IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

VAT Appeal No.3 of 2008

Date of decision: 29.1.2008

M/s Chumber Textiles

......Appellant

Versus

The State of Punjab and another

......Respondents

CORAM:-

HON'BLE MR.JUSTICE SATISH KUMAR MITTAL

HON'BLE MR.JUSTICE RAKESH KUMAR GARG

* * *

Present:

Mr. Puneet Kansal, Advocate for the appellant.

* * *

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 30.10.2007 (Annexure P-9)

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 u/s 56 and 60 of the Act?

(ii)

Whether penalty u/s 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 bonafide

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 circumstances of the

case, penalty can be imposed in respect of a bonafide

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 part of

assessee?

(vii)

Whether, on the facts and in circumstances of the

case, penalty can be imposed, on a harmonious

reading of Rules 36 and 40 of Punjab VAT Rules 2005,

for a bonafide 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 Hon'ble Supreme Court as

reported in 118 ITR 236 and 25 STC 211?

(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 bonafide 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

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 comp