.
1. These trade tax revisions for the assessment years 1992-93 and 1993-94 arises out of penalty proceedings under Section 15-A(1)(o) of the U.P. Trade Tax Act, 1948. Since both the revisions are against common order passed by Trade Tax Tribunal, both the revisions are being decided by common judgment.
2. Heard Sri Bharat Ji Agrawal, Senior Counsel assisted by Sri S.K. Posti, learned counsel for the revisionists and learned Additional Chief Standing Counsel, State of Uttaranchal, for respondent.
3. Brief facts of the case are that the revisionists, M/s. Polyplex Corporation Limited is a public limited company incorporated under the Indian Companies Act, 1956. Its registered office is situated at Lohiya Head Road, Khatima District, Udham Singh Nagar having its head office in New Delhi and a godown at Noida, The company is registered under the U.P. Trade Tax Act as well as the Central Sales Tax Act, 1956 and the applicant has been granted eligibility certificate under Section 4-A of the U.P. Trade Tax Act.
4. The applicant is carrying on the business of manufacture and sale of polyester films within India as well as outside the country. In view of the policy of Government of India, the company was permitted to import certain items under custom duty free scheme under advanced licence. The applicant imported certain polyester films from the foreign countries, the entries of which are duly made in the records of the custom department and also in the record maintained by the company at New Delhi as well as in Noida.
5. One consignment of the film imported from outside India was coming from Delhi Custom Bounded Warehouse and was proceeding to Noida godown, which was checked by the Trade Tax Officer, Mobile Squad, on December 31, 1993 and was seized on the ground that form XXXI under Section 28-A of the Act was not available along with the consignment. However, the said goods were released on furnishing of cash security Rs. 1,29,076 and on furnishing of bank guarantee of Rs. 1,30,000.
6. This seizure of December 31, 1993 has given raise to the penalty proceedings for the assessment year 1993-94 under Section 15-A(1)(o) in which the assessing authority has imposed a penalty of Rs. 14,74,700.
7. For the assessment year 1991-92 an assessment order was passed by the assessing authority on January 25, 1996 and in the assessment proceedings it was found that the company has recorded in its account books the import of polyester films of Rs. 41,78,141.60 which is duly recorded in the account books and on which the tax has also been deposited but for bringing these goods form XXXI was not used, as required under Section 28-A. Accordingly a penalty order under Section 15-A(1)(o) for the alleged violation of Section 28-A was also passed separately on January 25, 1996 imposing a sum of Rs. 13,76,150 as penalty.
8. The penalty was imposed on the basis of transactions, already recorded in the account books for the assessment year 1992-93 in which it was found that the goods imported are duly recorded in the account books but these goods have been brought without form-XXXI. Hence there is a technical violation of Section 28-A.
9. Against the aforesaid order of the Trade Tax Officer, Khatima, dated January 25, 1996, for the assessment year 1992-93 and the order dated November 6, 1995 for the assessment year 1993-94 imposing penalty under Section 15-A(1)(o) appeals were filed before the Deputy Commissioner (Appeals), Trade Tax, Haldwani. The Deputy Commissioner (Appeals) by a common order dated September 5, 1997 has dismissed the appeal.
10. The company filed second appeal under Section 10 before the Trade Tax Tribunal, Haldwani Bench, Haldwani. The Trade Tax Tribunal by order dated June 5, 1998 has partly allowed the appeals, both for the assessment years 1992-93 and 1993-94 and have reduced the penalty amount for both the years, after recording a finding of fact that the goods imported are duly recorded in the records and they are also entered in the custom documents on which the tax has also been paid along with the interest. Hence there is no loss of revenue to the Trade Tax Department.
11. Against the aforesaid order of the Tribunal, the company has filed these two revisions challenging the confirmation of penalty. Learned counsel for the revisionists has submitted that during the assessment year 1992-93 in the assessment proceedings it was found that the company has imported polyester films from outside the country worth Rs. 41,78,141.60 which is duly recorded in the account books of the company, which was verified by the assessing authority and this fact was also mentioned in the assessment order passed for the assessment year 1992-93. He has further submitted that no penalty can be legally imposed merely because these goods were brought to Noida without furnishing form XXXI though in the assessment proceedings it was found that the applicant has imported polyester films from the foreign countries which was disclosed by the company itself and was duly entered in the account books of the company and on which the tax has already been deposited by the company on its sales made by it. He has placed reliance in the case of Gulmarg Chemicals and Scientific Works, Aligarh v. Commissioner of Sales Tax, U.P. reported in [1997J 105 STC 144 (All.) ; 1996 UPTC 973. In the case of Gulmarg Chemicals [1997] 105 STC 144 (All.) ; 1996 UPTC 973, the purchases of Rs. 3,09,832.90 were found duly recorded in the account books, which was verified and due tax was paid but it was found that form XXXI was not furnished for the purchases of these goods, which was brought from outside. Hence the penalty was imposed by the assessing authority and was confirmed up to the Tribunal level. The High Court in para 13 has held as under:
"In view of the admitted facts of the case and the clear finding of facts recorded by the assessing authority failure to furnish the form No. XXXI for the purchase made from outside U.P. by post was merely a technical omission caused by lack of knowledge or negligence but not with any intention to evade tax as the assessee has already recorded all the purchases in his account books which were duly verified and the tax thereon has been deposited by the assessee. I, therefore, hold that in view of the facts and circumstances of the present case the imposition of penalty under Section 28-A read with Section 15-A(1)(o) of the U.P. Sales Tax Act was not justified in law and on facts. Consequently the imposition of penalty by the assessing authority and the confirmation thereof by the appellate authorities is liable to be quashed."
12. He has further placed reliance in the case of Commissioner of Sales Tax, U.P. v. Oriental Carbon Limited reported in (1997) 10 NTN 105 in which the apex Court has held that finding of fact reached by the Tribunal that there had been no intention to cause any loss to the revenue or to evade tax in importing into State certain consignment without form XXXI the imposition of penalty on the ground of breach of provision of Section 28-A was not good.
13. In the present case also the Tribunal has recorded a categorical finding that no loss has been caused by the applicant-company since the entire transaction is duly recorded in the account books on which tax has also been paid as such neither there was intention of the company to evade tax nor there was any loss of revenue to the department and as such the Tribunal was not correct in confirming the imposition of penalty.
14. In the case of Sri Mewa Lal and Sons v. Commissioner of Sales Tax reported in 2002 UPTC 165 the court has held a finding has to be recorded by the authorities concerned that the goods were being transported in an attempt to evade assessment or payment of tax due or likely to be due under the Act. Unless such a finding is recorded no penalty can be imposed.
15. In the present case on the contrary there is a finding in favour of the company that there was no intention to cause any loss to the revenue and the entire purchases are duly recorded in the account books and duly supported by the customs documents.
16. In the case of Hindustan Steel Ltd. v. State of Orissa reported in [1970] 25 STC 211, the Supreme Court has held as under:
"An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also 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 a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute."
17. For the assessment year 1993-94 at the time of seizure of goods by the Trade Tax Officer all the documents except form XXXI were there. The consignment was admittedly coming from Delhi Custom Bounded warehouse and was proceeding to company's godown which is situated at Noida. Details of the consignment was verified by the Customs Department, New Delhi, and was duly recorded in the custom's record and the company has deposited the tax.
18. The Trade Tax Tribunal being last fact-finding authority has categorically recorded a finding that the department has not suffered any loss of revenue since the entire tax has been deposited along with the interest, for the delay in depositing the tax and the entries of these goods have been duly made in the custom documents including in the records maintained at Delhi for its movement from Delhi to Noida. Form XXXI as required under Section 28-A was not available at the time of seizure but other documents were available and the entire payment was made through bank in advance.
"Section 28-A. Import of goods into the State against declaration.--(1) Any person (hereinafter in this section referred to as the importer) who intends to bring, import or otherwise receive, into the State from any place without the State, any goods other than the goods exempt under Clause (a) of Section 4 in such quantity or measure or of such value, as exceeds,--
(a) .............
(b) the quantity, measure or value notified by the State Government in that behalf, in connection with business, shall obtain the prescribed form of declaration on payment of the prescribed fee from the assessing authority having jurisdiction over the area where his principal place of business is situated or, in case there is no such place, where he ordinarily resides :
.......
(2) Where such goods are to be consigned by road--
(a) the importer shall furnish to the consignor the declaration in the prescribed form in duplicate duly filled in and signed by him and the driver or any other person in-charge of any vehicle carrying any such goods shall carry with him the copies of such declaration duly verified by the consignor in the prescribed manner together with such other documents as may be prescribed and shall before crossing any check-post or barrier established under Section 28, deliver one copy of such declaration to the officer in-charge of such check-post or barrier and the other copy of the declaration and the remaining documents along with the goods to the importer or his agent."
"Rule 83(4).--(a) The owner, driver or any other person in-charge of the vehicle or vessel shall, in respect of such goods carried in the vehicle or vessel as are notified under or referred in Sub-section (1) of Section 28-A and as exceed the quantity, measure or value specified in the notification therein, carry with him the following documents :
(i) form of declaration for import or certificate in form XXXII, hereinafter in the rules in this chapter referred to as declaration or certificate, as the case may be, in duplicate ;
(ii) cash memo, bill or challan,
(iii) authorisation for transfer of goods/goods challan hereinafter referred to as trip sheet in triplicate."
19. Learned counsel for the applicant has placed reliance on the division Bench judgment of the Allahabad High Court in the case of Jain Shudh Vanaspati Ltd. v. State of U.P. reported in [1983] 53 STC 54 ; 1983 UPTC 198 wherein the court has held as under :
"......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 them 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......."
20. The decision was also followed in the case of Dates Discs Private Limited v. Commissioner of Sales Tax reported in [1999] 114 STC 285 (All.); 1998 UPTC 598. Learned counsel for the applicant has placed reliance on the judgment of the Allahabad High Court in the case of Wimco Limited v. Commissioner, Sales Tax, U.P., decided on March 28, 2003. In the aforesaid case the court has followed the decision of Oriental Carbon Limited (1997) 10 NTN 105 (SC) and Jain Shudh Vanaspati Ltd. case [1983] 53 STC 54 (All.); 1983 UPTC 198. In the present case the Tribunal has recorded a finding of fact that there was no loss of revenue to the department and further there was no intention to evade tax the order of penalty under Section 15-A(1)(o) cannot be sustained.
21. For the reasons recorded above both the revisions are allowed. Order of Tribunal dated June 5, 1998 is set aside and penalty imposed under Section 15-A(1)(o) is cancelled.