2025-VIL-697-P&H
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VAT High Court Cases

Punjab Value Added Tax Act, 2005 - Section 51(7)(b) – Penalty, Stock Transfer for sales promotion, Undervaluation of goods in Delivery Challan – Appellant was transporting a consignment of goods as a stock transfer where the goods were intended for a sales promotion scheme, to be given as a free gift with another product - At the Information Collection Centre (ICC) voluntarily declared the goods but showed a nominal value in the challan - Authorities detained the goods and imposed a penalty under Section 51(7)(b) of the PVAT Act for undervaluation - Whether a penalty under Section 51(7)(b) of the PVAT Act, 2005 is imposable for the undervaluation of goods in a delivery challan, where the transaction is a bona fide stock transfer of promotional goods, voluntarily reported at the tax barrier, and there is no evident intention to evade tax - HELD - The transaction was unequivocally a 'Stock Transfer' and not a sale, as explicitly mentioned on the accompanying challan. Since the goods were meant for a promotional scheme and had already been subjected to the full rate of tax at the time of purchase by the appellant's Head Office, no tax of the State of Punjab was involved or sought to be evaded in the present transaction - the intention to evade tax, a crucial element for invoking the penal provisions of Section 51, was not evident from the record. The undervaluation in the stock transfer note, especially for promotional goods where value is not significant for the transaction itself, cannot automatically be equated with an attempt to evade tax - the Detaining Officer at the ICC had exceeded the scope of their authority under the summary proceedings of Section 51 as the issues of valuation for a declared stock transfer fall within the purview of the Assessing Authority during regular assessment, not the Detaining Officer at a tax barrier whose primary role is to check for unaccounted transactions - The impugned order of the Tribunal along with the original penalty order are set aside - The appeal is allowed
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