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TMI Blog2023 (5) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... s taxable, incidental & ancillary to the business of the appellant-assessee and covered under the definition of 'business" as defined under Section 2 (c) of Punjab VAT Act, 2005? (ii) Whether on the facts and in the circumstances of the case, the Ld. Tribunal was justified in upholding the imposition of penalty without proving any mens-rea on the part of the appellant? (iii) Whether on the facts and in the circumstances of the case, the Ld. Tribunal was justified in upholding the charging of interest when there is no mens-rea on the part of the appellant and tax has been paid as per returns? Brief facts of the case are that the assessment of the appellantassessee for the year 2006-07 was framed by the Designated Officer vide order dated 28.07.2010 creating an additional demand of Rs.29,64,583/- on the following grounds:- "(i) levying tax on sale of old cars. (ii) Disallowance of ITC availed on sundry items i.e. machinery repair, generator repair, computer repair, fans for office, stationery items, which were purchased against cash memo/retail invoices. (iii) non inclusion of freight in GTO and avoidance of payment of tax. (iv) non reversal of ITC on account of lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 940/- has been made in respect of transportation charges earned by the appellant as transporter." The Tribunal has based its decision on adding the above said income to the sale of old cars to the income of the assessee on the ground that it was as per entry at serial No.66 of the list of Tax Free Goods (Schedule B of PVAT Act, 2005). Learned counsel for the appellant has argued that the Tribunal has ignored the definition of "business" as given in Section 2 (c) of the Punjab VAT Act, 2005 and has wrongly relied upon notification No. SO 50/PA.8/2005/S.8/2006 by which, sale of "Pre-owned Cars" was made taxable. He has further argued that at the time of purchase of old cars, the appellant had suffered sale tax, which the assessee as a buyer was bound to pay. The old cars were never held by the assessee for the purpose of sale or purchase, but they were for used for carrying out his business transactions. The sale was carried to get rid of the old vehicles having regard to lapse of time and their wear and tear. As per Entry No.60 in Schedule B, the intent of the legislature was to tax persons, who are exclusively dealing in the sale of old cars only. He has referred to the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educe the cost of production of goods in the business of selling in which he is engaged. An attempt to realize price by sale of surplus unserviceable or discarded goods does not necessarily lead to an inference that business is intended to be carried on in those goods, and the fact that unserviceable goods are sold and not stored so that badly needed space is available for the business of the assessee also does not lead to inference that business is intended to be carried on in selling those goods. The contention on behalf of the State in respect of the first part of the turnover for 1964-65 therefore fails. With respect to the second part of the turnover the question, whether the amendments in 1964 to the definition of "business" and "casual trader" are directly applicable has to be considered. It will be observed that under the definition of "business" even commercial transactions carried on without a motive to make gain or profit, or whether or not any profit accrues from such activity are included in that definition. The amended sub clause (ii) also includes with that definition transaction in connection with or incidental or ancillary to such trade, manufacture or advent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. Thereafter, penalty of Rs. 16,02,484/- was imposed under Section 56 of the Act and amount of Rs. 5,52,857/- had been charged as interest under Section 32 of the Act. Before the Tribunal, learned counsel for the assessee-appellant had stated that he had wrongly claimed ITC on items bearing Nos. 41 to 59 as mentioned in Form VAT-24 and customer-wise summary. In view of the said fact, the appellant was not held entitled to claim ITC on the said items. Once, the assessee had himself admitted his mistake, whether penalty of Rs. 16,02,484/- under Section 56 of the Act can be imposed along with interest of Rs. 5,52,857/-. On this issue, reference can be made to a judgment passed by in Commissioner of Income Tax, Ahmedabad vs. Reliance Petroproducts Private Limited, (2010) 11 Supreme Court Cases 762, wherein, Hon'ble the Supreme Court was examining a case of imposition of penalty under Section 271 (1) (c) of the Income Tax Act. The assessee had claimed incorrect expenditure in his return. In that case, it was observed as under:- "9. As against this, Learned Counsel appearing on behalf of the respondent pointed out that the language of Section 271(1)(c) had to be strictly c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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