Aggrieved by the order of the Commercial Tax Tribunal dated 23.11.2011, these revisions have been filed before this Court.
Briefly stated the case of the revisionist, which is the Food Corporation of India, is that certain consignment of wheat was brought from the State of Punjab by Rail in rakes to the godown of the Food Corporation of India in Faizabad, U.P. It was also admitted that the goods were not accompanied by Form-38.
It is not disputed between the parties that during transit from outside U.P. to the godowns of the Food Corporation of India in Faizabad, U.P., the goods were neither seized nor intercepted by the respondent tax authorities. The entire consignment of wheat was sold by the Food Corporation of India and the tax on the same was also paid. It was at this stage that in 2010-11 the Taxing Authorities discovered that the goods were not accompanied by Form-38 and therefore, a presumption was drawn by the authorities that the goods had been brought from outside the state and sold within the state of U.P with the intent to evade the tax. Accordingly penalty proceedings were initiated against the Food Corporation of the India and the said penalty was levied under Section 54 (1) (14) of the U.P. Value Added Tax Act, 2008 (hereinafter referred to as the VAT Act, 2008).
The Assessing Authority, Joint Commissioner, Faizabad relying upon a seven judges Constitution Bench judgment of the Supreme Court reported in AIR 1977 SC 2279, R.S. Joshi etc. Vs. Ajit Mills Ltd. and Another etc., in which the Supreme Court has held that where admittedly the goods are not accompanied by the appropriate documents and are brought from outside the state and sold within the state there would be a presumption that the sale has been with the intent to evade tax and for this purpose, it is not necessary for the authority to examine as to whether the dealer or the importer actually intended or brought the goods within the state with the intent to defraud the tax, has imposed a penalty of Rs.1,49,01,600/- and has issued a demand for deposit of the same within 30 days. Similar order and demand has been made in all other above revisions as they are arise out of a common order in common proceedings in respect of the same consignment of wheat Rakes.
I have heard Sri Pradeep Agarwal, learned counsel for the revisionist and Sri Sanjieva Shankhdhar, learned counsel for the respondent-revenue and perused the documents on record.
Sri Pradeep Agarwal has referred to the provisions of Section 54 (1) (14) of the U.P. Value Added Tax Act, 2008 and submits that Clause 14 sub-section 1 of Section 54 provides for imposition of penalty where the dealer or any other person imports or attempts to import or abets the import of any goods, in contravention of the provisions under section 50 or section 51 with a view or intention of evading payment of tax on sale of such goods. He therefore submits that the use of the word "intention" in Clause-14 is a mandatory requirement and a mandatory finding to be recorded by the Taxing Authority as to whether there was an intention on the part of the dealer or importer to actually sell the goods in the State of U.P. with the intention of evading tax. He has placed reliance upon a Division Bench decision of this Court reported in 2009 NTN (41) 189, M/s Rama Pulses Vs. State of U.P. and Others, wherein the provisions of section 54 (1) (14) were being considered by the High Court and the Division Bench of this Court relying upon the judgment of the Supreme Court reported in 1983 U.P.T.C. 198 SC 198, Jain Shudh Vanaspati Ltd, Ghaziabad Vs. State of U.P. and Others has held that the intention to evade the tax has been found to be a necessary ingredient before imposing the penalty under the Act on the dealer or any other person. In the absence of any finding by the Assessing Authority that there was any intention on the part of the revisionist to evade the tax, the Division Bench has remitted the matter to the Taxing Authority.
Sri Sanjieva Shankhdhar, learned counsel for the respondent-revenue on the other hand referred to the provisions of Section 51 of the U.P. Value Added Tax, 2008 and submitted that the section provides that where any taxable goods are consigned by rail, air or post from a place outside the State for delivery to a dealer inside the State, the concerned authority shall not deliver the goods to the dealer or consignee unless he furnishes or causes to be furnished to such authority a declaration in prescribed form along with the order documents as may be prescribed. He therefore submits that by disposing of the consignment of wheat which was admittedly brought from the State of Punjab and was sold within the State of U.P. and was not accompanied by Form-38, the intention to evade tax was implicit in the act of the revisionist and the penalty levied by the Assessing Authority was absolutely correct as the power of the Assessing Authority flowed from the provisions of Section 54 (1) (14) of the VAT Act, 2008.
Sri Sanjieva Shankhdhar further submits that import of such a huge consignment of wheat from Punjab and selling the same within the State of U.P. by the Food Corporation of India was nothing but an act of causing unprecedented economic loss to the State revenue therefore in such circumstances when the facts are admitted nothing further remains for the Assessing Authority but to proceed ahead and impose penalty and therefore reconsidering the matter for purposes for discovering the intention to evade tax would be a mere empty formality.
Sri Sanjieva Shankhdhar has referred to the 7 Judge Constitution Bench judgment of the Supreme Court reported in AIR 1977 SC 2279, R.S. Joshi etc. Vs. Ajit Mills Ltd. and Another etc., particularly paragraph 19 of the said judgment where the Supreme Court has rejected the notion that a penalty or a punishment cannot be cast in the form of an absolute or no-fault liability but must be preceded by mens rea. Further what is to be noted is that the provisions of the statute being considered by the Constitution Bench were of Section 37 (1) of the Bombay Sales Tax Act, 1959. Section 37 (1) (a) of the said Act provided that if any person, not being a dealer, liable to pay tax under this Act, collects any sum by way of tax in excess of the tax payable by him, or otherwise collects tax in contravention of the provisions thereof, he shall be liable to pay in addition to any tax for which he may be liable, a penalty as prescribed in Clause (1) of Clause (a).
The said Constitution Bench judgment in my opinion was interpreting the specific provision of Section 37 (1) of the Bombay Sales Tax Act, 1959 and the said section did not require the Assessing Authority to examine whether the dealer or other person imports or attempts to import or abets the import of any goods with a view or intention of evading payment of tax on sale of such goods etc. and therefore the judgment in the case of R.S. Joshi (supra) would have no application to the facts of the present case.
Section 54 (1) (14) of the U.P. Value Added Tax, Act reads as follows:
"54. Penalties in certain cases-(1) The assessing authority, if he is satisfied that any dealer or other person, as the case may, has committed the wrong described in column 2 of the table below, it may, after such inquiry, if any, as it may deem necessary and after giving dealer or person reasonable opportunity of being heard, direct that such dealer or person shall, in addition to the tax, if any, payable by him, pay by way of penalty, a sum as provided in column 3 against the same serial no. of the said table:
...........................
Where the dealer or any other person, as the case may be, -
(i) imports or attempts to import or abets the import of any goods, in contravention of the provisions under section 50 or section 51 with a view to evading payment of tax on sale of -
(a) such goods; or
(b) goods manufactured, processed or packed by using such goods; or
(ii) transports, attempts to transport any taxable goods in contravention of any provisions of this Act ;
40% of the [value] of goods In the present case recording of a finding with regard to the intention of the dealer or importer or any other person importing such goods within the State of U.P. with a view to evade payment of tax is implicit in the provisions of Section 54 (1) (14) of the VAT Act, 2008 and therefore the judgment in the case of R.S. Joshi (supra), which is on its own facts is not applicable to the facts or the statutory provisions involved in the present case. On the other hand, in my opinion the judgment of the Division Bench in M/S. Rama Pulses (supra) relying on the Supreme Court judgment in the case of Jain Shudh Vanaspati Ltd. (supra) squarely applies to the facts of the present case.
From a perusal of the order of the Joint Commissioner, Faizabad Zone, Faizabad dated 28.02.2011 as well as the order of the Tribunal dated 23.11.2011 it will be seen that absolutely no finding has been given either by the Assessing Officer or by the Tribunal as to whether there was an intention on the part of the Food Corporation of India-revisionist to evade tax. In my opinion the provisions of Section 54 sub-section 1 clause 14 are mandatory and the Taxing Authorities are under an statutory obligation to examine the material on record and discuss the merits of the matter and record a clear finding with regard to the intention of the dealer or importer as to whether there was or was not an intention to evade tax.
In the present case both the orders of the Assessing Authority, Appellate Authority as well as Tribunal are silent on this aspect of the matter and therefore the orders dated 28.02.2011, 22.06.2011 and 23.11.2011 are illegal and in violation of the mandatory provisions of Section 54 (1) (14) of the VAT Act, 2008 and are accordingly set aside. The matter is remitted to the Assessing Authority to reconsider the matter in the light of the observations made above and the law laid down by the Division Bench of this Court in the case of M/S. Rama Pulses (supra) and Jain Shudh Vanaspati (supra), within a period of two months from the date of receipt of the certified copy of this order.
The revisions stand allowed.
Order Date :-24th September, 2014 N Tiwari