Raj Tube Co. vs State of Punjab - 2023 Supreme(P&H) 3417

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(P&H) 3417

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
RITU BAHRI, MANISHA BATRA, JJ.
M/s. Raj Tube Co. – Appellant
Versus
State of Punjab & Anr. – Respondents
VATAP NO. 98 of 2010 (O&M)
Decided On : 13-03-2023

Advocates Appeared:
Mr. Sandeep Goyal, Advocate; For the Appellant
Mr. Saurabh Kapoor, Addl. A.G., Punjab.

Headnote:(A) Punjab Value Added Tax Act, 2005 - Section 68(2) - Penalty imposed for alleged tax evasion - Appellant failed to provide genuine documentation while transporting goods - Penalty of Rs. 1,21,951/- upheld by the Tribunal. (Paras 2 and 8)

(B) Legal Standard for Imposing Penalty - Penalties under tax laws require actual findings of intent to evade tax supported by substantial evidence. A mere statement by the vehicle driver is insufficient to constitute mens rea for evasion. (Para 4)

Facts of the case:
The appellant, a dealer registered under VAT laws, sold iron pipes to a registered entity, but was penalized after goods were detained due to discrepancies in documentation suggesting potential tax evasion.

Findings of Court:
The Tribunal's decision to uphold the penalty was based on the lack of genuine supporting documentation and credibility of statements provided regarding the ownership and origin of goods.

Issues: The primary issues addressed were the credibility of documents presented by the appellant and whether the statements made during the detention justified the imposition of a penalty for tax evasion.

Ratio Decidendi: The court held that the appellant's failure to produce credible documentation promptly indicated an intention to evade tax; therefore, the penalty was justified based on established legal standards for such cases.

Result: Appeal dismissed.

Table of Content
1. appellant engaging in resale of iron and steel goods. (Para 1 , 2)
2. arguments against penalty based on driver’s statement. (Para 3 , 4)
3. court analysis on the validity of invoicing and penalty. (Para 5 , 6 , 7)
4. no legal error found in tribunal’s order. (Para 8)
5. appeal dismissed for lack of merit. (Para 9)

JUDGMENT

Ritu Bahri, J. (Oral)

The instant appeal, under Section 68(2) of the PUNJAB VALUE ADDED TAX ACT , 2005, is against the order dated 30.08.2010 (Annexure A-8) passed by the Value Added Tax Tribunal, Punjab.

2. The appellant is a dealer duly registered under the provisions of the PUNJAB VALUE ADDED TAX ACT , 2005 and the Central Sales Tax Act, having its place of business at Vishavkarma Nagar, Mandi Gobindgarh. The appellant being engaged in the business of resale of iron and steel goods, had sold iron pipes to M/s Biksons Engineering Works of Ahmednagar (Maharashtra). The purchasing dealer was duly registered under the State and Central Sales Tax Law. The goods were covered by Invoice No.407 dated 26.02.2009 amounting to Rs.4,06,504/- + CST @ 4% (Rs.16,260/-) (Annexure A-1). Those goods were also covered by G.R. No.465 dated 26.02.2009 (Annexure A-2) and the same were loaded in vehicle No. PB- 23F-1285. When the goods were on the way from Mandi Gobindgarh to Ahmed Nagar, the ETO, Mobile Wing, Patiala, detained the same under Section 51 (6) (a) of the Punjab VAT Act, 2005 on the ground that the driver of the vehicle had stated that he had loaded the entire goods from the business premises of M/s K.S. Steel Tubes, Amloh Road, Mandi Gobindgarh. The goods and the vehicle were got released by the appellant on furnishing of bank guarantees. A show cause notice (Annexure A-3) was issued to the appellant on 26.02.2009. In response to the notice, the appellant appeared before the AETC through its counsel and produced all relevant documents. The appellant also submitted written submissions on 06.03.2009 (Annexure A-4). Finally, vide order dated 06.03.2009 (Annexure A-5) passed by the AETC, a penalty of Rs.1,21,951/- was imposed upon the appellant under Section 51 (7) (b) of the Punjab VAT Act on the ground that there was mens rea to evade tax in the present case as the goods meant for trade were being transported by the dealer without proper and genuine documents with an intention to evade tax. Against the said order, appellant filed an appeal before the First Appellate Authority i.e. Deputy Excise and Taxation Commissioner (Appeals), Patiala, which was dismissed vide order dated 18.12.2009 (Annexure A-6). Even the second appeal filed by the appellant before the Punjab VAT Tribunal was dismissed vide order dated 30.08.2010 (Annexure A-8). Hence, the present appeal.

3. Learned counsel for the appellant has vehemently argued that the respondent-department has wrongly rejected the bills produced by the appellant on the ground that the goods were loaded from the premises of M/s K.S. Steel Tubes. However, no steps were taken against M/s K.S. Steel Tubes, who as per department, was the true owner of those goods. The driver of the vehicle had not crossed the ICC of Punjab State and was still in the territory of Punjab at the time of detention. Documents (Annexures A-1 and A-2) produced by the driver were the only documents, which were required to be produced before leaving the State of Punjab. The oral statement given by the driver that the goods were loaded from the premises of M/s K.S. Steel Tubes cannot be made a ground to impose penalty. He has further argued that the appellant was the owner of the goods. The appellant had got the vehicle, along with the goods, released after furnishing adequate bank guarantee before the competent authority. Once the goods were released to the appellant and no action was taken against M/s K.S. Steel Tubes, the appellant has to be treated as owner of the goods and only on the basis of oral statement given by the driver, M/s K.S. Steel Tubes cannot be taken to be the owner.

4. L

Click Here to Read the rest of this document