High Court · 2025 on 13 May 2025

Judgment

1. Heard Mr. R.R. Agarwal, learned Senior Counsel assisted by Mr. Suyash Agarwal for the revisionist and Mr. B.K. Pandey, learned ACSC for the State-respondents.

2. By means of present revision, the revisionist is assailing the order dated 18.12.2024 passed by Commercial Tax Tribunal, NOIDA Bench II, NOIDA in Second Appeal No. 216 of 2021 (2017-18) under Section 54 (1) (15) of UP VAT Act, 2008 (herein after referred to as the ‘Act’).

3. The present revision was admitted vide order dated 8.4.2025 on the following substantial questions of law:

“(i) Whether on the facts and circumstances of the case, the Tribunal was correct to affirm the penalty amounting to Rs. 11,40,000/- U/s 54 (1) (15) of UP Vat Act, 2008, when the goods were purchased against invoice no. 65 dated 23.5.2017 from Delhi and were to be delivered at Delhi office of the applicant. (ii) Whether the assessing officer (Mobile Squad) having issued penalty notice u/s 54 (1) (14) of the Act, dated 21.6.2017, for violation of Section 50, the Tribunal was right to upholding the penalty order u/s 54(1) (14) of the Act, when no penalty notice u/s 54 (1) (15) was issued by the Assessing Authority (Mobile Squad), and both the provisions operate under altogether independent and operate under different facts rendering penalty order viod – ab -initio. (iii) Whether the Tribunal was legally justified in confirming the 2 penalty order even when there was no intention to evade payment of tax since the applicant was not carrying on the business of the purchase and sale of the goods without considering the submissions of the applicant.”

4. Learned Senior Counsel for the revisionist submits that the revisionist is a corporate body registered under the Companies Act, 1956 and is engaged in the business of investment and trading of shares debentures at Stock Exchange having office at 63/2, R.N. Chamber, 3rd Floor, The Mall, Kanpur and branch office is situated at 502, 5th Floor, Padum Tower II, Rajendra Place, New Delhi. He further submits that for smooth running of the business, computer and internet facility are required, therefore, some computers and allied equipments were purchased by the revisionist from M/s M.B. Solutions Pvt. Ltd., 2010, Bhandari House, 19 Nehru Place, New Delhi through retail invoice no. 65 dated 23.5.2017 worth Rs. 28,45,000/-. The said goods were loaded in Truck No. UP 74 T2715; however due to delay in transportation the office at Delhi was close and the driver of the vehicle, on his own will, moved the vehicle in question along with the goods to the place of his relative through Dadri and Gautam Buddha Nagar, where the goods in question were intercepted by AC Mobile Squad Noida at 12:15 P.M. on

24.5.2017. Thereafter show cause notice was issued under Section 50 of the Act on the ground that requisite Form 39 was not accompanying with the goods to which the revisionist has duly submitted reply. Since the goods in question were urgently required therefore, on payment of security of Rs. 11,40,000/-, the goods in question were released and immediately thereafter the vehicle in question moved to Delhi for delivery of goods at the Delhi office, which is evident from the fact that entry tax of Municipal Corporation Delhi and ECC Fee of Government of Delhi were paid on 25.5.2017 at 8:41 A.M.

5. Learned Senior Counsel for the revisionist further submits that show cause notice was issued under Section 54 (1) (14) of the Act to which the revisionist has duly submitted reply along with evidences but being not satisfied with the same, the order dated 11.7.2017 has been 3 passed by which penalty of Rs. 11,40,000/- has been imposed under Section 54 (1) (15) of the Act. The revisionist has challenged the said order in first appeal, in which specific grounds were taken that the revisionist was never put to notice under Section 54(1) (15). He further submits that both the sections i.e. Section 54 (1) (14) and Section 54 (1) (15) of the Act are applicable on the different set of facts but while dismissing the first appeal of the petitioner, vide order dated 15.4.2021, the grounds taken by the revisionist were not considered at all. He further submits that first appellate authority has recorded the grounds up to ground no. 16, but intentionally ground no. 17 has not been recorded, which was argued and pressed by the revisionist before the first appellate authority. Feeling aggrieved, the revisionist filed second appeal and reiterated the same grounds in the second appeal also, but by the impugned order dated 18.12.2024, though the grounds were noticed but the second appeal has been dismissed.

6. Learned Senior Counsel for the revisionist further submits that order has been passed by the respondent authority under Section 54 (1) (15) of the Act, without putting any notice to the revisionist and once the notice has not been issued to the revisionist, the entire proceedings are bad in the eyes of law.

7. Per contra, learned ACSC supports the impugned order and submits that merely by mentioning a wrong section, the impugned orders cannot be held to be illegal.

8. After hearing learned counsel for the parties, the Court has perused the records.

9. It is admitted between the parties that the dealer is engaged in the business of trading of share and debentures at Stock Exchange, which itself shows that the revisionist is not purchasing or selling any physical commodity, except investment and trading of shares & debentures. The goods in question, which were seized, were the computers and allied equipments, which were being for smooth functioning of the 4 revisionist’s business. It is nobody’s case that the revisionist was registered for selling or purchasing of the goods in question or any other electronic equipments. The goods in question were seized on the premise that Form 39 was not accompanying with the goods. Once the fact has been admitted by the respondent authorities that the goods were moved without accompanying Form 39, which itself shows that registered dealer has imported the goods for its use. Once the said fact is not in dispute by any of the authority, the same itself indicates that the revisionist is not trading the goods in question. The record shows that immediately after release of the goods on 25.7.2017, the goods in question have crossed the border of State of UP and reached its destination at Delhi, which shows that the goods in question have not been sold in State of UP.

10. Further, copy of the show cause notice dated 21.6.2017 under Section 54 (1) (14) of the Act has been brought on record as Annexure no. 8 of the revision, to which a detailed reply has been submitted by the revisionist, but surprisingly, the penalty order has been passed under Section 54 (1) (15) of the Act. Section 54 (1) (15) of the Act, can be pressed to service on different facts than under Section 54 (1) (14) of the Act to which revisionist was never put to notice. Against the said order, a first appeal has been preferred, copy of which has been brought on record as Annexure No. 9 to this revision, in which specific grounds have been pleaded that notice has been issued under Section 54 (1) (14) of the Act but the order has been passed under Section 54 (1) 15) of the Act, therefore, the same is void ab initio, as the revisionist was never put to any notice of the same.

11. The relevant extract of the averments made in the memo of appeal as well as specific ground no. 17 are quoted hereunder: “Thereafter, the Assistant Commissioner [MS]-3, Commercial Tax Noida, [being the assessing authority] issued a show cause notice no. 259 dt. 21.6.17 u/s 54(1)(14) fixing date of hearing for 5.7.17. The appellant complied with the notice u/s 54(1)(14) and filed 5 explanation along with evidences of movement & entry of vehicle along with goods in side Delhi immediately after release before the assessing authority which could not find favour and the assessing authority opted to impose penalty of Rs. 11,40,000-00 vide order no.292 dt. 11.7.17 passed u/s 54(1)(15) [hereinafter called the impugned order]. In the facts and circumstance the assessing authority failed to appreciate the facts and evidences on record and arbitrarily imposed penalty of Rs. 11,40,000-00 u/s 54(1)(15). The impugned order is null and void. The seizure was u/s 50 of UPVAT Act, 2008, and assessing authority issued show cause notice u/s 54(1)(14) but the impugned order is passed u/s 54(1) (15). The provisions of section 54(1(14) and 54(1)(15) applies under altogether independent and different facts which makes the impugned order ab-inito void. …… GROUNDS OF APPEAL ……….

17. Because in the facts and circumstances provisions of Section 54 (1) (15) are not applicable. The provisions of section 54 (1) (14) and 54 (1) (15) are applicable in different facts and circumstances.”

12. The first appellate authority by the order dated 15.4.2021 has recorded a finding in respect of the grounds taken by the revisionist but has not dealt with the same and confirmed the penalty order.

13. Again in the second appeal, copy of which has been annexed as Annexure no. 11 of this revision, some specific averments have been made along with ground no. 19 by the revisionist, which are quoted hereunder :- “In the facts and circumstance the assessing authority failed to appreciate the facts and evidences on record and arbitrarily imposed penalty of Rs. 11,40,000-00 u/s 54(1)(15). The aggrieved appellant preferred appeal u/s 55 of UPVAT Act, 2008 against penalty order no. 292 dt. 11.7.17 passed u/s 54(1) (15). The Additional Commissioner [Appeal]-2, NOIDA, vide order dt. 14.04.2021 passed in Ist. Appeal No. 632/17 [A.y. 2017-18 u/s 54(1)(15) of UPVAT Act] arbitrarily dismissed the appeal and confirmed penalty u/s 54(1)(15). The appellate authority failed to appreciate that the penalty order u/s 54(1)(15) is null and void. The seizure was u/s 50 of UPVAT Act, 2008, and assessing authority issued show cause notice u/s 54(1)(14) but the penalty order is passed u/s 54(1)(15). The provisions of section 54(1)(14) and 54(1)(15) operates under 6 altogether independent and operative in different facts which makes the impugned order ab-inito void. The appellant has agitated this legal issue before the appellate authority but the appellate authority failed to take cognizance of this legal issue and has neither addressed nor adjudicated this issue. The appellate authority grossly failed to consider fact & legal issue that seizing authority and assessing authority imposing penalty u/s 54(1)(15) is the same individual. The law do not appreciate that investigating officer is not authorise to act as judge in the same case. ….. GROUNDS OF APPEAL …….

19. Because in the facts and circumstances provisions of section 54 (1) (15) are not applicable. The provisions of section 54 (1) (14) and 54(1) (15) are applicable in different facts and circumstances.”

14. Though the Tribunal has noticed the aforesaid grounds in the impugned order but no finding whatsoever has been recorded in this respect.

15. The record further shows that none of the authorities have disputed the fact that the notice was given under the different provision i.e. under Section 54 (1) (14) of the Act and order has been passed under the different provision i.e. under Section 54 (1) (15) of the Act. Further all the respondent authorities have noticed the arguments raised by the revisionist but have not dealt with the same, therefore, this action itself vitiates the impugned order.

16. It is not the case that the revisionist is trading / selling the computers / allied equipments but the same was purchased for the use of office work at Delhi Branch of the revisionist, however, due to mistake of the truck driver / transporter, the goods in question were entered in the State of UP as the office at Delhi was closed at that time. After interception and seizure, whenever the goods in question were released on deposit of security, the same crossed the border of State of UP and reached the destination at Delhi office of the revisionist.

17. The records shows that the orders have been passed under Section 7 54 (1) (15) of the Act for which the revisionist was never put to notice. Even learned ACSC could not show or justify the impugned orders, as the same has been passed in gross violation of principles of natural justice.

18. In view of the aforesaid facts and circumstances of the case, the impugned orders cannot be sustained in the eyes of law and same are hereby quashed.

19. The revision is allowed with cost of Rs. 10,000/- (Ten thousand) to be recovered from the erring officer who has passed the penalty order and paid to the revisionist, within one month from the date of production of certified copy of this order.

20. Since huge penalty to the tune of Rs. 11,40,000/- has been deposited by the revisionist in pursuance of illegal order, it is appropriate that the amount deposited by the revisionist shall be refunded to the revisionist forthwith on production of certified copy of this order.

21. List on 17.7.2025 in Chambers in order to enable the State- respondent to file the compliance affidavit.

22. The substantial questions of law are answered accordingly in favour of the revisionist and against the opposite party. Order Date :- 13.5.2025 Rahul Dwivedi/- RAHUL DWIVEDI High Court of Judicature at Allahabad