TMI Blog2010 (2) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... nswered in favour of the assessee. - Value Added Tax Appeal No. 4 of 2009 - - - Dated:- 17-2-2010 - ASHUTOSH MOHUNTA AND MEHINDER SINGH SULLAR , JJ. The judgment of the court was delivered by MEHINDER SINGH SULLARr J. The brief facts, relevant for disposal of present appeal, filed by the assessee-M/s. Jain Steel Industries (for brevity, the assessee ), emanating from the record and as set up by the assessee, are that during the course of its normal business of sale and purchase, it sold the goods falling under the category of iron and steel to Bombay firms, vide bills on inter-State sale basis against C form and charged CST at the rate of two per cent on those goods, in view of the notification dated March 31, 1995. On April 23, 2006, while transporting the goods to its destination, the driver of the vehicle voluntarily reported the goods at ICC (Export), Shambhu and produced the copies of two invoices/bills (annexures A1 and A2) along with the receipts. The checking officer claimed that the goods were liable to be taxed at the rate of four per cent, while the assessee has taxed it at the rate of two per cent. It was claimed by the assessee that under similar circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , are taxable at the rate of two per cent. The argument is that since the driver of the vehicle had voluntarily reported at ICC (Export) Shambhu Barrier and produced all the bills, receipts and requisite documents, so, question of any concealment did not arise and if there was no concealment of facts, then the required tax can be calculated and charged at the time of final assessment, but no penalty can be imposed on the assessee in this respect under section 51 of the Act. The argument further proceeds that there must be a cogent material on record and specific finding that there has been an attempt to avoid and evade the tax before invoking the penalty clause, which, according to the learned counsel for the assessee, is totally lacking in the present case. In support of his contention, he has placed reliance on the judgment of this court in case Xcell Automation v. Government of Punjab [2007] 5 VST 308, judgment dated January 18, 2010 passed in case GSTR No. 17 of 2006 titled as Anand Refrigeration Co. (P) Limited, Jalandhar City v. State of Punjab [2010] 30 VST 235 (P H), judgment dated February 10, 2010 passed in case V.A.T.A.P. No. 18 of 2008 titled as N.S.S. Enterprises, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finally within a period of fourteen days from the commencement of the enquiry proceedings. (c) The officer referred to in clause (b), before conducting the enquiry, shall serve a notice on the consignor or consignee of the goods detained under clause (b) of sub-section (6), and give him an opportunity of being heard and if, after the enquiry, such officer is satisfied that the documents as required under sub-sections (2) and (4), were not furnished at the information collection centre or the check-post, as the case may be, with a view to attempt to avoid or evade the tax due or likely to be due under the Act, he shall by order, for reasons to be recorded in writing, impose on the consignor or the consignee of the goods, penalty equal to fifty per cent of the value of the goods involved. In case, he finds otherwise, he shall order release of the goods for sufficient reasons to be recorded in writing. He may, however, order release of the goods and vehicle on furnishing of a security by the consignor or the consignee in the form of cash or bank guarantee or crossed bank draft for an amount equal to the amount of penalty imposable and shall decide the matter finally within a perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njab [1972] 30 STC 597, it was held that levy of penalty is not based on any assumption that the goods were transported after sale within the State. Its basis is the attempt to evade tax and it prescribes a condition precedent for the levy of penalty. The condition precedent is that the authorized officer should record a finding that there has been an attempt to evade the tax due under the Act. Sequelly, in Prakash Roadlines (P) Ltd. v. Commissioner of Commercial Taxes in Karnataka [1991] 83 STC 49 (Karn), it was observed that mere failure to produce documents on demand by the assessee not by itself sufficient to sustain levy of penalty . Again, this court in Xcell Automation's case [2007] 5 VST 308 has held as under (at page 309): That exercise of power at the check-post, to be valid, should have reasonable nexus with the attempt at evasion. Straight-jacket approach is not called for and each instance of exercise of power has to be seen in the light of individual facts. Neither exercise of power can be restricted, wherever required for checking attempt at evasion nor can be extended to areas where there was no attempt at evasion. Where relevant documents are duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf under section 51(7) of the Act, under the present set of circumstances. There is another aspect of the matter, which can be viewed from a different angle. Possibly, no one can dispute that there exists a provision under section 51(7) of the Act for levying penalty in this connection, but that does not mean that penalty should be imposed on each and every case only on the ground that such provision exists in the statute. Penalty should only be imposed if party 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 be imposed merely because it is lawful to do so. The honourable apex court in Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 has ruled that 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 . Thus, seen from any angle, we are of the considered opinion that in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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