2025-VIL-612-P&H
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VAT High Court Cases

Punjab Value Added Tax Act, 2005 - Stock transfer or Sale, Transfer of goods – Detention of goods on the ground that the documents covering the goods were suspected to be not genuine and the transaction was suspected to be a case of Sale instead of Stock Transfer - Appellant claimed that the goods were not meant for sale but were to be supplied to customers on a right to use basis against a refundable security deposit and monthly rent – Assessing Authority concluded that the goods were actually meant to be sold and imposed a penalty under Section 51(7)(b) of the PVAT Act, 2005 - Whether the transaction was a genuine stock transfer or a sale transaction liable to tax – HELD - The goods were being supplied against an advance payment pursuant to an email order, which indicated that it was a sale transaction - There is no provision in the agreement for repair during the use of goods, atmospheric wear and tear or the otherwise depreciation of the material. Thus, no effective control of property remains with original owner of the goods i.e. appellant, while these may be in use by the customer. Therefore, the amount charged as security would accordingly constitute 'sale price' exigible to tax - Further, the security deposit charged from the customers and the condition that the goods would become the property of the customer after 5 years even if not returned, showed that it was a novel method of tax evasion. The appellant failed to provide any documentary evidence to prove that it was a genuine stock transfer. The appellant did not furnish any proof of payment of rent by the customers and deposit of tax on the rental amount. Therefore, the goods were meant to be sold and the documents covering the goods were not genuine and proper - the imposition of the penalty is upheld and the appeal is dismissed
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