MOSER BAER INDIA LTD. V. COMMISSIONER INCOME TAX

STRE/864/2008

AI Insights

The case involves Moser Baer India Ltd., a 100% export-oriented unit, which faced a penalty under the U.P. Trade Tax Act for alleged technical defects in Form-31, despite no intention to evade tax. The Trade Tax Tribunal reduced the original penalty but upheld it, leading to this revision. The primary legal question was whether a mere technical defect in Form-31 warrants a penalty under the Act when there is no intention to evade tax. The court found that the penalty was improperly imposed as there was no recorded satisfaction of intent to evade tax, and the assessee had not engaged in any taxable activities within the state.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 766800 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 05-07-2019
• Assessment Year: misc
• Other Referred Cases: M/S Rama Pulses Vs. State of U.P. & others
• Laws Referred To: U.P. Trade Tax Act, 1948, Central Excise Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: C S C
• Assessee Lawyers: KRISHNA AGARWAL
• Keywords: 100% Export Oriented Unit; Form 31; Penalty; Technical defect; Intention to evade tax
• Section: 4(A); 15-A-(1) (O)

Judgement Text

"Court No. - 1 Case :- SALES/TRADE TAX REVISION No. - 864 of 2008 Applicant :- Moser Baer India Ltd. Opposite Party :- Commissioner Income Tax Counsel for Applicant :- Krishna Agarwal Counsel for Opposite Party :- C.S.C. Hon'ble Saumitra Dayal Singh,J. 1. Heard Sri Krishna Agarwal, learned counsel for the applicant-assessee and Sri B.K. Pandey, learned counsel for the respondent-revenue. 2. Present revision has been filed by the assessee against the order passed by the Trade Tax Tribunal Noida dated 19.3.2008 by which Appeal No.36 of 2006 filed by the applicant-assessee for A.Y. 2004-05, has been partly allowed and the amount of the original award passed under Section 15-A-(1) (O) of U.P. Trade Tax Act, 1948 (hereinafter referred to as the Act), of Rs.10,80,000/-, has been reduced to its half i.e. Rs.5,40,000/-. 3. The present revision has been pressed on the following question of law:- \"(ii) Whether, in the absence of any intention to evade payment of tax, a mere technical defect in Form-31 warrants imposition of penalty U/s 15 (A) (o) of the Act?\" 4. Undisputedly, the assessee is a 100 % export oriented unit (EOU) that also had been granted exemption under Section 4 (A) of the U.P. Trade Tax Act as a new unit engaged in the manufacture of compact disc and digital video disc. In the aforesaid manufacturing activity, the assessee required for use of certain dyes. It imported such commodity from M/s Shiva Speciality Chemicals India Ltd., Gandhidham, Gujrat. Also, it appears that the aforesaid commodity, namely dyes, was exempted from the payment of duty under the Central Excise Act. A certificate for procurement and movement of those goods had also been issued by the central excise authorities to the assessee. Thus, vide certificate dated 10.3.2005 for 10 kgs of dye Irgephor ultra green chemical, had been issued. 5. Thus, it is the case of the assessee that it was completely exempted on the manufacture and sale of the compact disc and digital video disc and that its raw material which is the main dispute in the present revision, was also exempted from the payment of excise duty the assessee being the 100% export oriented unit. The statutory records maintained under the Excise and Customs Act did not show removal of those goods in the domestic tariff area and they exclude the possibility of undisclosed sales of the manufactured goods. Inasmuch as, the assessee is a reputed manufacturer of compact disc and digital video disc, it also could not be assumed in absence of any evidence that it may have sold the raw material purchased by it. In any case, there is no allegation to that effect, made by the tax authority. 6. In such factual background, it has been submitted that the consignor, namely, M/s Shiva Speciality Chemicals India Ltd., had been issued a Form-31 by the assessee bearing No.382954558 to supply the quantities of dye Irgephor ultra green chemical. 10 kgs of that commodity were dispatched by the consignor against its regular Invoice No. KA- 10400310 valued at Rs.27 lacs. Those goods were dispatched by the consignor from Delhi to Noida to the address of the assessee on a scooter/two wheeler bearing registration No. DL-35 U/532. Those goods were also accompanied by the original consignment note, bill of entry and excise certificate . 7. During a road check, the aforesaid goods were detained by the trade tax authority in view of the fact that the description of the goods, the date and the invoice number were not found recorded on Form-31 accompanied with the goods. Consequently, the goods were also seized. 8. Since, it was the consignor and not the authorized assessee who was at fault, the goods were released in favour of consignee after depositing the security amount. However, the Assessing Officer, proceeded to impose penalty on the present assessee/consignee though it was not at fault and there was no intention to evade tax on its part. While the Assessing Officer imposed a penalty of Rs.10,80,000/- by means of award order dated 27.7.2005, he did not adjudicate upon the objection raised by the assessee that there was no intention to evade tax on its part. 9. A perusal of the penalty order reveals that the same had been passed on the reasoning that the assessee had failed to fill up two important columns on From-31 being description of goods, bill issued and its date. Also, it has been mentioned that the goods were not found accompanied with the original invoice. Upon appeal, the first appeal authority dismissed the appeal and sustained the penalty. Before the Tribunal, the assessee again raised the issue that in the facts of the present case where assessee had issued Form-31 to the consignor, it was the consignor who was transporting goods outside the State of U.P. There was no default on the part of the assessee as may have invited the penalty upon it. In any case, there was no intention to evade tax and there is no finding to that effect. As to the presence of the documents, it was again submitted that the original invoice and consignment note were accompanying the goods. The Tribunal upheld the imposition of penalty but reduced the penalty to half. 10. Learned counsel for the assessee would submit that, in the facts of the present case, it was undisputed that the goods were brought inside the State of U.P. by the consignor to whom the assessee had already issued the aforesaid import declaration form. In any case, in view of the fact that the assessee is a 100% export oriented unit and also exempt from tax under the Act by virtue of eligibility certificate granted under Section 4 A of the Act and the further fact that neither there is any allegation of the assessee having ever sold the goods outside the State of U.P. nor it was its intention to evade tax, the penalty imposed, is wholly illegal and contrary to law. Even otherwise, it has been submitted that, in the course of regular assessment, the assessing authority did not make any addition. Thus, there could never exist any ground to impose penalty with respect to the same. As a second limb of his submission, it has been submitted that the penalty under Section 15-A-(1) (O) of the Act hinges on the intention to evade tax. In that regard, reliance has been placed on the Division Bench of this Court in the Case of M/S Rama Pulses Vs. State of U.P. & others reported in 2009 NTN (Vol. 41) 189. 11. Learned Standing Counsel on the other hand submits that the duty and responsibility, to make complete disclosure of the goods being imported, was on the assessee, as he was the person who brought the goods inside the State. The fact that the description of the goods, invoice number and its date had not been filled up on Form-31, for all practical purposes, it was a blank declaration form, therefore, the intention to evade tax was inherent and the penalty has been validly imposed. 12. Having heard learned counsel for the parties and having perused the records, in the first place, the Act clearly stipulates that a penalty under Section 15-A-(1) (O) of the Act may be imposed if the Assessing Officer is satisfied that the offending dealer had intention to evade tax. Such satisfaction must be recorded in the penalty order itself and not outside it. In the facts of the present case, other than mentioning the default noted by the Assessing Officer, as referred to above, there is no satisfaction recorded of such intention to evade tax. A satisfaction required to be reached by the Act, cannot be a matter of interference to be drawn in revision proceedings but the same must be found to be in existence on a plain reading of the order passed by the Assessing Authority. There can be no presumption on such satisfaction having been reached and there can be no argument to infer its presence. 13. Even otherwise, in the facts of the present case, it appears difficult to accept the presence of such intention, as the assessee is a 100% export oriented unit whose export sales were found to be exempt and there is no allegation that the assessee was engaged in trading of goods that were being imported. 14. Consequently, the revision succeeds. Accordingly, the revision is allowed. The order dated 19.3.2008 passed by the Trade Tax Tribunal Noida, is set aside. The question of law noted above is answered in negative i.e. in favour of the applicant-assessee and against the respondent- revenue. Order Date :- 5.7.2019 Meenu "