AMIT BAJAJ ADVOCATE

  

  

 

PUNJAB AND HARYANA, HIGH COURT

State of Punjab and another Versus M/s ABB Limited

 No. - VAT Appeal No.52 of 2012(O&M)

CM No.22066 -CII of 2012 

1. Annexure A.5 – copy of agreement filed alongwith the application is taken on record subject to just exceptions. Civil Miscellaneous application No.22066-CII of 2012 stands disposed of.

2. This appeal has been preferred by the State of Punjab under Section 68(2) of the Punjab Value Added Tax Act, 2005 ( in short, “the Act”) against the order dated 11.11.2011 passed by the Value Added Tax Tribunal, Punjab (for brevity, “the Tribunal”) whereby the appeal filed by the respondent against the order dated 2.6.2010, Annexure A.4 passed by Deputy Excise and Taxation Commissioner-cum-Joint Director (Investigation) Patiala Division, Patiala in Appeal No.4335/08-09 has been allowed.

3. Briefly, the facts as narrated in the appeal may be noticed. On 18.1.2008, two goods vehicles bearing Nos. PB-07T- 1512 and PB-07M-7209 loaded with electrical goods reached at the Information Collection Centre (ICC) of Dhabi Gujran (Patiala). On examination of the documents shown by the drivers of the vehicles, it was found that an unregistered dealer of Punjab was importing the said goods worth Rs. 54,11,951/- for trade after paying Central Sales Tax at the rate of 12.5%. Since the goods were of high value and were meant for trade being imported by an unregistered dealer, the goods and the vehicles were detained for further verification. After recording the statements of the drivers of the said vehicles, detention order dated 18.1.2008 was passed under Section 51(6) of the Act and notice dated 18.1.2008 was issued to M/s Aeren R Festival City, Jalandhar Byepass, Ludhiana to appear and produce the books of accounts and other documents to prove the genuineness of the transactions. When none appeared, the matter was referred to the Excise and Taxation officer cum Office Incharge, ICC, Dhabi Gujran (Patiala). The said officer issued show cause notice to the consignee to appear and produce the books of account and other documents.

The representative of the respondent appeared but failed to prove the genuineness of the documents. The representative of M/s Aeren's R Festival City, Ludhiana informed that they had not made any such import of the goods. From further inquiries, it was found that another company by the name of M/s Aeren' R Entertaining Zone Limited was a registered dealer at Ludhiana but they also denied having made any such purchase of goods. After examining the matter, a penalty of Rs. 16,23,587/- was imposed under Section 51(7)(b) of the Act against the respondent vide order dated 31.1.2008, Annexure A.3.
Aggrieved by the order, the respondent filed an appeal under Section 62 of the Act before the Deputy Excise and Taxation Commissioner-cum-Joint Director (Investigation) Patiala Division, Patiala which was dismissed vide order dated 2.6.2010, Annexure A.4. Not satisfied with the order, the respondent filed an appeal before the Tribunal.

Vide order dated 11.11.2011, the appeal was accepted by the Tribunal. Hence this appeal by the State of Punjab.

4. We have heard learned counsel for the appellants and perused the record.

5. The Tribunal has, after appreciation of material on record, come to the conclusion that there was no error on the part of the respondent-dealer. It was noticed that full sales tax on the transaction being inter state sale had been paid and the element of tax in Punjab State was not involved. It was also noticed that there was voluntary reporting at ICC and the goods were accompanied by proper and genuine documents complete in all respects. The Tribunal also recorded that payments for the transactions were made through the banking channels i.e. by cheques and were not kept out of the books of account.
The conclusion of the Tribunal on the aforesaid premises was that an error had crept in on the basis of which the department had sought to conclude that there was an attempt to evade tax. Following findings recorded by the Tribunal are relevant:-

“A close examination of all these documents would reveal that as a matter of fact, a project by the name of 'Festival City' at Village Fagguwal and Quadian, GT Road, Ludhiana is being set up. The conclusion which can be reasonable and legitimately drawn is that by way of in-advertence, the name of the project in place of consignee's (M/s Aerens Entertainment Zone Limited) name has been mentioned in documents. It appears to be a human mistake, which can be expected of anyone. This mistake or error can also be taken to be a misdescription of the name of consignee. Such mistake or error pales into insignificance in the face of own admission of the ETO that the transaction is in between M/s ABB Limited (appellant) and M/s Aeren 'R Entertainment Zone Limited Ludhiana. It also be described to be a clerical mistake which itself would not be enough to hold that the documents are fake or fabricated or an attempt to evade tax has been made. Man is not infallible.

There is nothing on the record to infer or conclude that the goods were meant for resale or use of manufacturing activity of the purchasing party. If the department had produced evidence in proof of the fact that M/s Aerens Entertainment Zone Limited has agreed to sell this project after its completion to a third party, then the matter would have been examined from that angle. In the absence of such evidence, there can be no escape from the finding that the goods were meant for self-consumption as these were to be installed by the consignee in the Festival City, Ludhiana Project. These goods having been made specifically for the project could be hardly sent by way of stock transfer to Punjab Branch. This may be the reason for paying full CST on this interstate sale. This being a case of inter-state-sale, the element of tax of Punjab State was not involved. This is a case of voluntarily reporting at the ICC. The goods under transaction were accompanying proper and genuine documents, complete in all respects. The payments have been made through banking channels i.e. the cheques. In these circumstances, this transaction could not have been kept out of account books. In all probabilities, it has to be accounted for.

More to the point, it is own observation of the ETO that the consignor and actual consignee are registered in Punjab. It is beyond comprehension as to on what basis, the ETO had proceeded to observe that the documents covering both the transactions are false and fabricated and the goods are for trade in State of Punjab.

If the documents had been of such a nature, the transaction would have not been reported voluntarily at the ICC. There being no violation of the provisions of Section 51 of the Act in any manner, the ETO was not justified in imposing a penalty under Section 51(7) of the Act.”

6. The findings recorded by the Tribunal have not been shown to be perverse or illegal in any manner. No substantial question of law arises. The appeal is dismissed.