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2012 (1) TMI 143 - HC - VAT and Sales Tax
Tax evasion - penalty under section 51(7)(c) of the Punjab VAT Act 2005 - Whether or not under the circumstances of the case penalty can be imposed especially when the entire payment is routed through bank and major portion of payment is made in advance through bank for same transaction? Held that - The Tribunal recorded that the goods were booked on September 5 2009 at Delhi and the same were lying in the booking agency on October 26 2009. The goods were not dispatched immediately and the same were found at Amritsar which was not the route from Delhi to Jammu. The assessee-dealer was unable to give explanation much less satisfactory about the goods which were found at Amritsar as to in what circumstances the transporter preferred to go via Amritsar. Under the circumstances the Tribunal recorded that there was possibility of goods being disposed of at Amritsar and there was attempt to evade tax. Accordingly the penalty imposed by the assessing authority and the appellate authority was upheld by the Tribunal. No illegality or perversity could be demonstrated in the findings of fact recorded by the assessing authority and also the appellate authorities. Accordingly no substantial question of law arises in this appeal and the same is dismissed.
Issues:
1. Whether the appellant attempted to evade tax and is liable for penalty under section 51(7)(c) of the Punjab VAT Act, 2005Rs.
2. Whether the negligence of the driver in obtaining a transit slip is sufficient to impose a penalty under section 51(7)(c) without an attempt to evade taxRs.
3. Can a penalty be imposed under section 51(7)(c) without a proper enquiryRs.
4. Whether the order passed by the Punjab VAT Tribunal lacked reasoning and violated principles of natural justiceRs.
5. Can a penalty be imposed under section 51(7)(c) based solely on presumptions without proving an attempt to evade taxRs.
6. Can a penalty be imposed when payments are made through a bank for the same transactionRs.
Analysis:
1. The appellant, a partnership firm registered under the Delhi Value Added Tax Act, purchased ghee and sold it to a trader in Jammu. The goods were dispatched to Amritsar instead of Jammu due to transportation constraints. The goods were seized for not having a transit slip, leading to a penalty of Rs. 5,90,835 imposed by the Assistant Excise and Taxation Commissioner. Appeals to reverse the penalty were unsuccessful, leading to the current appeal.
2. The appellant argued that since no tax was payable in Punjab as it was a transit state, there was no attempt to evade tax. However, the Tribunal found the delay in dispatching the goods suspicious, indicating a possible attempt to evade tax. The Tribunal upheld the penalty based on the belief that the goods could have been disposed of in Amritsar.
3. The Tribunal noted discrepancies in the documentation and the lack of a transit slip, raising doubts about the authenticity of the transaction. The absence of proper documentation and explanations led to the imposition of the penalty, as there was a possibility of tax evasion.
4. The Tribunal's detailed findings highlighted the inconsistencies in the appellant's explanations and the lack of concrete evidence to support their claims. The Tribunal emphasized the importance of proper documentation and compliance with tax regulations to avoid penalties.
5. The Tribunal referenced legal precedents to support its decision, emphasizing the significance of transit slips and proper documentation in determining tax liabilities. The Tribunal found no merit in the appellant's arguments and upheld the penalty, as there was insufficient evidence to refute the suspicion of tax evasion.
6. The Tribunal's decision was based on the lack of satisfactory explanations from the appellant regarding the discrepancies in the transaction. The Tribunal concluded that no substantial legal question arose from the case, leading to the dismissal of the appeal.