Rudra Pipes Pvt Ltd Vs Commissioner of Trade/ Commercial Tax (Allahabad High Court)
The Allahabad High Court allowed the revision against penalty proceedings under Section 54(1)(14) of the U.P. VAT Act. The assessee, a registered dealer in iron and steel, had purchased goods from Haryana using Form-38 and transported them to Uttar Pradesh, where they were sold within the State. The goods were detained and later seized, followed by penalty proceedings. The Tribunal dismissed the assessee’s appeal.
The Court noted that the use of two Form-38s for importing the goods was undisputed and that the forms had not been cancelled. The assessee’s disclosed turnover had also been accepted in the assessment proceedings. The Court found no cogent material contradicting the Form-38 transactions. It further held that the absence of a statutory requirement to submit a weighing slip could not sustain the adverse finding. Relying on the principle stated in M/S Rama Pulses, the Court held that mens rea to avoid payment of tax was necessary for imposing the penalty. Since the use of Form-38 indicated no intent to avoid tax, the impugned orders were quashed. The revision was allowed.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard learned counsel for the parties.
2. Cause shown is sufficient to condone the delay.
3. The delay condonation application is allowed.
4. This is the application to recall the order dated 30.03.2022, by which the revision was dismissed for non-prosecution.
5. Cause shown for non-appearance of the counsel has been explained to the satisfaction of this Court. The restoration application is allowed. The order dated 30.03.2022 is, therefore, recalled and the revision is restored to its original number.
(Re: Memo of Revision)
6. The present revision has been filed against the order dated 26.09.2013 passed by Commercial Tax Tribunal, Ghaziabad in bunch of cases arising out of penalty proceeding initiated under Section 54(1)(14) of the U.P. VAT Act. The revision was admitted vide order dated 13.11.2013 on following question of law:
“Whether the Tribunal is justified in levying penalty under Section 54(1)(14) of the Value Added Tax Act, 2008 by treating the transaction to be interstate transaction whereas actually the transaction was within the State of U.P. which required no Form 38?”
7. The facts of the case are that the revisionist is a registered dealer engaged in the business of wholesale and retail trading of various items of iron and steel. For assessment years 2008-09 & 2009-10, the assessments were completed under the U.P. Entry Tax Act and disclosed turnover was accepted by the Department and every sale and purchase is being shown in the books of account. On 15.12.2012, the revisionist purchased iron and steel from M/s Surendra Steel Supply Company, Jhakal, Haryana vide Bill No. 008 dated 15.12.2012, Builty No. 1115 dated 15.12.2012 and Form-38 of the application no. 1640455 as well as against the Bill No. 009 dated 15.12.2012 amounting to Rs. 11,51,693/-, Builty No. 1116 dated 15.12.2012 and Form-38 No. 3348828 were issued. The aforesaid consignments were loaded and brought from Haryana by Truck No. PB23J4201. After receiving the goods in the State of U.P., the same was sold to M/s Ashok Steels, Azamgarh Road Shahjahaganj, Jaunpur vide tax invoice no. 109 dated 16.12.2012 though the same Truck No. PB23J4201 and Builty No. 1330 dated 16.12.2012. The tax invoice OC Stamp No. 291514 was issued for intra U.P. transportation. The goods in question were detained on 16.12.2012 at about 11:15 p.m. at Mathura and a show-cause notice was issued to which a detailed reply was furnished. On being dissatisfied, the authorities vide order dated 23.12.2012 seized the goods and demanded security of Rs. 16,02,796/-. The revisionist contested the matter up to this High Court through Revision No. 65 of 2013 but could not succeed and thereafter penalty proceeding was initiated on 08.03.2013 under Section 54(1)(14) of U.P. VAT Act, to which a reply was submitted on 20.03.2013 clearly stating that the transaction in question was duly recorded in the books of account and the goods were purchased from Haryana and Form-38 No. 3348828 was used for transportation. On being dissatisfied, the penalty order was passed against which an appeal was filed which was dismissed and thereafter second appeal was filed which was also dismissed by the impugned order. Hence the present revision.
8. Learned counsel for the revisionist submits that the goods in question were purchased from Haryana along with due From-38 which was issued much prior to the date of purchase and the same was used in the transaction in question and the authorities below without any material has drawn an adverse inference. He further submits that there was no intent to avoid payment of tax and no attempt was made for the same, hence, the proceeding has wrongly been initiated. In support of his submission, he relies upon the judgment passed by this Court in the case of Krishna Gram Udyog Samiti versus Commissioner of Trade Tax, U.P., reported in 2013 NTN (Vol. 53)-202 and M/s Rama Pulses versus State of U.P. and others, reported in 2009 NTN (Vol. 41)-189.
9. Learned Standing Counsel supports the impugned order.
10. After hearing the parties, the Court has perused the record.
11. The record shows that the authorities have not disputed while importing the goods from Haryana and two Form-38 Nos. CC3348828 & CC1640455 were used. The said fact is specifically mentioned in the reply to the show-cause notice, copy of which has been annexed as Annexure No.9. The relevant paragraph no.4 of the reply is extracted herein-below:
“That the goods in question was purchased from M/s Surindera Steel Co. Jhakhal, Haryana through Form No. 38 bearing no. CC3348828 and CC1640455 and reply in relation to detention of the vehicle has already been filed with your office on dated 18.12.2012 which is already placed on record file.”
12. The said fact has neither been disbelieved nor any cogent material has been brought on record to show otherwise. The record shows that in the previous assessment year, the tax disclosed by the assessee has been accepted. The Tribunal while rejecting the appeal has recorded that the assessee has not filed Kanta Parchi (weighing slip) of Ghaziabad. It has been contended that there is no provision under the Act of submitting of weighing slip. Once there is no requirement for maintaining of submission of weighing slip, the ground taken for rejection on that count cannot sustain. Once the turnover disclosed by the assessee has been accepted in the assessment proceeding and Form-38 issued by the Department has not been canceled, the adverse view drawn against the assessee in the penalty proceeding cannot sustain. The mens rea to avoid tax is necessary. In absence of any intent to avoid payment of tax, penalty cannot be imposed, as held by Division Bench of this Court in the case of M/S Rama Pulses (supra).
13. It goes without saying that the revisionist has used two Form-38 for importing the goods. Once the form has been used, the assessee cannot escape from being assessed at the time of assessment. Once Form-38 has been used, the intent not to pay tax cannot be attributed to the revisionist. Hence, the impugned orders cannot sustain and are hereby quashed.
14. The revision is allowed.
15. Question of law is answered accordingly in favour of the revisionist.
