2013 (5) TMI 765 - HC - VAT and Sales Tax

Whether the penalty under section 22A(7) could be imposed upon the goods in transit which is STP in the hands of the consignor? Whether the petitioner could be bound to produce the books of accounts of the THIRD PARTY? Whether the petitioner have a right to know about the progress of the enquiry conducted by the authorities regarding the transactions genuineness? Held that - In the present case very identity of the seller of the goods is doubtful and even it has not been proved that the goods were tax-paid. The orders passed by the Tax Board and DC (A) appear to be just and proper and no error illegality or perversity have been committed by the Tax Board while sustaining the penalty the same has rightly been sustained and even otherwise it is a case of finding of fact and no question of law is found to be involved.

Summary

Issues involved:
1. Imposition of penalty under section 22A(7) on goods in transit
2. Obligation to produce third party's books of accounts
3. Right to information about progress of enquiry regarding transaction's genuineness

Analysis:
1. The revision petition challenged the penalty imposed under section 22A(7) on the petitioner for goods in transit. The case involved a tanker checked by the Flying Squad officer, leading to doubts about the origin of the goods. Despite conflicting statements and documents, the petitioner failed to substantiate the purchase from a specific company, resulting in the penalty. The petitioner argued against the penalty based on conjunctures and surmises, citing a previous judgment regarding tax-paid goods. However, the court upheld the penalty, considering the detailed investigation and circumstances surrounding the case, emphasizing the petitioner's failure to provide concrete evidence to support their claim.

2. Another issue raised was the obligation to produce the third party's books of accounts. The petitioner contended that they were not obliged to provide records of a third party, Yogendra Trading Company, from whom the goods were allegedly purchased. The respondent argued that the petitioner failed to produce sufficient evidence to confirm the purchase, highlighting the importance of substantiating claims with proper documentation. The court noted that while the petitioner may not be required to present third party records, additional proof was necessary in this case to establish the legitimacy of the transaction.

3. The third issue involved the petitioner's right to information about the progress of the enquiry regarding the transaction's genuineness. The petitioner sought clarity on the investigation and challenged the penalty based on lack of information and alleged unjustified imposition. The respondent emphasized the thorough investigation conducted and the petitioner's failure to provide substantial evidence. The court considered the facts and circumstances, concluding that the penalty was rightly imposed, based on the findings of the lower authorities and the petitioner's inability to prove the transaction's authenticity.

In summary, the court dismissed the revision petition, upholding the penalty imposed on the petitioner for failing to substantiate the purchase of goods and emphasizing the importance of providing concrete evidence in such cases. The judgment highlighted the need for thorough investigations and proper documentation to support claims in tax-related matters.