2013 (10) TMI 1284 - HC - VAT and Sales Tax

Whether the Tribunal has rightly interpreted the provisions of section 51(7)(b) of the VAT Act 2005 which provides for imposition of penalty when an attempt to evade the tax is proved and the AETC has imposed penalty by holding that it was the case of reuse of the invoice - Held that - It emerges that the bill number value of goods names of consignee and consignor were mentioned on the GR. The destination of goods was from Moga to Delhi via Mandi Gobindgarh in order to reduce the freight charges to remain competitive in the market. In such circums tances the Tribunal recorded that there was no attempt to evade tax and the documents could not be said to be ingenuine. The finding of fact in which no perversity could be pointed out no ground for interference by this court is called for. Accordingly the substantial questions of law are answered against the appellants-State and in favour of the assessee - Decided against Revenue.

Summary

Issues:
1. Interpretation of section 51(7)(b) of the VAT Act, 2005 regarding imposition of penalty for tax evasion.
2. Imposition of penalty under section 51(7)(b) on consignor reusing the invoice.

Analysis:
1. The appeal was filed by the State under section 68(2) of the Punjab Value Added Tax Act against the order of the Value Added Tax Tribunal. The Tribunal had allowed the appeal of the assessee, stating that there was no attempt to evade tax and the documents were genuine. The State argued that the consignment was meant for sale in Mandi Gobindgarh, but the invoice showed a destination of Delhi, indicating an attempt to evade VAT payable in Punjab. The State contended that the penalty imposed was justified. However, the Tribunal found no merit in the appeal, citing previous sales transactions and the competitive market as reasons for the discrepancy in the destination mentioned in the invoice. The Tribunal concluded that there was no tax evasion attempt, and the documents were genuine.

2. The Tribunal analyzed the documents presented, including earlier sales transactions, ICC declarations, and the specifics of the consignment. It noted that the bill number, value of goods, names of consignee and consignor were mentioned on the goods receipt. The destination discrepancy was explained as a measure to reduce freight charges and stay competitive in the market. The Tribunal found no evidence of tax evasion or ingenuine documents. The judgment highlighted that the discrepancies in the destination mentioned on the invoice did not indicate an attempt to evade tax. The Tribunal upheld its decision that there was no tax evasion effort by the assessee. The court dismissed the appeal, ruling in favor of the assessee and against the State.

In conclusion, the High Court dismissed the appeal filed by the State, upholding the Tribunal's decision that there was no attempt to evade tax and the documents were genuine. The judgment emphasized the importance of analyzing the context and purpose behind discrepancies in documents to determine tax evasion attempts.