Unfilled Form 38 Column Cannot Alone Justify VAT Penalty Without Tax Evasion Intent: Allahabad HC

Commissioner Commercial Tax U.P. Lucknow Vs S/S Saurabh Traders Railway Bus Stand Pilkhuwa Hapur (Allahabad High Court)

Summary: The Allahabad High Court considered a revision against the Commercial Tax Tribunal’s order dated 14.05.2013, whereby the revision preferred by the respondent was allowed and the order imposing penalty had been set aside. Goods transported in Vehicle No. UA -10/3486 were intercepted by the Mobile Squad at Moradabad. The driver furnished various documents, and it was found that Column 6 of Form 38 was blank, wherein the bill/cash memo/chalan/tax invoice number were not endorsed. The authorities apprehended that the Form had been left blank with an intention to evade tax and for reuse of the Form and imposed a penalty of Rs. 1,38,000/- under [Section 54(1)(14) of the VAT Act](https://taxguru.in/ “U.P. VAT Act, 2008”).

The Tribunal, however, found that merely because Column 6 of Form 38 remained unfilled, it could not be presumed that there was an intention to evade tax. The respondent had obtained Form 38, the duplicate copy contained the relevant entry, and the driver was carrying other relevant documents. The omission was explained as having occurred due to negligence or human error.

The High Court also considered the Circular dated 03.02.2009 issued by the Commissioner, Commercial Tax, U.P., which provided that where a vehicle importing goods was accompanied by Form 38 and the goods tallied with Form 38 and other documents, the inspecting officer was required to fill an unfilled column after verification, with signature and stamp, and release the goods.