The main legal point established in the judgment is that failure to provide a satisfactory explanation for non-compliance with tax filing obligations can justify the imposition of tax and penalties under the Punjab Value Added Tax Act, 2005.

Rakesh Kumar Garg, J.

1. The assessee has filed the present appeal under Section 68 of the Punjab Value Added Tax Act, 2005 against the order of the Tribunal in Appeal No. 59 of 2007-08 (VAT) decided on October 30, 2007 (annexure P9) raising the following substantial questions of law:

(i) Whether there is any mens rea on the part of the appellant to evade the payment of tax for which the penalty can be imposed under Sections 56 and 60 of the Act?

(ii) Whether penalty under Section 56 of the 2005 Act can be imposed only where the designated officer records his satisfaction that there is concealment on part of the assessee/dealer and such concealment is with an intention and/or in order to evade or avoid payment of tax?

(iii) Whether issuing the show cause notice qua the penalty specified in the notice is required before such penalty can be imposed actually after inspection of records, etc., by the designated officer as envisaged under Section 61 of the VAT Act read with Rule 50(1)(c) of the VAT Rules 2005?

(iv) Whether the notice to show cause under Rule 50(1)(c) would require specifying the provisions under which the penalty is proposed to be imposed as also the quantum of the penalty to be imposed? (v) Whether, on the facts and in circumstances of the case, tax can be claimed on account of a bona fide omission of a particular purchase being reflected in the quarterly returns when no purchase tax is payable under the VAT Act in respect of the said item?

(vi) Whether, on the facts and in the circumstances of the case, penalty can be imposed in respect of a bona fide omission in the quarterly returns filed by the assessee as prepared by his accountant when it was the first year of the new enactment coming into force and there being no mens rea to evade or avoid payment of tax on the part of the assessee?

(vii) Whether, on the facts and in the circumstances of the case, penalty can be imposed, on a harmonious reading of Rules 36 and 40 of the Punjab VAT Rules, 2005, for a bona fide omission of a particular entry in quarterly returns filed under Rule 36 before the filing of annual statement filed under Rule 40 of the said Rules?

(viii) Whether the appellate authorities are required to deal and give a finding on each of the contentions raised on behalf of the appellant?

(ix) Whether, on the facts and in the circumstances of the case, penalty upon the dealer can be imposed in view of the settled law of the honourable Supreme Court as 118 ITR 236 (sic) and [1970] 25 STC 211 Hindustan Steel Ltd. v. State of Orissa?

(x) Whether the first appellate authority is, in the facts and circumstances of the case, under legal duty to satisfy himself regarding the disputed questions of facts in the impugned order by summoning the records of the case and other means?

(xi) Whether penalty, in the facts and circumstances of the case, can be imposed for bona fide omission in quarterly returns when there is no such omission in the annual statement duly filed under Rule 40 of the VAT Rules, 2005?

2. The appellant is a dealer registered under the provisions of the Punjab Value Added Tax Act, 2005 (hereinafter referred to as "the VAT Act, 2005") and is engaged in the business of purchase and sale of bed sheets, blankets, etc., having its place of business at Moga, District Moga. The appellant filed his four quarterly returns under the VAT Act, 2005 during the year 2005-06. During the course of scrutiny of returns, it was noticed by the Designated Officer-cum-Excise and Taxation Officer, Moga that the dealer/assessee had made purchases of bed sheets and blankets, etc., from outside the State of Punjab and after comparing the data of inter-State purchases available in computer system of the department it was found that the dealer has omitted to reflect in returns, purchases worth Rs. 4,85,024.

3. Accordingly, a notice was issued to the dealer on September 13, 2006 for verifying the facts. Sh. Chamkaur Singh, proprietor of the firm appeared on Septe