Evasion of Tax cannot alleged merely on ground that dealer produced Manual Form KK instead of Computer Generated Form: Madras HC [Read Judgment]

Madras High Court

The Madras High Court recently quashed the penalty order passed by the VAT authorities who imposed penalty on the dealers on ground that they produced the manually prepared Form KK instead of computer generated forms. The Court observed that it cannot be a sole ground for attributing the offence of evasion of payment of tax on the assessee under the provisions of the Tamil Nadu Value Added Tax Act, 2006.

In the instant case, the petitioner is a registered Custom House Agent, who has cleared and forwarded a consignment to IFB Automotive Private Limited at Bangalore.The vehicle of the dealer was intercepted by the sales tax department during transportation and consequently, the goods were detained on ground that the petitioners, instead f computer generated Form KK, produced manualforms prepared by them. Accordingly, orders were passed against them imposing penalty double the amount of tax finding that the willfully attempted to evade tax.Aggrieved by the above order, the petitioners approached the High Court.

Before the High Court, the petitioners with proof submitted that they had to prepare Form KK manually, since there were problem in the server in downloading the same.

Justice T.S Sivagnanam observed that, “There is no finding in the compounding notice that the petitioner evaded payment of tax. The only reason for detention of the goods is the petitioner had produced a manual Form KK instead of a computed generated Form KK. The petitioner’s explanation, vide representation, dated 20.11.2016 has not been considered nor referred to by the respondent, though it has been acknowledged by the respondent as could be seen from the signature appended to the representation, dated 20.11.2016.”

“That apart in terms of Section 68 of the TNVAT Act, the owner or person in charge of the goods should carry with them, a Bill of sale or delivery note or such other documents as may be prescribed and Log book relating to the goods transported. Assuming that Form KK cannot beaccepted, the other documents which are all import documents could have been considered by the respondent. Therefore, this Court has no hesitation to hold the computation done by the respondent in the compounding notice, dated 18.11.2016 is not tenable.”

Read the full text of the Judgment below.