Once the documents were produced before passing the seizure order, it cannot be said that the revisionist had any intention to evade payment of tax: Allahabad High Court.

Court No. 1 Case : SALES TRADE TAX REVISION No. 191 of Revisionist : M S Colgagte Palmolive India Ltd Opposite Party : Commissioner Of Commercial Entry Tax Lucknow Counsel for Revisionist : S.D. Singh Aditya Counsel for Opposite Party : C.S.C Hon ble Piyush Agrawal J 1. Heard Sri Aditya Pandey counsel for the revisionist and Sri Manu Ghildyal Standing Counsel for the State. 2. The present revision has been filed against the order dated 7.11.2008 passed by Commercial Tax Tribunal Kanpur Bench 1 Kanpur in Second Appeal No. 238 of 2006 for the assessment year 2004 2005 arising out of penalty proceedings initiated under Section 15 A(1)(o) of U.P. Trade Tax Act 1948 in which following questions of law have been raised 1) Whether the penalty of Rs. 4.00 lacs imposed and sustained against the applicant is wholly illegal and contrary to the provisions of Section 15 A(1)(o) of the Act 1948 2) Whether the penalty imposed on the applicant under Section 15 A(1)(o) of the Act 1948 is wholly perverse arbitrary and excessive 3. Sri Aditya Pandey counsel for the revisionist submits that the revisionist is a Public Limited Company and engaged in the business of manufacturing and trading of tooth paste tooth powder tooth brush and cosmetics etc. The revisionist used to send its goods from the place of factory to its various branches situated all over the country. He further submits that 926 cartoons of colgate tooth powder were dispatched from Aurangabad Warehouse to its Kanpur Warehouse as a stock transfer along with which all requisite documents were accompanied. The goods while coming to Kanpur passed through various States and before passing the State of Madhya Pradesh all documents were produced at the entry exit check post and were duly endorsed. When the goods reached the State of Uttar Pradesh at Raksa check post at Jhansi the driver of the truck in question handed over all the documents for filling up the trip sheet in accordance with Section 28 A of the Act 1948 to the agent. In the truck some goods of M s LML Limited Kanpur was also there. Due to the inadvertent mistake of the broker munshi dalal at the check post only details of goods of M s LML Limited Kanpur was filled. On the said basis the check post authorities detained the goods and issued the show cause notice Immediately on being noticed all documents of the revisionist goods such as Invoice Form 31 Transport G.R. Way Bill etc. were produced before passing of seizure penalty order but the same was not accepted and the seizure order was passed estimating the value of goods of Rs. 10 lacs and demanded the security for the release of the goods of Rs. 3 lacs. The security amount was reduced to Rs. 1.5 lacs by order dated 10.02.2005 Thereafter the penalty proceedings were initiated against the revisionist under Section 15 A(1)(o) of the Act 1948 and by order dated 4.8.2005 the penalty of Rs. 4 lacs was imposed. Against the said order the revisionist preferred a first appeal and by order dated 21.06.2006 the same was confirmed and the same was affirmed by the impugned tribunal order 4. Sri Aditya Pandey counsel for the revisionist submits that action to impose penalty is not justified as the goods in question were duly accompanying all relevant documents as mentioned in Section 28 A of the Act 1948 Moreover the same was produced before passing of the seizure order along with the reply to the show cause notice. He further submits that if the documents are produced before passing of the seizure there was no contravention of the provision of Section 28A of the Act. Hence the prayers for quashing of the penalty 5. Learned Standing Counsel supports the order passed by the authorities below. He further submits that at the time of submission of trip sheet no documents whatsoever were produced. On the physical verification the goods of the revisionist were found in Truck No HR 55B7590 and in the trip sheet only goods of M s LML Limited Kanpur were disclosed and therefore the seizure as well as penalty order were justified. 6. The Court has perused the record 7. Admittedly the goods in question were coming as a stock transfer from Aurangabad to Kanpur. On its journey to Kanpur the goods have passed through the State of Madhya Pradesh and the Sales Tax check post at Saidhna M.P. checked all the papers produced by the revisionist and was duly stamped. Thereafter when the goods reached at the entry check post of State of U.P.the driver produced all documents of the revisionist as well as of M s LML Limited Kanpur only for filling up the trip sheetwas produced only documents of M s LML Limited Kanpur was found and on physical verification of the truck in question the goods of the revisionist company i.e. 926 cartoons of colgate tooth powder were also found. On coming to the discrepancy found a show cause notice was issued. On the receipt of the show cause notice a reply was submitted along with the documents such as Invoice Form 31 Transport G.R. and Way Bill but the same was rejected as an after thought and the seizure order was passed and demanded security of Rs. 3 lacs for release of the goods that was modified by the order dated 10.02.2005 and was reduced to Rs. 1.5 lacs. 8. Thereafter the penalty proceedings under Section 15 A(1)(o) of the Act 1948 was initiated against the revisionist which was confirmed upto the tribunal. The penalty proceedings have been initiated only on the ground that the revisionist have contravented the provision of Section 28 A of the Act 1948 who intends to import goods in the State of U.P. from outside the State of U.P. without obtaining prescribed form of declaration and with the intention to evade payment of tax. The record reveals that before passing of the seizure order all the relevant documents were produced i.e Invoice Form 31 Transport G.R. as well as the documents also stamped of Madhya Pradesh. 9. This Hon ble Court in the case of Sarvashri Ramesh Chand Santosh Kumar Vs Commissioner of Trade Tax U.P. Lucknow 2010 U.P.T.C. 1113) held that the penalty under Section 15 A(1)(o) of the Act 1948 could not be imposed if the dealer not found to have contravented the provision of Section 28 A of the Act 1948. The Court has further held that if the documents have produced along with the reply to the show cause notice there is no attempt to evade tax and imposed the penalty is bad Paragraph 9 to 17 are being reproduced herein 9. The penalty provision of Section 15 A(1)(o) of the Act is attracted where the assessing officer is satisfied that the dealer has imported or transported or has attempted to import or transport any goods in contravention of the provisions of Section 28 A of the Act with an attempt to evade tax. 10. In M s. Ashish Trading Company Agra Vs. Commissioner of Trade Tax U.P. Lucknow 45 STR 294 this Court in considering penalty provisions of Section 15 A(1)(o) read with Section 28 A of the Act vis a vis non obtaining the declaration in Form 31 held that levy of penalty merely because no declaration form was produced cannot be sustained. 11. In ITI Limited Vs. The Commissioner of Trade Tax U.P Lucknow 2010 UPTC 643 the Court has laid down that where Form 31 was not initially produced but was subsequently furnished before the seizure the imposition of penalty under Section 15 A(1 o) of the Act is not justified. 12. A similar view was expressed in another decision of this Court reported in 2010 UPTC 503 M s Interarch Building Produce Ltd. Vs The Commissioner of Trade Tax. In this case the Form 31 was produced by assessee dealer before passing seizure order and the Court held in the circumstances that intention to evade tax was not reflected so as to attract the penalty provision 13. In 2009 NTN389 Multitex Filtration Engineering Ltd. Vs Commissioner of Commercial Tax U.P. Lucknow his Lordship of this Court relying upon a Division Bench decision in Jain Shudh Vanaspati Ltd. Ghaziabad and others Vs. State of U.P. and others 1983 UPTC 183 held that the attempt to evade tax is a mandatory pre condition for seizure of goods and for levy of penalty and the intention to evade tax cannot be inferred merely for the reason that the goods are not accompanied by the requisite declaration or that certain columns in the form have not been filled up 14. In the case in hand the basic ground for levying penalty is that the Form 31 was not available with the goods and in the bilti the name of the parties were subsequently filled up. It was on the basis of the aforesaid that an inference was drawn that the assessee dealer attempted to evade tax. It is admitted on record that before the seizure when the show cause notice was given Form 31 was produced by the assessee dealer along with the reply. The said production of Form 31 and other documents was voluntarily. Therefore when such documents were produced voluntarily before actual order of seizure being passed it cannot be inferred that the assessee dealer attempted to evade the tax. 15. Accordingly the inference so drawn and the finding that there was an attempt to evade tax has no legs to stand specially in the light of above referred various decisions. 16. In view of aforesaid facts and circumstances the question raised in this revision as to whether the levy of penalty under Section 15 A(1)(o) was justified is answered in favour of the assessee dealer and against the revenue and it is held that as there was no attempt to evade payment of tax the penalty could not have been imposed 17. Accordingly the revision is allowed. The impugned orders dated 3.3.2003 passed by the tribunal 21.9.2002 passed by Deputy Commissioner and 22.3.2002 passed by Assistant Commissionerare set aside." 10. The case in hand revisionist along with reply to show cause notice has filed the documents but no weightage was given to it and the seizure order was passed. Once the documents were produced before passing of the seizure order it cannot be said that the revisionist had any intention to evade payment of tax or made any contravention of the 11. Therefore in view of the above facts the revision is allowed and the impugned order is hereby set aside and the questions of law are answered accordingly in favour of revisionist 12. It is made clear that if any amount has been deposited in compliance with the penalty order the same shall be refunded in accordance with law within a period of two months from the date of production of a copy of this order. Order Date : 22.10.2021 SA

Summary: The revisionist along with a reply to show cause notice has filed the relevant documents before the seizure authorities but the same was paid no weightage, in such a case it cannot be said that the revisionist was trying to evade tax. Such an observation was made by the Hon’ble Allahabad High Court before Hon’ble Justice Piyush Agrawal in the matter of M/S Colgate Palmolive India Ltd vs  Commissioner Of Commercial/Entry Tax Lucknow [SALES/TRADE TAX REVISION No. – 191 of 2009] on 22.10.2021. 
The facts of the case revolved around a seizure of goods which was been transported as stock transfer and seized at the entry check post of State of U.P. (Raksha) (Jhansi). It was the contention of the revisionist that despite the production of all relevant documents before the seizure authority no heed was paid and a penalty of Rs. 4 Lacs was imposed. On the other hand, it was the contention of the standing council that at the time of submission of trip sheet (Behti), no documents whatsoever were produced. Thus, the penalty imposed is completely justified and bonafide in law.

The Hon’ble High Court referred to the judgment given in the case of Sarvashri Ramesh Chand Santosh Kumar Vs. Commissioner of Trade Tax, U.P. Lucknow (2010 U.P.T.C.-1113) in which it was held that “t the penalty under Section 15-A(1)(o) of the Act, 1948 could not be imposed if the dealer not found to have contravened the provision of Section 28-A of the Act, 1948. The Court has further held that if the documents have produced along with the reply to the show-cause notice, there is no attempt to evade tax and imposed the penalty is bad.”

Additionally, the Hon’ble High Court observed that it is on record that the revisionist had duly submitted all the documents before the authorities along with a reply of the show-cause notice. Therefore, it cannot be said that the revisionist had any intention to evade payment of tax or has made any contravention of the Act.

Finally, the Hon’ble High Court allowed the revision and set aside the impugned order.
Click Here To Read The Judgment.
Judgment Reviewed By: Rohan Kumar Thakur
 The facts of the case revolved around a seizure of goods which was been transported as stock transfer and seized at the entry check post of State of U.P. (Raksha) (Jhansi). It was the contention of the revisionist that despite the production of all relevant documents before the seizure authority no heed was paid and a penalty of Rs. 4 Lacs was imposed. On the other hand, it was the contention of the standing council that at the time of submission of trip sheet (Behti), no documents whatsoever were produced. Thus, the penalty imposed is completely justified and bonafide in law. 
The Hon’ble High Court referred to the judgment given in the case of Sarvashri Ramesh Chand Santosh Kumar Vs. Commissioner of Trade Tax, U.P. Lucknow (2010 U.P.T.C.-1113) in which it was held that “t the penalty under Section 15-A(1)(o) of the Act, 1948 could not be imposed if the dealer not found to have contravened the provision of Section 28-A of the Act, 1948. The Court has further held that if the documents have produced along with the reply to the show-cause notice, there is no attempt to evade tax and imposed the penalty is bad.”

Additionally, the Hon’ble High Court observed that it is on record that the revisionist had duly submitted all the documents before the authorities along with a reply of the show-cause notice. Therefore, it cannot be said that the revisionist had any intention to evade payment of tax or has made any contravention of the Act.

Finally, the Hon’ble High Court allowed the revision and set aside the impugned order.
Click Here To Read The Judgment.
Judgment Reviewed By: Rohan Kumar Thakur
 The Hon’ble High Court referred to the judgment given in the case of Sarvashri Ramesh Chand Santosh Kumar Vs. Commissioner of Trade Tax, U.P. Lucknow (2010 U.P.T.C.-1113) in which it was held that “t the penalty under Section 15-A(1)(o) of the Act, 1948 could not be imposed if the dealer not found to have contravened the provision of Section 28-A of the Act, 1948. The Court has further held that if the documents have produced along with the reply to the show-cause notice, there is no attempt to evade tax and imposed the penalty is bad.” 
Additionally, the Hon’ble High Court observed that it is on record that the revisionist had duly submitted all the documents before the authorities along with a reply of the show-cause notice. Therefore, it cannot be said that the revisionist had any intention to evade payment of tax or has made any contravention of the Act.

Finally, the Hon’ble High Court allowed the revision and set aside the impugned order.
Click Here To Read The Judgment.
Judgment Reviewed By: Rohan Kumar Thakur
 Additionally, the Hon’ble High Court observed that it is on record that the revisionist had duly submitted all the documents before the authorities along with a reply of the show-cause notice. Therefore, it cannot be said that the revisionist had any intention to evade payment of tax or has made any contravention of the Act. 
Finally, the Hon’ble High Court allowed the revision and set aside the impugned order.
Click Here To Read The Judgment.
Judgment Reviewed By: Rohan Kumar Thakur
 Finally, the Hon’ble High Court allowed the revision and set aside the impugned order.