IMPORTANT POINT
The court established that valid documentation and absence of intent to evade tax are crucial for imposing penalties under tax law.

JUDGMENT :

Ritu Bahri, C.J.

The revisionist has challenged the penalty order passed by the Deputy Commissioner (Assessment)-2, Commercial Tax, Haridwar, and the judgment of the Commercial Tax Tribunal, Bench Dehradun, dated 25.11.2014, whereby after setting-aside the judgment passed by the First Appellate Authority, imposed a penalty of Rs.10.00 lakhs on the revisionist.

2. The revisionist is a manufacturer of rubber tires. On 24.09.2013, Mobile Squad Authority, Amarpur, Haridwar have checked the Vehicle No.HP72 3524, and on inspection, found that the transported goods rubber by Farm-16 No.-U.K. VAT/K-2010-2440358, through M/s East India Transport Agency, 20B Abdul Hameed Street, Kolkata, by Bilti No.-6169578 (in two copies), bill no.1376/ date 17.08.2013 of M/s Mysoor Polymers and rubber product Ltd., 20B K.R.S road, Meta Street Pot Mysool, total value of Rs.35,10,000-00 was carried on. The driver of the vehicle was having old series form-16. On account of that, the trip sheet could not be prepared. For,-16 old K series was declared obsolete on 20/02/2013. So on the ground of above fact the mobile squad officer Amarpur issued show cause notice to assessee, in compliance of it the assessee filed its reply. The above imported material was given to the M/s Mysoor polymers and rubber product for job work, which was being return by above firm M/s Mysoor Polymer without doing any job work on account of the coming into end the agreement. The above goods is neither purchase nor sale, only being return without any job work on old form by mistake. There is no intention of evasion of tax in it. The driver of the vehicle could not produce the trip-sheet and Form 16 used by the transporter, was old form.

3. Thereafter, a notice was issued under Section 48(8) of the Value Added Tax Act, and ex parte penalty order was passed against the assessee.

4. The stand taken before the Appellate Authority by the revisionist was that previously they had sent an import declaration form to a dealer with whom they do the job work. The import declaration form was with M/s Mysoor Polymer and Rubber Product Ltd. When M/s Birla Tyres, demanded return of its goods, the above firm sent the goods using the old form-16 No.U.K. VAT K2010, No.2440358. The dealer returning the goods and transporter was not having knowledge that K series form-16 declared obsolete. When the trip sheet was being prepared at the border of Uttaranchal, the trip sheet could not be prepared because of K series form-16. The case of the revisionist was before the Appellate Authority that they were importing the goods along with the requisite documents. They had already filed new form-16 No.2767947 in place of old import declaration form.

5. The Appellate Authority, after hearing and going through the record, gave a finding that the present revisionist was a bonafide dealer and the goods in question were accounted in the accounts books. The assessing authority has not raised any objection regarding the above said facts. Hence, as per Section 43(5), two conditions which exist for imposing the penalty are not made out. The driver of the vehicle was having all the requisite documents of the goods.

6. The Appellate Authority referred to the judgment in the case of Commissioner of Sales Tax vs. M/s R.K. Enterprises, 2006 NTN Vol. 30 All., dated 03.01.2006, where it has been held that merely because Form-31 was declared obsolete, an inference cannot be drawn that any attempt was made to evade the tax. In that case, there was a challan, gate pass and Form-31, though were obsolete, were attached with the documents. In the above said background, the imposition of penalty was found not to be correct.

7. On the second issue, reference has been made to the judgment in the case of M/s Malhotra Iron Store vs. CST, 1996 UPTC Page 33 and M/s Show Scot Distilleries Pvt. Vs. STO, 1983 UPTC 387, wherein it has been held that if the goods are of the bonafide dealer, and secondly, if the goods are recorded in the accoun