VAT Appeal No.3 of 2007 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Date of Decision:-9.3.2010 M/s Mohan Fibre Products Ltd. Dera Bassi, Patiala. ...Appellant Versus State of Punjab and others ...Respondents CORAM: HON'BLE MR.JUSTICE ASHUTOSH MOHUNTA HON'BLE MR.JUSTICE MEHINDER SINGH SULLAR Present:- Mr.Kishan Singh, Advocate for the appellant. Mr.Piyush Kant Jain, Addl. AG Punjab for the respondents. Mehinder Singh Sullar, J. The crux of the facts, relevant for disposal of present appeal and emanating from the record, is that on 30.7.2005, the goods (apple trays) of the appellant-assessee M/s Mohan Fibre Products Ltd. (for brevity “the assessee”) were transported in four trucks bearing registration Nos.HP-25-1123, HP-67- 2487, HP-09-0635 and HP-19-B-0117 through transport company CSF, Chandigarh from Pabhat, Dera Bassi (Punjab) to Parwanoo (Himachal Pradesh). The drivers of the trucks did not report at Information Collection Centre, while leaving the limits of State of Punjab and took the vehicles through escape route. The trucks were apprehended by the Excise and Taxation Officer, Mobile Wing, Punjab. As the papers produced by the drivers appeared to be suspicious to the authority, therefore, the goods were detained. Consequently, a show cause notice dated 30.7.2005 (Annexure P3/T) was issued in this regard to the assessee. 2. In pursuance of the show cause notice, the Company Secretary appeared before the designated officer on 5.8.2005 with the request to release the goods in question against the bank guarantee, but did not produce the account books or any other document to substantiate the genuineness of the transactions. Again, on 8.8.2005, the Company Secretary appeared and sought VAT Appeal No.3 of 2007 2 time and the matter was adjourned to 11.8.2005 with the direction that no further opportunity will be afforded in this respect. The assessee did not produce the account books, cash book, ledger, ITC proof etc. despite adequate opportunities and tried to explain that there was no such violation. 3. The explanation put forth by the assessee did not find favour and the designated officer recorded a finding that there is a clear cut attempt to avoid/evade the tax in the instant transactions. Therefore, a penalty was imposed on it (assessee) under section 51 (7) (c) of the Punjab Value Added Tax Act, 2005 (for short “the Act”), vide impugned order dated 12.8.2005 (Annexure P4). 4. Aggrieved by the impugned order (Annexure P4), the assessee filed the appeal before the Deputy Excise and Taxation Commissioner-cum-Joint Director (Enforcement), Patiala Division, Patiala, which was dismissed, vide impugned order dated 7.2.2006 (Annexure P6). 5. Again aggrieved by the impugned order (Annexure P6), the assessee filed the appeal, which was also dismissed by the VAT Tribunal, Punjab, Chandigarh, vide impugned order dated 9.10.2006 (Annexure P8). 6. The assessee still did not feel satisfied with the impugned orders and filed the present appeal. 7. The appeal was admitted to determine the following substantial questions of law:- “A) Whether the Assistant Excise and Taxation Commissioner has traveled beyond his jurisdiction while imposing penalty U/s 51(7)(c) of Punjab VAT Act, 2005 when the goods were detained by the Detaining Officer on the short ground of non- production of Form VAT-XXXVI issued by any ICC ignoring the fact that the State Govt. has not established any ICC on Pabhat to Shimla Road via Panchkula? B) Whether penalty could be imposed U/s 51(7)(c) of Punjab VAT Act, 2005 when the goods were sent to Himachal Pradesh by way of stock transfer and for VAT Appeal No.3 of 2007 3 sale on consignment basis which is permissible U/s 6-A of Central Sales Tax Act, 1956 and no tax of the State is involved?” 8. Assailing the impugned orders, the learned counsel for the assessee has vehemently argued that the goods of the assessee were accompanied with proper and genuine documents including GR issued by the transport company. Therefore, no penalty can be imposed on it (assessee) for non-production of form VAT-XXXVI. The argument is that the form VAT-XXXVI was not generated from where the vehicles were being taken from Zirakpur to Shimla Highway, as there was no Information Collection Centre established by the department. Hence, he submitted that the present appeal be accepted. 9. Hailing the impugned orders, on the contrary, the learned State counsel has argued that there is an ICC Barrier at Zirakpur itself and the drivers of the vehicles adopted an escape route. The contention is that the drivers of the concerned vehicles did not produce the relevant documents and get the form VAT XXXVI generated at ICC. Therefore, the designated officer has rightly imposed the penalty under section 51 (7)(c) of the Act and no interference is warranted in this connection. 10. Having regard to the rival contentions of the learned counsel for the parties and having gone through the record with their assistance, we are of the considered view that no ground for interference in the impugned orders is made out. 11. It is not a matter of dispute that on 30.7.2005, the drivers of the indicated trucks did not report at ICC, Zirakpur and adopted an escape route, in order to evade the tax. The vehicles were apprehended by the Excise and Taxation Officer, Mobile Wing, Punjab. As the documents produced by the drivers were suspected to be ingenuine, therefore, the goods were detained. The bare perusal of the record would reveal that the assessee failed to produce the relevant documents before the designated officer despite adequate opportunities. As per provisions of section 51 of the Act, the persons incharge of the goods were required to produce the documents at the ICC Barrier, but they lacked in this context. The case was re-examined and the detaining officer VAT Appeal No.3 of 2007 4 again, inter-alia, reported that the assessee failed to produce the relevant documents, pertaining to the consignment/branch transfer. Again, it is not a matter of dispute that the goods were being transported from the State of Punjab to Himachal Pradesh. Moreover, having completed all the codal formalities, the authorities have recorded a finding of fact based on the evidence that the assessee did not inform at ICC Barrier nor produced the genuine documents, in order to avoid/evade the tax. 12. The argument of the learned counsel for the assessee that since it was stock transfer from Punjab to Himachal Pradesh, so no tax was leviable and penal clause cannot be invoked, is not only devoid of merit, but misplaced as well. The Tribunal recorded a finding of fact and observed as under:- “The goods were being transported from the State of Punjab to Himachal Pradesh. The goods were loaded in four trucks and the driver of none of these trucks reported at the ICC Barrier falling on the way. The contention of the Ld. counsel that there was only stock transfer of the goods and as such no tax was involved, cannot be accepted. The perusal of the record shows that in one of the four invoices, the consignee of the goods shown was M/s Mohan Buyer Moulding Pvt. Ltd. It was also recorded therein that it was a consignment sale against form. If it was only a consignment transfer to an agent under the agency agreement, the consignment sale was not required to be recorded in the invoices. The other three invoices were also on a printed form with printed words thereon, “Retail Invoice- original for buyer”. These invoices were allegedly issued in favour of its office by the appellant company at Parwanoo. If it was so, the retail invoices were not required. Moreover, in all these invoices, buyers order Nos. had been also recorded. All this shows that the goods were being sent on buyers order, while invoices were issued in favour of its office, by the appellant company, with an intent to evade tax.” 13. Therefore, we see no legal infirmity in the finding recorded by the appellate authorities. Once, it is proved that neither the assessee reported the goods meant for trade at ICC Barrier adopted the escape route nor produced the VAT Appeal No.3 of 2007 5 indicated relevant documents before the detaining or designated officer, then the intention of the assessee to avoid/evade the tax is inevitable, in the obtaining circumstances of the case. Therefore, it is apparent from record that the driver, who was person Incharge of the goods of the assessee, did not stop his vehicle despite signal. It was chased and brought back to the ICC Barrier. The driver failed to produce the relevant documents, so much so the assessee did not produce any material before the designated officer to prove the genuineness of the transaction, despite adequate opportunities. All these facts if cumulatively put together, then the conclusion of evading or avoiding the tax is inevitable. Hence, it is held that the assessee has contravened/violated the provisions of the Act and the authorities below have rightly imposed the penalty on it (assessee), in the obtaining circumstances of the case. 14. In the light of the aforesaid reasons, the questions of law involved in this appeal are, accordingly, answered against the assessee. 15. No other point, worth consideration, has been urged or pressed by the learned counsel for the parties. 16. For the reasons recorded above, the instant appeal is hereby dismissed, with no order as to costs. (Mehinder Singh Sullar) Judge (Ashutosh Mohunta) Judge 9.3.2010 AS Whether to be referred to reporter? Yes/No