Introduction: Road side penalty is imposed by the taxing authority as per the provision laid down under section 31. State Government is empowered to erect the barriers/check posts or can authorize the officer not below the rank of AETO to check the vehicle moving with the goods. Officer has to see the documents prescribed under the act accompanied the goods and verify the goods as per the documents. In case of any irregularity, the officer will detain the goods and inform to the Officer in charge of the District and obtain the permission if the goods are detained more then 24 hours. Detention memo will be given to the incharge of the goods and proper show cause notice will be issued to the owner of the goods to reach the conclusion that there is an attempt to evade the tax. If it is established from the facts and the circumstances that there is an attempt to evade the tax under the Act the officer can impose the penalty as well as recover the tax.
Detention of goods: Under the section 31 the detention of goods is the pre requisite to impose the penalty. If the goods are not detained or detained against the provision then the penalty can not be imposed. As per second proviso to section 31(5), officer has to seek the permission of DETC for detaining the goods more then 24 hours. If the permission is not obtained the detention will be illegal and similarly the penalty proceedings will also be against the provision of law.
Documents to be accompanied with the goods : As per section 31(2) the vehicle carrying the goods must accompany the sale invoice or tax invoice or delivery note, goods carrier record (GR) and the declaration prescribed under the Act i.e VAT D-3 Inward or outward as the case may be for the value of goods exceeding Rs. 25,000/-. There is some occasion when there is no document with the goods or one of the document not accompanied with the goods. In that case this has to be decided on the facts and circumstances of the each case before detaining the goods and imposing the penalty. VAT D-3 is required for only the goods meant for the purpose of business and not the goods for personal consumption.
Goods taken on supardari: The goods only can be detained and the vehicle can not be detained. So the goods will be unloaded or the goods will be given on supardari to the dealer registered under the HVAT Act on his personal bond to the satisfaction of the officer relying on the financial position of the dealer. In the case of dealer not registered under the Act the goods can be released after taking the surety prescribed under rule 70 i.e. Cash deposit, bank guarantee or personal bond from the dealer registered under the Act to the satisfaction of the taxing authority for the amount of tax and penalty recoverable from the owner of the goods.
Reasonable opportunity of hearing: Officer has to issue the show cause notice and must give at least ten days time to explain the position and prove that there is no attempt to evade the tax. If the owner of the goods proves that there is no intention to evade the tax then the goods will be released without imposing the penalty otherwise the penalty at the rate of three times of the tax or thirty percent whichever is lower will be imposed and the tax applicable on the goods will also be recovered. The tax amount can be adjusted at the time of filing the return.
Attempt to evade the tax must: Officer detaining the goods must prove that there is an attempt to evade the tax if he is not able to prove that there is an attempt to evade the tax then the penalty is illegal and likely to be struck down by the Appellate authority. There were some penalty imposed for non accompanying the VAT D-3 relying on the decision of the Apex court in the case of State of Rajasthan but our Tax Tribunal has taken the view that the judgment is not applicable under the HVAT Act since in our Act attempt to evade the tax must be proved mere non accompanying the form does not empower the officer to impose the penalty.
Under priced goods: The penalty can be imposed for the under priced goods on the difference value. But the officer must give the option under section 49 to purchase the goods before levying the penalty for under priced goods. Section 49 is a specific section introduced under the VAT Act to find the goods are under priced or not since the goods are printed with the MRP and the profit of distributor/retailer are included in the price but the tax is to be imposed on the sale price. If the owner of the goods refuses to sale the goods at price determined by the officer then this will be good proof that the value of goods determined by the officer is correct.
Appeal: An appeal can be filed against the penalty order to the appellate authority at Ambala,
Refund: The amount deposited against the penalty order will be refunded with interest as per section 20. The interest will be calculated for the period from the date of deposit to the date of refund. The rate of interest will be 1% per month. The sanction of interest is to be granted by the Financial Commissioner of Excise and Taxation. The process is very long and the person has to wait for years and pursue the case through DETC.
Conclusion: The case falling under section 31 is very interesting and this has to be dealt with more care since a small mistake at the initial stage will loose the case before the Appellate Authority and an extra care before the officer will win the case before the appellate authority. Each case under section 31 has own importance since the facts seems the same for two cases but the decision in one case is in favour but in another case this shows against and the mind of the dealer and professional point out the finger on the appellate authority. My friends may be correct in one or two cases but can not be correct in each case.
RK Jain Advocate