Penalty For Non Appearance - Not Valid If No Attempt To Evade Tax Is Made Out: Punjab & Haryana High Court

The Punjab and Haryana High Court has held that non-appearance before the Information Collection Centre (ICC) cannot be made a ground to initiate penalty proceedings if no attempt to evade tax is made.

The division bench of Justice Ritu Bahari and Justice Manisha Batra has observed that the driver had produced the documents at I.C.C. and subsequently, at the time of checking, he showed all the invoices. There was no attempt to evade tax. Hence, the VAT appeal was allowed, and no case for the imposition of a penalty is made out under Section 51(7)(c) of the Punjab VAT Act, 2005.

The goods were being transferred by vehicle from Ludhiana to Delhi. The driver of the vehicle furnished the documents at the computer counter for the generation of the declaration. After getting the declaration, the driver of the vehicle produced the documents before the detaining officer, who, after examining them, found that the goods seemed excessive and needed physical verification.

The goods were physically verified, and it was found that the driver of the vehicle did not furnish any information with respect to invoices. Therefore, the goods were detained under Section 51(6) of the Punjab VAT Act, 2005, and a show-cause notice was issued to the owner of the goods.

The appellant contended that the person operating the computer failed to generate two bills for the appellant due to an oversight. The driver of the vehicle furnished all the documents along with the computer-generated information before the officer-in-charge, who detained the goods on the ground that no information was generated with respect to the goods.

The department contended that Form VAT-XXXVI had not been issued to the appellant company for not producing invoices before the I.C.C., but the goods were detained as they seemed to be in excess of the invoices produced before the I.C.C. The driver had generated three bills, whereas information for two bills was not generated.

The court held that once the Government Department had accepted the invoices produced at I.C.C., there was no reason not to accept Invoices Nos. 648, 225, and 8 dated July 12, 2006. Similarly, invoices Nos. 526 and 527 were also issued on the same date, i.e., July 12, 2006, with respect to the supply order. The driver was not expected to know details about the supply order.

Case Title: M/s. Punjab Wool Syndicate Versus The State of Punjab and another

Case No: VATAP-57-2010 (O&M)

Citation: 2023 LiveLaw (PH) 26

Date: 18.01.2023

Counsel For Appellant: Advocates Sandeep Goyal, Nazuk Singhal, Aakriti

Counsel For Respondent: A.A.G. Alankar Narula

Click Here To Read The Order