2011 (1) TMI 1265 - HC - VAT and Sales Tax

Whether levy of penalty under section 13A(4) of the Act can be said to be unjustified? Held that - None of the authorities below has accepted the explanation put forward by the applicant that it has sold only 9 M.T. bitumen against bill No. 79 dated March 1 2002 which was being transported in Tanker No. U.P. 81 D-4408 from Agra to Jabalpur and further 10.310 M.T. bitumen was loaded in the said tanker at Mathura which was purchased by Jabalpur party from Indian Oil Corporation Limited and Tanker No. U.A.C. 9078 had been subjected to break down. Admittedly at the time of inspection neither the bill of 19.310 M.T. bitumen was produced nor the bill of 9 M.T. bitumen claimed to have been sold by the applicant was produced. Bill No. 7924318 dated February 14 2002 issued by the Indian Oil Corporation Limited and G.R. No. 597 dated March 1 2002 were produced. In bill No. 7924318 dated February 14 2002 Tanker No. U.A.C. 9078 was mentioned. There was nothing to show that the said bill and bilties relate to the goods loaded in the tanker. The driver and khalasi of the tanker in their statements have not stated that the goods of Tanker No. U.A.C. 9078 have been loaded in Tanker No. U.P. 81 D-4408. Admittedly the entries of 19.310 M.T. bitumen found at the time of inspection was not found entered in the books of account of the applicant. In the circumstances levy of penalty under section 13A(4) of the Act cannot be said to be unjustified.Appeal dismissed.

Summary

Issues:
1. Penalty imposition under section 13A(4) of the U.P. Trade Tax Act, 1948.
2. Interpretation of documents related to the transportation of goods.
3. Verification of entries in the books of account.

Analysis:

1. Penalty Imposition under Section 13A(4) of the U.P. Trade Tax Act, 1948:
The case involved a revision under section 11 of the U.P. Trade Tax Act against an order imposing a penalty under section 13A(4) of the Act. The applicant, engaged in the business of buying and selling bitumen, claimed to have sold goods to a construction company. The goods were intercepted during transportation, leading to penalty proceedings. Despite explanations provided by the applicant regarding the transfer of goods between tankers due to breakdown, the penalty was upheld by the authorities. The Tribunal confirmed the penalty based on the lack of proper documentation and entries in the books of account. The court, after considering the arguments, upheld the penalty imposition, stating that the levy was justified given the circumstances.

2. Interpretation of Documents Related to Transportation of Goods:
The key issue revolved around the interpretation of documents presented during the transportation of goods. The driver of the intercepted tanker produced certain bills and documents, including one from the Indian Oil Corporation Limited. However, discrepancies arose regarding the linkage of these documents to the goods found in the tanker during inspection. The applicant's contention that the goods were transferred between tankers due to a breakdown was not substantiated with proper documentation at the time of inspection. The authorities emphasized the lack of clarity in the presented documents and the absence of evidence supporting the transfer of goods as claimed by the applicant.

3. Verification of Entries in the Books of Account:
Another significant aspect of the case was the verification of entries in the applicant's books of account. The authorities noted discrepancies between the claimed sale of goods and the entries recorded in the books. While the applicant asserted that entries for the sold goods were maintained, the actual inspection revealed inconsistencies. The absence of entries for the total quantity of goods found during inspection raised doubts about the accuracy of the applicant's records. Consequently, the penalty imposition was also justified based on the discrepancies in the recorded entries.

In conclusion, the court dismissed the revision, upholding the penalty imposed under section 13A(4) of the U.P. Trade Tax Act, 1948. The decision was based on the lack of proper documentation, inconsistencies in the presented records, and the failure to substantiate the claims made by the applicant regarding the transportation of goods.