Heard Sri Lokesh Mittal, learned counsel for the applicant.
This revision petition is filed under Section 58 of the U.P. Value Added Tax, 2008 (hereinafter refer to as "VAT ACT") Brief facts of the case are that the revisionist is a registered dealer in whose favour the Assessing Authority has issued the registration certificate, which provides that the revisionist is allowed to carry on the business of purchase and sale of Kirana, Spices and Chemicals.
It is claimed that the revisionist has affected the purchases of 354 bags of Mirch (Chilly) from a registered selling dealer namely M/s. Priya Das Moti Lal and Company, Rawatura, Agra, which is also a registered dealer both under the U.P. VAT Act and Central Sales Tax Act. The said seller M/s. Priya Das Motia Lal & Company sold 354 bags of Chilly against Invoice No. 134 dated 26.11.2014 valuing sum of Rs. 4,38,964/- of which the seller has charged the tax and also the Mandi Shulk therefore, the grand total of 354 bags of Chilly comes Rs. 4,71,886/-. In the tax invoice the gross weight has been mentioned as 12011 kg. and the weight of Bardana is mentioned as 460 kg.
According to the revisionist, the revisionist has instructed the seller M/s. Priya Das Motia Lal and Company to send the said 354 bags of Chilly to the cold storage namely M/s. S.J. Ice and Cold Storage (Pvt). Ltd. just to avoid unnecessary burden of transportation, loading and unloading etc. and while instructing the seller the revisionist has also issued a letter dated 26.11.2014 addressed to the said cold storage requesting to take the delivery of 354 bags of Chilly and keep the same in the cold storage on behalf of the revisionist.
A survey was conducted at the aforesaid cold storage by the Special Investigating Bureau Commercial Tax, Range-A, Agra, on 18.12.2014, where the surveying party has noticed that the stock register maintained by the said cold storage discloses an entry of deposit of 354 bags of Chilly and where the name of the present revisionist was noted. Based on the aforesaid information collected by the investigating team a notice has been issued under Section 45(1) of U.P. VAT Act by the Deputy Commissioner (SIB) Commercial Tax, Range-A, Agra dated 09.01.2015 directing therein to appear and to produce the books of accounts justifying their stand about the availability of the aforesaid 354 bags of Chilly in the said cold storage. The date was fixed i.e. 12.01.2015. The verification of the books of account, produced by the revisionist, was carried out and the (SIB) Authority has noticed that the proof with respect of purchases effected by the revisionist is duly recorded in its books of accounts.
However, a report is prepared by the (SIB) Authority which was forwarded to the Assessing Authority of the revisionist and based on the said report the Assessing Authority of the revisionist has proceeded to pass the penalty order under Section 48(5) of the VAT Act.
The Assessing Authority of the revisionist has issued a show cause notice under section 48(5) dated 31.01.2017 . It seems that the detailed reply to the show cause notice was filed by the revisionist on 8.2.2017 explaining therein whatever has already been explained in pursuance of the notice issued by the Deputy Commissioner (SIB).
The Assessing Authority was not satisfied with the reply hence, has passed the penalty order under Section 48(5) dated 15.02.2017 by which he has imposed the penalty of Rs. 1,27,440/- which is determined on the basis of enhanced estimated value of the goods namely, the Chilly found at the Go-down of the Cold Storage.
Aggrieved by the penalty order first appeal was filed before the Additional Commissioner, Grade II (Appeal)-2, Commercial Tax, Agra. The Additional Commissioner (Appeals) has discussed the matter and after considering the entire evidence adduced by the respective parties he has recorded following findings and conclusions and has allowed the appeal. The finding recorded by the Ist appellate authority are reproduced:-
"bl izdkj Li"V gS fd /kkjk&48¼5½ ds vUrxZr vFkZn.M rHkh vkjksfir fd;k tk ldrk gS] tc eky ifjogudrkZ cksukQkbM O;kikjh u gks vFkok eky dh izfof"V mldh ys[kk iqLrdksa esa mfpr :i ls u dh xbZ gks vFkok eky fdlh cksukQkbM Mhyj ls lEcfU/kr u gks vFkok izi=ksa esa xyr fooj.k mfYyf[kr gksa vFkok djkioapu ds mnns'; ls 50% ls vf/kd dk voewY;u fd;k x;k gksA iz'uxr ekeys esa eky dh izfof"V fu;fer ys[kk iqLrdksa esa ntZ gSA vihykFkhZ }kjk /kkjk 48¼5½ ds vUrxZr of.kZr fdlh Hkh izfo/kku dk mYya?ku fd;k tkuk izekf.kr ugha gksrk gSA vr% mijksDr rF;ksa ds vk/kkj ij vihykFkhZ ij /kkjk&48¼5½ ds vUrXkZr fopkjk/khu ekeys esa vFkZn.M dh dk;Zokgh vkdf"kZr ugha gksrhA bl izdkj fopkjk/khu vihy lkjoku gS vkSj Lohdkj fd, tkus ;ksX; gS rFkk vkjksfir vFkZn.M lekIr fd;s tkus ;ksX; gSA vihy la[;k&AGR2/0163/17 o"kZ 2014&15 vFkZn.M ¿/kkjk 48¼5½ ds vUrxZrÀ Lohdkj dh tkrh gS rFkk vihykFkhZ ij vkjksfir vFkZn.M lekIr fd;k tkrk gSA ;fn bl en esa dksb /kujkf'k tek dh xbZ gks] rks mls fu;ekuqlkj okil djus ds funsZ'k fn, tkrs gSaA bl vkns'k dh ewy izfr vihy i=koyh ij j[kh tk; rFkk bldh izekf.kr izfr;k¡ vihykFkhZ dks] mlds dj fu/kkZj.k vf/kdkjh dks rFkk jkT; izfrfuf/k dks izsf"kr dh tk¡;A"
Aggrieved by the order passed by the Additional Commissioner (Appeal) the Commissioner of Commercial Tax, U.P. has filed the second appeal before the Tribunal. The Tribunal vide its impugned judgment and order dated 07.06.2018 has allowed the appeal filed by the Commissioner as such has confirmed the penalty order passed by the Assessing Authority.
Learned counsel for the revisionist has submitted that no penalty proceeding can legally be initiated against the revisionist under Sub Section (5) of Section 48. He has referred the provision of Sub Section (5) of Section 48 of the VAT Act, which is quoted hereinbelow:
"Section 48 power to seize goods-
(5) If such authority, after taking into consideration the explanation, if any, of the dealer or, as the case may be, the person in charge and after giving him an opportunity of being heard, is satisfied that the said goods were omitted from being shown in the accounts, registers and other documents referred to in sub-section (1) or not traced to any bonafide dealer or not properly accounted for by an dealer or the documents issued by a bonafide dealer with respect to the accompanying goods contained wrong particulars or the goods are undervalued to the extent of more than fifty percent of the value of goods prevalent at the relevant time in the local market area where the said transaction had taken place, with intention to evade payment of tax, it shall pass an order imposing a penalty not exceeding forty per cent of the value of such goods or tax payable under the Act on the value of such goods, whichever is higher as he deems fit."
Learned counsel for the revisionist, Sri Lokesh Mittal and Sri M.M. Rai has pointed out that in fact the goods in question were duly 'accounted for' in the regular books of account which are duly maintained by the revisionist and further submitted that it is also duly recorded in the books of account which are supposed to be maintained by the cold storage.
Learned counsel for the revisionist has submitted that when the Deputy Commissioner (SIB) has issued the notice on 09.01.2015 requiring the reply on the date fixed, the revisionist has produced all the books of accounts related to the transaction namely the purchase of goods as well as the documents indicating therein that the goods are being kept in the cold storage on the instruction of the revisionist, the entry in the record and the delivery of the same.
Learned counsel for the revisionist has also placed reliance by producing the evidence that the payment with respect of the purchase of goods in question i.e Chilly was made by the revisionist through banking.
In support of his claim, copy of the bank statement is also filed as Annexure-I to the supplementary affidavit which clearly indicates that the revisionist has affected the purchase of goods in question which are duly recorded and further that the payment was made through bank only by the revisionist by issuing a cheque bearing no. 742185 dated 04.12.2014 of Punjab National Bank, which is credited in the account of the seller on 09.12.2014.
Learned counsel for the revisionist has also placed reliance on a document, which is copy of the Ledger Account of the seller, which clearly indicates that the sale against tax invoice no. 134 was made to the revisionist for sum of Rs. 4,71,886.94/-.
Learned counsel for the revisionist therefore, claims that since the transaction in question was duly recorded in the regular books of account of the revisionist therefore, the entire penalty proceedings are illegally proceeded/held.
Per contra, learned Standing Counsel Sri, B.K. Pandey has placed reliance of the provision of Section 21(5) of the VAT Act, which provides as to how the accounts and the documents to be maintained by the dealers. For the ready reference Sub Section (5) of Section 21 of the VAT Act is quoted hereinbelow :
Section 21-Accounts and documents to be maintained by dealers:-
"Except as provided in sub-section (4) every dealer liable to pay tax while consigning or delivering any taxable goods to another dealer whether as a result of sale or otherwise, shall issue to the purchaser or consignee of goods, a legible challan or transfer invoice in the prescribed manner containing such particulars as may be prescribed."
From the reading of Sub Section (5) of Section 21, it is clear and it provides that the dealer who is liable to pay tax while consigning or delivering any taxable goods to another dealer, whether as a result of sale or otherwise shall issue to the purchaser or consignee of goods a legible challan or transfer invoice.
Learned Standing Counsel therefore, submits that in the instant case admittedly neither the challan was found nor the transfer invoice was found where as the same are prescribed under Rule 41 of the VAT Rules.
Rule 41 of the VAT Rule provides the challan or transfer invoice to be prepared so as referred under Sub Section 5 of Section 21. It is further clarified in Rule 41 as to how the challan or transfer invoice to be prepared and as to what would be contained in the said challan or transfer invoice which is required at the time of goods delivered or dispatched. For the ready reference Sub Rule (1) of Rule 41 of Vat Rules is quoted hereinbelow:
"Rule 41...........
(1) The dealer shall prepare the challan or transfer invoice referred to in sub-section (5) of section 21 in three copies marked Original, Duplicate and Triplicate from a bounded book and each copy of challan or transfer invoice shall contain following particulars in respect of goods delivered or dispatched.
(i) Name and address of the dealer;
(ii)Name of branch or depot;
(iii) Taxpayer's Identification Number (Registration Number) of dealer consigning or delivering goods;
(iv) Serial No.;
(v) Date;
(vi) Signature of the authorized person who has authenticated the challan or invoice;
(vii) Name and address of the dealer or person to whom goods are delivered or consigned;
(viii) Taxpayer's Identification Number of consignee dealer, if any;
(ix) Sale or stock transfer...........................
(x) Time of removal of goods in case of manufacturer;
(xi) Following details in respect of goods delivered or consigned;
(a) Description of goods;
(b) Identification mark or batch No. if any;
(c) Quantity or measure of goods;
(d) No. of packets;
(e) Actual or estimated value of goods;
(xii)Tax-invoice or sale-invoice No. and date (if issued at the time of sale);
(xiii) Mode of transportation;
(xiv) Signature and status of person issuing challan or transfer invoice."
Heard the counsel for the parties and perused the impugned judgment of the Tribunal.
Firstly, this Court proposes to consider the submission of learned counsel for the revisionist. Sub Section (5) of Section 48 clearly stipulates that the Section in question will come in picture only when it is found that the goods were omitted from being shown in the books of accounts, registers or other documents which are referred to in Sub Section or not traced to any bona fide dealer or not properly accounted for by an dealer or the document issued by a bona fide dealer with respect of the accompanying goods contained wrong particulars or the goods are under valued to the extent of more than 50% of the value of goods....................... with intention of evade payment of tax, the penalty proceedings can be initiated and the penalty will be imposed.
From the bare perusal of the penalty order, which is confirmed by the Tribunal, there is no finding recorded by any of the authorities that any of the aforesaid conditions are not fulfilled or any of the conditions are flouted. In the instant case, it is clearly established that the goods which are purchased or sold by a registered dealers against the proper tax invoice, charging the tax plus Mandi Shulk dispatched from seller place to the cold storage on the instructions of the revisionist (purchaser) and the same are duly recorded in the register of the cold storage and the number of item namely 354 bags of Chilly was found by the (SIB) Authority, at the time of inspection held on 18.12.2014 and immediately in pursuance of the first notice issued by the (SIB) Authority, at the first stage itself, the books of accounts are produced by the Revisionist on the very date fixed, then what further remains to be placed by registered dealer.
In my view, therefore, the entire proceedings namely the seizure and the consequential penalty proceedings is nothing but clearly an abuse of process of law at the hands of the respondent authorities.
So far as the contention of the learned Standing Counsel is concerned, as he has referred the provisions of Section 21 (5) of the VAT Act, in my opinion, is not relevant so far as the controversy involved in the present case. As in the instant case, admittedly the seller has send the goods on the instructions of the purchaser to the cold storage to be kept there for certain period and admittedly the seller has charged the tax while issuing the tax invoice, which was not disputed by any of the authority, there remains no reason of applicability of Sub Section (5) of Section 21 as referred by learned Standing Counsel.
Rule 41 provides the challan or transfer invoice at the time of an occasion when the goods are delivered or dispatched. In the instant case, neither the goods are delivered nor the same are dispatched by the revisionist therefore, there was no occasion to prepare the challan or the transfer invoice.
In view of the aforesaid, it was not a case where the penalty proceedings could legally be initiated and in fact, the Assessing Authority as well as the Tribunal were illegally and arbitrarily proceeded to impose and confirm the penalty.
In view of the aforesaid facts, the order passed by the Tribunal dated 07.06.2018 is set aside.
The revision is allowed.
Order Date :- 27.09.2018 sweta