IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH VAT Appeal No.2 of 2006 Date of decision: 25.2.2008 M/s Triloki Traders ......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. K.L. Goyal, Advocate for the appellant. Mr. A.G. Masih, Sr. DAG, Punjab. * * * Rakesh Kumar Garg, J . 1. The assessee has filed the present appeal challenging the order of the Sales Tax Tribunal, Punjab Chandigarh dated 28.11.2005 raising the following substantial questions of law:- “(i) Whether in the facts and in the circumstances of the case, the ld. Tribunal is justified to treat the sale of Sil Air Bubble Film as sale of 'packing material' and therefore taxable at the first stage of sale u/s 5(1-A) of the PGST Act, 1948? (ii) Whether in the facts and in the circumstances of the case, the ld. Tribunal is justified to uphold the imposition of penalty u/s 10(6) and levy of interest u/s 11-D of the PGST Act, 1948, when there was no default under Section 10(4) of the Act ibid? (iii) Whether the imposition of penalty as upheld by the Tribunal can be justified when there was no mensrea on the part of the appellant dealer?” 2. The brief facts of the case are that the appellant is a registered dealer under the Sales Tax Laws and is engaged in the business of packing material, ice etc. The appellant filed four requisite returns under the Punjab General Sales Tax Act, 1948 for the assessment year 2002- 2003. Not satisfied with the returns filed by the dealer-assessee, a notice under Section 11(2) of the Act was issued for framing assessment. In response to the said notice, the assessee along with his Advocate appeared and also produced account books from time to time. During the scrutiny of purchase bills it was found that the assessee-appellant has purchased packing material ie. Silair Air Bubble Film from M/s The Supreme Industries Ltd., Gwalior (MP). The assessee was liable to pay tax at the rate of 4 % for the said packing material at first stage within the State being the first seller after import as per notification dated 23.2.2002. However, the dealer-assessee has failed to discharge his tax liabilities. It was also found that he has returned sales worth Rs.20,74,895.67/- as sales to registered dealers under Section 5(2)(a)(ii) and has not paid the tax due. A notice dated 23.4.2003 was served upon the assessee giving him reasonable opportunity of being heard. The appellant-assessee in his written reply dated 28.4.2003 stated that he deals in resale in Silair Air Bubble Film which is taxable at last stage under the category of general goods and, therefore, no penal action or interest can be imposed upon the appellant. 3. The Assessing Officer vide his order dated 30.4.2003 rejected the claim of the appellant and taxed the goods i.e Silair Air Bubble Film worth Rs.20,74,895.67 p at first stage at the rate of 4%. The Assessing Officer also imposed penalty under Sections 10(6), 11(d) and 23 of the Punjab General Sales Tax Act, 1948. The appeal filed by the appellant was dismissed by the Appellate Authority vide order dated 16.4.2004. However, while dismissing the appeal the quantum of penalty imposed under Section 10(6) of the Act was reduced to Rs.20,000/-. 4. The assessee-appellant filed further appeal challenging the above said order of the Deputy Excise and Taxation Commissioner (A), Patiala before the Sales Tax Tribunal, Punjab, Chandigarh. The Tribunal vide impugned order dated 28.11.2005 dismissed the appeal filed by the appellant while holding that the goods sold by the appellant i.e. Silair Air Bubble Film was a packing material and the same was taxable at the first stage at the rate of 4%. 5. We have heard learned counsel for the parties and perused the record. 6. A perusal of the order of the Tribunal would show that the Tribunal has given a finding of fact to the effect that the assessee was dealing in Silair Air Bubble Film which is a packing material. For arriving at this conclusion, the Tribunal has relied upon the fact that the said item has been classified under Chapter 39.23 as packing material under the Central Excise Tariff Act, 1985 and even the said classification under the Central Excise Tariff Act, 1985 has been upheld by the Hon'ble Supreme Court in the case of Collector of Central Excise, Bombay vs. Tender Care International 1998 (104) ELT 424 (Tribunal) and the said classification has never been challenged by the appellant. The Tribunal has also found that the appellant had shown all the transactions in his trading account as packing material (i.e. prior to the year 2001 when the item packing material was made taxable at the first stage) and in the past also the material had been accepted as packing material by the assessee himself. Thus, it is evidently clear that the material sold by the dealer was treated as packing material from the very beginning beyond the reasonable doubt and at no stage he has challenged the said classification which he himself had chosen to indicate in his trading account. We find no ground to interfere in the said finding of fact given by the Tribunal. It is relevant to mention here that the counsel for the appellant has not raised any arguments in support of the questions raised in para 5 (ii) of the grounds of the appeal. Hence, we find no merit in this appeal and the same is hereby dismissed. (RAKESH KUMAR GARG) JUDGE February 25, 2008 (SATISH KUMAR MITTAL) ps JUDGE