2026-VIL-653-P&H
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VAT High Court Cases

Punjab Value Added Tax Act, 2005 - Penalty for alleged tax evasion - Requirement of intent under Section 51(7) PVAT Act - Stock transfer of mobile phones with accessories - Petitioner challenged order imposing penalty under Section 51(7)(c) PVAT Act for alleged attempt to evade tax on mobile phone accessories which carried higher tax rate of 8% compared to mobile phones at 5% - Whether penalty can be imposed at check-post when classification of goods was not settled and there was bonafide belief regarding tax liability - HELD - Section 51(7) of PVAT Act categorically specifies that for levy of penalty there has to be intent to evade tax on part of assessee – For exercise of power at check-post to be valid must have reasonable nexus with attempt at evasion - Where relevant documents duly produced but bonafide plea against taxability is raised and there is neither mis-declaration nor concealment, exercise of power of imposing penalty at check-post on ground of attempt at evasion not intended - The Supreme Court held in Nokia India Pvt. Ltd. that accessory of mobile phone would have to be taxed separately. This by itself would not lead to inference of intent on part of appellant to evade payment of tax - Accessories were clearly specified as being part of mobile phone in Stock Transfer Invoice which would point to fact that there was no intent to suppress that mobiles in transit were not accompanied by accessories – The material available with check-post authorities was insufficient to infer intent to evade tax and absence of such intent makes levy of penalty itself bad in law – The impugned order is set aside and the appeal is allowed
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