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Madura Coats Ltd. v. State Of U.P. - SALES/TRADE TAX REVISION DEFECTIVE No. 508 of 1998  RD-AH 2623 (9 September 2005)
TRADE TAX REVISION NO.(508) of 1998
Madura Coats Ltd., Kanpur. Applicant
State of U.P. Opp.party
Hon'ble Rajes Kumar, J.
Present revision under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "the Act") is directed against the order of Tribunal dated 7th February, 1998 relating to the assessment year, 1993-94 by which the Tribunal has sustained the penalty levied under section 15-A (1) (o) of the Act at Rs.40,070/-.
The applicant is engaged in the business of manufacture and sale of thread and printed cotton cloth. The applicant has a factory at Bangalore and has a branch office and depot at Kanpur. By stock transfer memo nos. F-73, F-74, F-71, L-82, N-13 and W-7, the goods consisting of 309 pieces cotton thread and 39 pieces cotton printed cloth were despatched from factory to Kanpur depot have been despatched against Form 31 no.1391748. At Mohan Nagar check post on verification, it was found that in form 31, 39 pieces of cotton printed cloth were disclosed while 4 pieces cotton printed cloth and 35 pieces cotton cloth printed kits were found. Cotton printed cloth kits consists of cotton cloth printed with thread and needle. On the ground that wrong declaration was made in Form 31, the goods were seized and subsequently released on furnishing of security. In pursuance of the seizure of the goods, penalty under section 15-A (1) (o) of the Act has been levied at Rs.80,140/- by the assessing authority. First appeal filed by the applicant has been rejected. Applicant filed second appeal before the Tribunal, which has been allowed in part. The Tribunal has sustained the levy of penalty, but reduced the amount of penalty to Rs.40, 070/-. Being aggrieved by the order of the Tribunal, present revision has been filed.
Heard Sri A. S. Diwakar, Learned Counsel for the applicant and Sri K. M. Sahai, Learned Standing Counsel appearing on behalf of the opposite party.
Learned Counsel for the applicant submitted that on the facts and circumstances of the case, no case of an attempt to evade the tax has been made out, which is a condition precedent for the levy of penalty under section 15-A (1) (0) of the Act. He submitted that the goods were imported against declaration Form 31 no.1391748 in which 348 pieces were declared, which were also found in physical verification. It has been submitted that with regard to the alleged discrepancy in the declaration form relating to 35 pieces of cotton cloth printed kits, it was explained that at Bangalore factory, the code number for cotton printed cloth and cotton cloth printed kits was common while at the selling point it has been separately classified and the tax on the sale of cotton cloth printed kits have always been paid. He submitted that on the earlier occasions also , the goods have been imported in a similar manner with same declaration, but the tax has been paid on the cotton cloth printed kits which shows that there was no intention to evade the tax.
Learned Standing Counsel submitted that wrong declaration made by the applicant shows the intention to evade the tax and the Tribunal has rightly confirmed the levy of penalty.
I have perused the order of the Tribunal and considered the rival submissions made by the learned counsel for the parties.
Under Section 15-A (1) (0) of the Act, penalty is levied for the violation of Section 28-A of the Act. This Court in the case of CST Versus M/S Oriental Carbon Limited reported in 1985 UPTC 613 held that for the levy of penalty under section 15-A (1) (o) of the Act, it is condition precedent to make out a case of an attempt to evade the tax. The view of this Court has been upheld by the Apex Court in the case of CST Versus M/S Oriental Carbon Limited reported in 1997 NTN 105. Therefore, for the levy of penalty under section 15-A (1) (o) of the Act, it is necessary to make out a case of an attempt to evade the tax. Admittedly, the goods have been despatched from the factory to its branch office by way of stock transfer. The despatch of the goods were not as a result of sale. The goods were accompanied by a declaration form in form 31, which was contemplated under section 28-A of the Act. In the declaration form 348 pieces were declared which were also found on physical verification. It is not the case that 35 pieces of cotton cloth printed kits were not declared. The only objection is that it was declared as cotton printed cloth while the cotton cloth printed kits was found. The reason for such declaration has been explained by the applicant that at the factory, the common code number for both cotton printed cloth and cotton cloth printed kits has been given and, therefore, the common code number has been mentioned in the stock transfer memo. In view of the fact that the entire goods were covered by the declaration form, it cannot be said that any attempt has been made to evade the assessment and tax. In my view, the alleged discrepancy was only of a technical nature and does not lead to an inference of an attempt to evade the tax.
For the reasons stated above, the order of the Tribunal is not sustainable and the penalty levied under section 15-A (1) (o) of the Act is liable to be set aside.
In the result, revision is allowed. The penalty levied under section 15-A (1) (o) of the Act is quashed.
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