Punjab VAT Tribunal held that merely because the invoice is issued in two consecutive serial numbers, that cannot lead to presumption of tax evasion. Hence Penalty levied u/s 51(7) (b) of Punjab VAT Act 2005 is quashed.
FULL TEXT OF THE ORDER OF VAT TRIBUNAL, PUNJAB
This order will dispose of an appeal filed u/s 63 of the Punjab Value Added Tax Act, against an order dated 16.02.2017 passed by the First Appellate Authority i.e. Deputy Excise and Taxation Commissioner, Jalandhar Division, Jalandhar, confirming the order dated 06.09.2016 passed by the Assistant Excise and Taxation Commissioner, ICC, Sharrbhu (Export), District Patiala, imposing a penalty of Rs.46,880/- on detention of vehicle No. PB-32J-7563.
Brief facts which are relevant for the decision of this appeal are to the effect that vehicle No. PB-32J-7563 loaded with sports goods reached at the ICC, Shambhu (Export) on 29.08.2016. The driver of the vehicle Shri Amarjit produced following documents:-
1. Invoice No.001/002 dated 25.08.2016 issued by the consignor in favour of M/s B.G. and Co., NH 31, Coochbehar, West Bengal for the sale of sports goods amounting to Rs.147350/- (excluding) CST and surcharge.
2. G.R.No.1612 of Lovely Road Carrier, Jalandhar for self generated Form VAT-36 containing the particulars of invoice.
On perusal of the invoice produced by the driver, it was noticed by the Detaining Officer that the invoice runs into two pages but contains different numbers i.e. No. 1 & No. 2 which did not appear to be proper and genuine to the Detaining Officer. When this discrepancy was confronted to the driver, he expressed his inability to explain. In order to verify the genuineness of ,the-documents, the goods alongwith the vehicle were detained u/s 51 (6) (a .,Or the Punjab VAT Act and notice was issued to the consignor for 31.08.2016 through.the owner cum driver of the vehicle.
The Proprietor was represented by Shri Manjit Singh, who appeared before the Detaining Officer on 29.08.2016 instead of 31.08.2016 to which date notice already stood issued. The said representative, as apparent from the order of the Detaining Officer, admitted his fault in issuing invoice in the manner stated above and he was directed to produce accounts books. The said representative allegedly did not, produce the same. The goods were taxable and were meant for trade. The Detaining Officer arrived at a conclusion that the consignor has violated the provisions of Section 51(2) of the Act. The goods were released against security equivalent to 30% of penalty leviable u/s 51 (7) (b) of the Act. The cash security was taken of Rs.46,880/-. The Detaining Officer forwarded the case to the Assistant Excise and Taxation Commissioner, ICC, Shambu (Export), District Patiala for necessary action u/s 51 (7) (b) of the Act.
A notice was issued to the consignor for 06.09.2016 which was served upon the proprietor’s father who attended the proceedings before the Assistant Excise and Taxation Commissioner and got the goods released on 29.08.2016. The consignor claimed that the invoice was issued running into two pages containing pages No. 1 & 2, but the Officer concerned formed an opinion that it cannot be determined from the said invoices whether the goods are covered by two invoices or by one invoice. The purpose of issuing the invoice with two Sr. numbers was not understood nor this was allegedly explained by the representative of the appellant. The said officer formed an opinion that the consignor having not produced the account books or the relevant bill book and other related documents to prove the genuineness of the invoice. The provisions of Section 51(2) of the Act had been violated by the taxable person and it was an intention to evade tax. He_ formed an opinion that the intention was established for evasion of the tax.
On the basis of the observations made the Assistant Excise and Taxation Commissioner, ICC, Shambhu (Export), District Patiala imposed a penalty of Rs.46,880/- u/s 51(7) (b) of the Punjab VAT Act. Aggrieved against the said order of penalty an appeal u/s 62 of the Punjab VAT Act was filed before the First Appellate Authority wherein the order of penalty was challenged on the ground that the Penalizing Authority had not given proper opportunity to the appellant to be heard and that the penalty had been imposed by non speaking order. It was urged before the First Appellate Authority that the goods had been voluntarily reported at ICC, Shambhu (Export) and that the number of items being large, the description of the goods was spread over two invoices, It was submitted that due CST was charged on the invoice and that the Designated Officer had failed to prove that it was a case of tax evasion on part of the appellant for levying penalty u/s 51 (1) of the Punjab VAT 2005. Reliance had been placed on the judgment of M/s Hindustan Steel Ltd, Vs. State of Orissa (1972) 83 EI’R 26 (SC) and a judgment of Haryana High Court in case M/s Pahar Chand & Sons Vs. State of Punjab 30 STC 211 to challenge the jurisdiction of the Penalizing Authority to impose penalty instead of referring the matter to the Assessing Authority of the concerned area. The First Appellate Authority vide order dated 16.02.2017 dismissed the appeal on the ground that the appellant had neither requested for adjournment nor produced books of account as such there is no merit to re-examine the case and the appeal was dismissed.
Mr. Amit Bajaj, Counsel appearing for the appellant has contended that in this present case, the penalty has been imposed u/s 51(7) (b) of the Punjab VAT Act, merely on the ground that the goods covering invoices were spread over two pages containing Sr. No.1 & 2 and that such reason is not sufficient enough to arrive at a conclusion that the appellant had got any intension to evade tax ‘or any attempt had been made to evade any tax especially when the goods had been voluntarily reported at the exit point in Punjab. He argued that if the appellant had any malafide intention, the goods would not have been voluntarily reported at the ICC, Shambu (Export). He urged that the penalty had been levied on the technical ground and that the imposition of penalty is not justified and it is not a reasonable because there has not been any breach of any statutory duty u/s 51 of the Punjab VAT Act. It is urged that the order of imposition of penalty by the authorities below is liable to be set-aside.
I have heard Ld. Counsel for the appellant and carefully perused the VAT invoice. which is serial No. 1 & Sr. No.2. The joint reading of both the invoices indicate that the first invoice contains 17 items and the grand total of their value is Rs.91900/-. The said value is carried forward in the second VAT invoice Sr. No.002 and the remaining articles are at Sr, No. 1$ to 26, The total value of the first invoice and second invoice is recorded at the bottom, The VAT surcharge @ of 10% has been added. Information value of the goods and the continuity of first invoice with the second invoice is apparent and established on the record. 1 have also carefully perused the said VAT invoices in context to the statutory requirement u/s 45 read with Rule 54 of the Punjab VAT Rules which prescribes the particulars which is required to be mentioned in VAT Invoice. A perusal of the VAT forms indicates that all the particulars which are required under Rule 54 have been mentioned in the VAT Invoice. The taxable person has satisfied that though the invoices have been given different serial numbers but they are in continuity with each other. In view of the nun–1;Ar of articles which are required to be included in the invoice, two pages have been used giving different numbers to the invoice of the same date which are in continuity. The next question which is required to be considered is whether any intention to evade tax or any violation of Section 51 (2) of the Punjab VAT Act could be presumed. The reference has been made to VAT 15 for the period of second quarter and the tax calculations mentioned therein. The said document indicates that the appellant neither had any intention to evade tax nor any tax has been evaded. The VAT invoice itself reflects the amount of VAT which is leviable. As the goods had been voluntarily reported at ICC, the transaction cannot escape the notice of the Assessing Authorities. It is also not disputed the due CST has been charged on the invoice and there is also no dispute that the transactions having been recorded in books of account and having been reported in the returns. There does not appear to be any mode which could lead to a presumption that any tax could have been evaded by the appellant. As such the order of penalty imposed u/s 51(7) (b) of the Punjab VAT deserves to be set-aside.
Ordered accordingly, The appeal is allowed and the non speaking order dated 16,02.2017 passed by the First Appellate Authority is hereby set-aside. The order dated 06.09.2016 passed by the Assistant Excise and Taxation Commissioner, ICC, Shambhu (Export), District Patiala imposing penalty of Rs.46,880/- is also set-aside. The appellant will be entitled to the refund of the amount of penalty which stands already deposited or to get the same adjusted in the subsequent assessments.