Delay of Document Production During Transit Not Ground for VAT Penalty u/s 48(5): Allahabad HC quashes Penalty [Read Order]
The High Court ruled that the Penalty under Section 48(5) of UP VAT Act cannot be imposed solely for non-production of documents at interception without proof of missing book entries and order was set aside.
![Delay of Document Production During Transit Not Ground for VAT Penalty u/s 48(5): Allahabad HC quashes Penalty [Read Order]](https://images.taxscan.in/h-upload/2025/12/01/2109236-document-production-vat-penalty-quashes-penalty-taxscan.webp "Delay of Document Production During Transit Not Ground for VAT Penalty u/s 48(5): Allahabad HC quashes Penalty [Read Order]")
In the recent ruling, the Allahabad High court quashed a VAT penalty imposed under Section 48(5) of the Uttar Pradesh Value Added Tax (UP VAT) Act 2008, holding that temporary delay in producing documents during transit cannot be the ground for initiating penalty proceedings. Thus, the penalty and Tribunal order were set aside, following the precedent in M/s Sonu Metal. The...
In the recent ruling, the Allahabad High court quashed a VAT penalty imposed under Section 48(5) of the Uttar Pradesh Value Added Tax (UP VAT) Act 2008, holding that temporary delay in producing documents during transit cannot be the ground for initiating penalty proceedings. Thus, the penalty and Tribunal order were set aside, following the precedent in M/s Sonu Metal.
The Revisionist, M/S New Tech Engineers, vehicle carrying goods broke down during transit, and the required documents could not be immediately produced as they were with the vehicle's helper. All the required documents were submitted within half an hour of interception. Despite this, authorities seized the goods and initiated penalty proceedings under Section 48(5) of the UP VAT Act 2008.
The Revisionist filed the revision against the impugned order dated 16.11.2011 passed by the CommercialTax Tribunal, in Second Appeal No. 751/2010 for the Assessment Year 2008-09 arising out the proceedings under the UP VAT Act 2008.
The Section 48(5) of UP VAT Act 2008 explained that: Power to seize goods.
“If such authority, after taking into consideration the explanation, if any, of the dealer or, as the case may be, the person in charge and after giving him an opportunity of being heard, is satisfied that the said goods were omitted from being shown in the accounts, registers and other documents referred to in subsection (1) or not traced to any bonafide dealer or not properly accounted for by any dealer or documents issued by a bonifide dealer with respect to the accompanying goods contained wrong particulars or the goods are undervalued to the extent of more than fifty percent of the value of goods prevalent at the relevant time in the local market area where the said transaction had taken place, with intention to evade payment of tax, it shall pass an order imposing a penalty, [not exceeding forty percent of the value of such goods or tax payable under the Act on the value of such goods, whichever is higher] [Substituted w.e.f. 20-08-2010 vide notif. no 1101(2) dt. 20- 08-2010, U.P. Act No 19 of 2010).] as he deems fit.”
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The Revision was filed on three Question of law, firstly, whether the Commercial Tax Tribunal wrongly overturn the factual findings without conducting its own independent Inquiry?; secondly, Whether the Tribunal had ignored the revisionist's written arguments, Form-C filing, and affidavit explaining the delay? and thirdly, Whether the Tribunal justify that the department succeed on appeal when it failed to appear before the First Appellate Authority?
The Counsel for the Revisionist submitted that during transit, the vehicle broke down and goods were seized and the documents were with the helper but were produced within half an hour; yet seizure and Section 48(5) proceedings were initiated. The revisionist replied that all entries were made in the books of account, but a penalty was imposed.
Further, the Counsel submitted that the First Appellate Authority allowed the appeal, but the Tribunal reversed this decision without addressing the factual finding that entries were properly maintained. In support of his submissions, he has placed reliance on the judgement of this Court in M/s Sonu Metal Vs. CCT [Sales/Trade Tax Revision No. 183/2022m decided on 21.11.2025].
On the other hand, the Counsel for the Respondent supported the impugned order dated 16.11.2011.
The Allahabad High Court, composed of Justice Piyush Agrawal, heard and reviewed the matter filed by the Revisionist.
After hearing and considering the submissions made by both the Counsels, the High Court held that Section 48(5) proceedings were initiated merely because documents were not produced at interception, overlooking that they were submitted within half an hour. The revisionist's reply stated all entries were duly made, yet no provisional assessment or immediate premises inspection was conducted to verify this. Without such verification, the inference of missing entries cannot be drawn later.
The issue was squarely covered by M/s Sonu Metal vs. CCT, which remained undisputed. Thus, the impugned order was set aside, the revision was allowed, and the questions of law were answered in favour of the revisionist.
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