# Hindustan Coca Cola Beverage Pvt. Ltd. Revisionist v. The Commissioner, Commercial Taxes

- **Citation:** (2016) 7 ILRA 315
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-07-12
- **Bench:** Yashwant Varma
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/hindustan-coca-cola-beverage-pvt-ltd-revisionist-v-the-commissioner-commercial-44068
- **Pages:** 12

## Headnote

316 INDIAN LAW REPORTS ALLAHABAD SERIES

VAT ACT, 2008 - Sections 48(1), 48(5), 54(14) - Rule 44 - Seizure of goods - Penalty -
Discrepancy in "batch number" and "date of manufacture" - Whether sufficient to infer
intention to evade tax - Held, No.
Headnote:
Discrepancy between the "batch number"/"date of manufacture" mentioned in tax invoices and the goods
loaded in the vehicle does not constitute violation of the provisions of the U.P. VAT Act or the Rules framed
thereunder, as Rule 44 does not mandate disclosure of batch number or date of manufacture in tax invoices.

For imposition of penalty under Section 48(5), existence of intention to evade payment of tax is a sine
qua non. The expression "with intention to evade payment of tax" qualifies all contingencies mentioned in
Section 48(5). In absence of material establishing such intent, penalty cannot be sustained.
Where goods were duly recorded in the Books of Account, carried uniform rate of tax, and no undervaluation
or suppression was established, mere discrepancy in batch numbers attributable to clerical or loading errors
does not justify levy of penalty.

Judgment in M/s Jagatjit Industries Ltd. v. State of U.P. distinguished - It related to seizure proceedings
under Article 226 and not imposition of penalty; further, IMFL cases involved statutory requirement of batch
number under Excise law, unlike VAT Act.

Followed:
Commissioner of Trade Tax v. Central Distillery & Breweries Ltd.
M/s Great Glen Distilleries & Wineries Ltd. v. Commissioner of Sales Tax
Sir Shadi Lal Enterprises Ltd. v. Trade Tax Tribunal

Result:
Revision Allowed.
Orders of the Assessing Authority dated 31.07.2009, First Appellate Authority dated 19.08.2013 and Tribunal
dated 15.01.2016 set aside.
Revisionist entitled to refund of penalty amount deposited.

## Text

7 All. Hindustan Coca Cola Beverage Pvt. Ltd. Vs The Commissioner, Commercial Taxes
315
the prosecution witness Devdutt is highly interested and partisan and wholly unreliable witness. His
testimony is contradictory in material particulars regarding the narration of the incident, as given to
the Investigating Officer and deposed before the trial court.

15. Even P.W.4 Investigating Officer Ram Shiromani has proved these contradictions and
there is no whisper in the statement of this prosecution witness that he got recorded any statement
regarding firing been done on the spot by anyone. Therefore, hollowness of prosecution case is
deeply rooted in material contradictions appearing in the testimony of the prosecution witnesses.

16. Lastly but not the least, this being Revisional Court cannot re-appreciate factual finding
given by the trial court and this Court is basically concerned with apparent illegality and perversity
of the finding so recorded and appearing in judgement. In a number of cases it is well established
that in case of findings of acquittal, if the Appellate/Higher Court comes to record findings that the
findings so recorded is grounded on material on record and the view so taken by the trial court, is
the natural outcome of the material on record then the findings arrived at need not be interfered
with by the higher Court. Even in cases where two views are possible then the view so taken by the
trial court,if found to be supported by material on record then the same is not to be interfered with
by the Appellate or higher Court, as the case may be.

17. This being so, there is no cogent reason to disturb the finding of acquittal recorded by
the trial court in this case. Consequently, this revision lacks force and is dismissed accordingly.
----------
REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 12.07.2016

BEFORE

THE HON'BLE YASHWANT VARMA, J.

Sales/Trade Tax Revision No.- 119 Of 2016
&
Connected With Other Cases

Hindustan Coca Cola Beverage Pvt. Ltd. ...Revisionist
Versus
The Commissioner, Commercial Taxes ...Opposite Party

Counsel for the Revisionist:
Rahul Agarwal

Counsel for the Opposite Party:
C.S.C.
316 INDIAN LAW REPORTS ALLAHABAD SERIES

VAT ACT, 2008 - Sections 48(1), 48(5), 54(14) - Rule 44 - Seizure of goods - Penalty -
Discrepancy in "batch number" and "date of manufacture" - Whether sufficient to infer
intention to evade tax - Held, No.
Headnote:
Discrepancy between the "batch number"/"date of manufacture" mentioned in tax invoices and the goods
loaded in the vehicle does not constitute violation of the provisions of the U.P. VAT Act or the Rules framed
thereunder, as Rule 44 does not mandate disclosure of batch number or date of manufacture in tax invoices.

For imposition of penalty under Section 48(5), existence of intention to evade payment of tax is a sine
qua non. The expression "with intention to evade payment of tax" qualifies all contingencies mentioned in
Section 48(5). In absence of material establishing such intent, penalty cannot be sustained.
Where goods were duly recorded in the Books of Account, carried uniform rate of tax, and no undervaluation
or suppression was established, mere discrepancy in batch numbers attributable to clerical or loading errors
does not justify levy of penalty.

Judgment in M/s Jagatjit Industries Ltd. v. State of U.P. distinguished - It related to seizure proceedings
under Article 226 and not imposition of penalty; further, IMFL cases involved statutory requirement of batch
number under Excise law, unlike VAT Act.

Followed:
Commissioner of Trade Tax v. Central Distillery & Breweries Ltd.
M/s Great Glen Distilleries & Wineries Ltd. v. Commissioner of Sales Tax
Sir Shadi Lal Enterprises Ltd. v. Trade Tax Tribunal

Result:
Revision Allowed.
Orders of the Assessing Authority dated 31.07.2009, First Appellate Authority dated 19.08.2013 and Tribunal
dated 15.01.2016 set aside.
Revisionist entitled to refund of penalty amount deposited.

(Delivered by Hon'ble Yashwant Varma, J.)

1. This batch of commercial tax revisions lays challenge to the order of the Tribunal dated
15 January 2016 upholding the imposition of penalty upon the revisionist-assessee. The
proceedings themselves pertain to Assessment Year 2009-10 and relate to a seizure of goods being
dispatched by the revisionist and a consequential levy of penalty under Section 48(5) of the U.P.
VAT Act, 20081. Since common questions of law arose from these revisions, they with the consent
of parties were heard together and are being disposed of by this judgment.

2. The facts leading upto the passing of the impugned order fall within a narrow compass.
The revisionist is engaged in the manufacture of soft drinks, fruit juices and other aerated
beverages. It is registered both under the VAT Act as well as the Central Sales Tax Act, 1956. It
was its case that during the peak summer months there is a heightened demand for soft drinks as a
result of which the revisionist is compelled to engage additional contract labour on a temporary
basis at its factory at Dasna, District Ghaziabad. This labour, the revisionist submits, is engaged for
loading and dispatching of consignments to its various stockists and distributors situate across the
States of U.P. and Uttarakhand. It was the case of the revisionist that the dispatches of soft drinks
7 All. Hindustan Coca Cola Beverage Pvt. Ltd. Vs The Commissioner, Commercial Taxes
317
were duly accounted for in the Books of Account and that all transactions stood duly reflected in
the records maintained by it. During the course of oral submission, learned counsel for the
revisionist pointed out that following international practices the tax invoices accompanying each
consignment also carried the "date of manufacture" as well as the "batch number" of the soft drinks
and beverages. As was contended before the authorities below and a submission which was
reiterated before this Court, learned counsel for the revisionist pointed out that during the course of
loading and dispatching of consignments, the additional labour inadvertently placed certain
consignments and packages meant for a particular truck onto other trucks which upon seizure led to
the Department claiming that there was a discrepancy in the "date of manufacture"/"batch number"
details mentioned in the tax invoices when compared with the actual consignments loaded on the
truck. It was these discrepancies which primarily led to the seizure of consignments and ultimately
culminated in orders imposing penalty. The assessing authority not accepting the explanation
furnished by the revisionist proceeded to levy penalty on the errant consignments constraining the
revisionist to prefer appeals which came to be dismissed by the first appellate authority. Aggrieved
by the decision of the first appellate authority the revisionist preferred Second Appeals before the
Tribunal which dismissed as many as six appeals by a common judgment and order dated 15
January 2016.

3. To view the facts in a clearer perspective, the details of the revisions, details of the
second appeals, the value of consignments, the amount of penalty imposed and moneys deposited,
may be viewed from the following chart: -

CTR
No.
Second
Appeal
No.
Order of the
Tribunal
A Y
Consi.
amount
Penalty
amount
Amount
Deposit
Amount
Stayed
Remarks
.1.
119/2016
438/2013
15/01/2016
2009-10
239113
42810
42810

Penalty
@25%
on
139283/-
&@8%
on
99830/-
2
120/2016
437/2013

15/01/16

2009-10

1,08,486/-

27,122/-

2
7,122/-

Penalty
@
25%
on
1,08,486/-

3
1121/2016

448/2013

15/01/16

2010-11

1,75,000/-

70,000/-

70,000/-

Penalty
@
40%
on
1,75,000/-
4
122/2016
446/2013
15/01/16
2010-11
93,000/-
37,200/-

37,200/-

Penalty
@
40%
on
93,000/-
5
123/2016
440/2013
15/01/16
2009-10
1,86,000/-
46,500/-
46,500/-

Penalty
@
25%
on
1,86,000/-
6
125/2016
445/2013
15/01/16
2009-10
2,00,000/-
80,000/-
80,000/-

Penalty
@
8%
on
15,000/-
7
126/2016
441/2013
15/01/16
2009-10
1,35,210/-
2
6,926/-
26,926/-

Penalty
@
25%
on
26,926/-
&
8% on 40,450
8
27/2016
442/2013
15/01/16
2009-10
96,600/-
24,150/-
24,150/-

Penalty
@
25%
on
96,000/-
439/2013
15/01/16
2009-10
1,86,000/-
46,500/-
46,500/-

Penalty
@
318 INDIAN LAW REPORTS ALLAHABAD SERIES

9
28/2016
25%
on
1,86,000/-
01
0
29/2016
440/2013
15/01/16
2009-10
1,30,000/-
52,000/-
32,500/-
19,500/-
Penalty
@
40%
on
1,30,000/-

4. Learned counsel for the revisionist referring to the provisions of the VAT Act has
contended that there existed no circumstance, which warranted the imposition of penalty upon the
revisionist. He submitted that no provision of the VAT Act or the Rules framed thereunder required
or obliged the revisionist to disclose the "date of manufacture" or the "batch number" of the soft
drinks. He submitted that a discrepancy in the details falling under the aforementioned two heads
did not justify the imposition of penalty. It was his submission that the articles in question were
duly recorded and reflected in the Books of Account and carried a uniform rate of tax. It was
submitted that there was no intention to evade payment of tax and therefore also the order of the
assessing authority as affirmed by the Tribunal as well as the first appellate authority were rendered
unsustainable. Learned counsel submitted that the authorities below have clearly erred in seeking to
justify the imposition of penalty by placing reliance upon the judgment rendered by this Court in
M/S. Jagatjit Industries Ltd., Ghaziabad Vs. State of U.P. And Other2. Seeking to distinguish
the judgment rendered in Jagatjit, learned counsel submitted that the same came to be rendered
upon a writ petition challenging an order of seizure. The Court, he submitted, was not considering
the issue of imposition of penalty at all. Elaborating his submissions, learned counsel contended
that admittedly the power of seizure is exercised on a prima facie satisfaction whereas in the case of
imposition of penalty, it must be found that the omission on the part of the assessee is aimed at
evasion of tax. Further, it was submitted that in Jagatjit, the Court was considering the seizure of a
consignment of Indian made foreign liquor (IMFL), which in terms of the provisions of the U.P.
Excise Act had to necessarily carry "batch numbers". It was submitted that in the case of I.M.F.L.,
the mention and disclosure of "batch numbers" was directly connected to the payment of excise
duty whereas there was no corresponding link between the mentioning of "batch number" with the
payment of tax under the VAT Act. The distinguishing features and backdrop in which Jagatjit
came to be decided, in the submission of the learned counsel for the revisionist, was duly noted by
a learned Single Judge of this Court in Commissioner of Trade Tax Vs. Central Distillery And
Breweries Ltd., Meerut3 which had proceeded to hold that a discrepancy in "batch numbers" would
not justify a seizure of goods. Learned counsel further submitted that the imposition of penalty
merely on an allegation of a discrepancy in the "batch numbers" did not find favour with this Court
and referred to the judgments rendered in M/S. Great Glen Distilleries And Wineries Ltd.,
Varanasi Vs. Commissioner of Sales Tax4 as well as Sir Shadi Lal Enterprises Ltd., Shamli
Vs. The Trade Tax Tribunal, Muzaffarnagar Bench, Muzaffarnagar & Others5. Learned
counsel further referred to a more recent judgement rendered by a learned Single Judge of this
Court in Nokia India Pvt. Ltd.6.

5. Learned counsel then lastly drew the attention of the Court to a judgment rendered by
the Tribunal inter partes on 9 May 2012 wherein an imposition of penalty in identical
circumstances was set aside by the Tribunal while recording that neither the VAT Act nor the Rules
framed thereunder required a disclosure of "batch numbers" and consequentially held that penalty
7 All. Hindustan Coca Cola Beverage Pvt. Ltd. Vs The Commissioner, Commercial Taxes
319
had been wrongly imposed. He submitted that apart from the fact that the said judgment rendered
by the Tribunal related to Assessment Year 2010-11, there was no distinguishing feature which
may have justifiably weighed with the Tribunal to take a discordant view and uphold the levy of
penalty in the facts of the present case.

6. Learned Standing Counsel refuting the above submissions contended that the assessing
authority had proceeded to hold that apart from the two discrepancies mentioned above, some of
the invoices had also not been pre-authenticated as was mandatorily required under the provisions
of the Rules. He submitted that the assessing authority had recorded a categorical finding that the
action of the revisionist was clearly aimed at evasion of tax and that the consignment of goods
without a proper recordal in the Books of Accounts was clear and apparent. It was his submission
that irrespective of the reasons assigned by the Tribunal, in light of the conclusion so recorded by
the assessing authority, the imposition of penalty was clearly justified. It is these rival submissions
which now fall for consideration.

7. Before proceeding ahead, a note on the order of the Tribunal and the reasons which
weighed with it to sustain the imposition of penalty may be apposite. The Tribunal has noted that
the explanation proffered by the revisionist attributing the discrepancies to the inadvertent mistakes
of the additional labour loading the consignments was not worthy of credence. The Tribunal arrived
at this conclusion holding that at the time of loading of the consignments, clerical staff is also
present and that tax invoices are generated only after the goods have been loaded. The second
reason which weighed with the Tribunal in refusing to accept the explanation proferred by the
revisionist was that this discrepancy had occurred on more than one occasion. It held that the
repetitive character of the discrepancies was an indicator of the fact that the stock register was not
being maintained in accordance with the provisions of the Act. It then referred to the statutory
requirement of the mention of "date of manufacturer" and "batch number" in terms of the
provisions of the Food Safety Standards Act, 20067. It accordingly proceeded to hold that the
discrepancy in the "batch numbers" and the resultant loading of consignments in different vehicles
clearly established that the stock register was not properly being maintained by the revisionist.
Ultimately placing reliance upon the law laid down in Jagatjit, the Tribunal proceeded to uphold
the orders passed by the assessing uthority as well as the first appellate authority.

8. Section 48 of the VAT Act confers a power upon an authorized officer to seize goods in
circumstances enumerated in sub section (1). The same reads as under:

 " Section 48. Power to seize goods.---

(1) An officer authorised under sub-section (1) of section 45 shall have the powers
to seize any goods -

i. which are found in a dealer's place of business, vehicle, vessel or any other
building or place; or
320 INDIAN LAW REPORTS ALLAHABAD SERIES

ii. which, such officer has reason to believe to belong to the dealer and which are
found in any place of business, vehicle, vessel or any other building or place, but are not account
for by the dealer in his accounts, registers or other documents maintained in the ordinary course of
his business.

iii. which are found in any place of business, vehicle, vessel or any other building
or place, and such goods are accompanied by any tax invoice or sale invoice or any other document
pertaining to value of goods, as the case may be, containing value of goods undervalued to the
extent more than fifty percent of the value of goods prevalent at the relevant time in the local
market area where the said transaction had taken place, with intention to evade payment of tax."

9. The power to impose penalty stands enshrined in sub section (5) which reads as follows:

"(5) If such authority, after taking into consideration the explanation, if any, of the
dealer or, as the case may be, the person in charge and after giving him an opportunity of being
heard, is satisfied that the said goods were omitted from being shown in the accounts, registers and
other documents referred to in sub-section (1) or not traced to any bonafide dealer or not properly
accounted for by any dealer or the documents issued by a bonafide dealer with respect to the
accompanying goods contained wrong particulars or the goods are undervalued to the extent of
more than fifty percent of the value of goods prevalent at the relevant time in the local market area
where the said transaction had taken place, with intention to evade payment of tax, it shall pass an
order imposing a penalty not exceeding forty per cent of the value of such goods, as he deems fit."

10. Section 54 which stands enshrined in Chapter VIII of the VAT Act enumerates the
circumstances in which penalty would be imposed and also prescribes the amount of penalty which
may be levied. Undisputedly, it is Item (14) which is relevant for our present purposes and the same
is in the following terms:

14
Where the dealer or any other person, as the case may be,-

i. (i) imports or attempts to import or abets the import of
any goods, in contravention of the provisions under section 50 or
section 51 with a view to evading payment of tax on sale of-

(a) such goods; or

(b) goods manufactured, processed of packed by using such
goods; or

i. (ii) transports, attempts to transport any taxable goods in
contravention of any provisions of this Act;

40%
of
value
of
goods
7 All. Hindustan Coca Cola Beverage Pvt. Ltd. Vs The Commissioner, Commercial Taxes
321
11. The requirements of tax invoices are set forth in Rule 44 reads as follows:

"Rule 44. Requirements of tax invoice, sale invoice, bill, cash memo and
purchase invoice.-(1) Every tax invoice referred to in sub-section (1) of section 22 shall contain
name and complete address of the selling dealer, name and address of its branch or depot from
where goods are sold, Taxpayer's identification Number of selling dealer, tax invoice serial No.,
date of issue, signature of the person authenticating tax invoice, name and address of the purchaser,
Taxpayer-s identification Number of purchaser, if any, description of goods, quantity or measure of
goods, value of goods, other charges, if any, amount of discount, if any, rate of tax, amount of tax
charged, total amount of tax invoice and signature of person issuing tax invoice."

12. Undisputedly, the levy of penalty is liable to be tested on the strength of the provisions
engrafted in sub sections (1) and (5) of section 48. A deconstruction of sub section (1) would
indicate that an assesse faces the specter of seizure in the following circumstances: -

(a) where the officer has reason to believe that goods belonging to the dealer,

(b) are not accounted for by the dealer in his accounts, registers or other documents.

13. In terms of sub section (5) the authority proceeds to levy penalty upon being satisfied
that-

(a) the goods were omitted from being shown in the accounts; or

(b) the goods are not traceable to any bona fide dealer; or

(c) the goods are not properly accounted for by any dealer; or

(d) the documents issued by any dealer contained wrong particulars;

or

(e) the goods are undervalued to the extent of fifty percent of the value of the goods
prevalent at the relevant time in the local market.

14. Rule 44 mandates that the following particulars must find mention in a tax invoice: -

(a) name and complete address of the seller dealer

(b) name and address of the branch or depot from where goods were sold

(c) Taxpayers Identification Number (TIN) of the selling dealer
322 INDIAN LAW REPORTS ALLAHABAD SERIES

(d) Tax invoice number and date of issue

(e) Signature of the person authenticating the tax invoice

(f) name and address of the purchasing dealer

(g) TIN number of the purchasing dealer

(h) a description of the goods

(i) quantity or measure of the goods

(j) value of the goods

(k) rate of tax

(l) amount of tax charged

(m) total amount of tax invoice

(n) signature of the person issuing the tax invoice.

15. As would be more than evident, Rule 44 nowhere requires the disclosure of the batch
number or date of manufacture of the goods in question. The description of the goods would be soft
drinks/aerated drinks. The requirement of mention of a batch number and date of manufacture are
statutory requirements placed by and under a separate statute. One must also not loose sight of the
fact that it is not the case of the respondents that the commodities loaded by the revisionist did not
carry a batch number or date of manufacture. There case simply is that the batch numbers/date of
manufacture did not in some cases tally with the goods actually loaded upon a particular vehicle. In
the opinion of this Court, when sections 48 and 54 speak of "wrong particulars" in a document or a
transportation of goods "in contravention of any provision of this Act", it must necessarily relate to
an omission or wrong mention of a particular mandated to be disclosed and mentioned under the
provisions of the VAT Act or the Rules framed thereunder. Since the only omissions which
triggered the impugned proceedings was an alleged discrepancy in the date of manufacture/batch
number, the Court is of the opinion that this was not a case where it could be justifiably held that
the goods were being transported in violation of the provisions of the VAT Act or the Rules. This
more so when it is borne in mind that it is not the case of the respondents that the goods did not
carry a date of manufacture/batch number and the only allegation was of a discrepancy/disconnect
between the particulars finding mention in the tax invoice and the actual goods found on a vehicle.

16. The Court at this stage must also note a submission advanced by the learned standing
counsel to the effect that some tax invoices had also not been pre-authenticated as required under
the provisions of Rule 44, a fact which finds mention in the order of the assessing authority. As is
7 All. Hindustan Coca Cola Beverage Pvt. Ltd. Vs The Commissioner, Commercial Taxes
323
evident from the order of the Tribunal, the Court finds that this omission, as is noted therein was
only in respect of two invoices. As rightly contended by the learned counsel for the revisionist, this
could not have justified an imposition of penalty on the value of the entire consignment. More
importantly, this factor has not weighed with the Tribunal while it proceeded to uphold and affirm
the orders of the assessing authority and the first appellate authority.

17. Having dealt with the peripheral issue, which was more technical in character, the
Court now proceeds to deal with the primary issue which pivots around the provisions of section 48
(5).

18. A close reading of sub section (5) establishes that while it sets out the circumstances in
which penalty may be imposed [clauses (a) to (e) as extracted and deconstructed above] all the
clauses are qualified and circumscribed by the words "with intention to evade payment of tax". The
phrase "with intention to evade payment of tax" flows and attaches to each of the circumstance
which attracts a levy of penalty under sub section (5). The Court however finds that the Tribunal
has nowhere recorded its conclusion that the act of the revisionist was with an intent to evade
payment of tax. As would be evident from a reading of sub section (5) the act or omission of the
assesse must necessarily be aimed at intent to evade tax. Every bona fide mistake or accidental
slip/omission is not intended by the statute to justify the imposition of a penalty.

19. A reading of the orders impugned would establish that no material or evidence was
referred to or relied upon which may have even remotely established intent to evade payment of
tax. The charge in this regard against the revisionist also does not find legs to stand on when one
bears in mind the fact that all the articles of a particular consignment would bear the same rate of
tax irrespective of the date of manufacture or batch number. Insofar as the recitals in the order of
the assessing authority in this respect is concerned, suffice it to state that a close reading of his
order establishes that it only reproduces the statutory requirements for a levy of penalty without
referring to any material which may have justified a levy of penalty. More fundamentally, the Court
finds that it was the categorical case of the revisionist that all the goods were duly accounted for in
its Books of Account. The respondents do not rest their orders on any material or evidence, which
may have dispelled this assertion. The Court further notes that the Tribunal while coming to the
conclusion that the stock register was not properly maintained does not rely upon any evidence or
particulars at all. The said conclusion is purely conjectural and based entirely upon the two
discrepancies referred to above.

20. The other aspect which cannot be lost sight of by this Court is the order of the Tribunal
itself made in respect of similar proceedings relating to Assessment Year 2010-11. While it is true
that the principles of res judicata may not ipso facto apply to tax adjudications, at the same time
issues which have been decided principally inter partes cannot be ignored. If the same
discrepancies were found in Assessment Year 2010-11 to be insufficient to justify an imposition of
penalty in that year, the Court finds no reason why the same principle would not apply to
Assessment Year 2009-10. At least the assessing authority, the first appellate authority and the
324 INDIAN LAW REPORTS ALLAHABAD SERIES

Tribunal do not record any finding as to why the said decision was not applicable or for that matter
distinguishable.

21. The last issue which then remains is whether Jagatjit is an authority for the proposition
that a discrepancy in batch numbers was a circumstance relevant for imposition of penalty. The
Tribunal has proceeded on the basis that Jagatjit does lay down this law. It is trite to note that a
judgment is not to be read as Euclid's theorems. One of the primary rules of interpretation of
judgments and which has been repeatedly so recognised is that the endeavor to understand the law
declared in a judgment must be made bearing in mind the factual backdrop in which it came to be
rendered. The true essence of a judgment must be extracted and understood bearing in mind the
facts against which it came to be rendered. This principle itself is based on the Latin maxim
"Secundum Subjectam Materiam. It is this basic principle which, in the opinion of this Court, has
been completely lost sight of by the Tribunal.

22. Jagatjit came to be rendered by a learned Judge of the Court upon a difference of
opinion between two learned Judges constituting a Bench of the Court. The issue in Jagatjit was
whether the Court while exercising its powers under Article 226 of the Constitution should
interfere with an order of seizure of goods. This is evident from the following extracts of the
judgment:-

"11. The question, therefore, for consideration is whether on the facts of the case any
ground for interference by this Court was made out in exercise of its jurisdiction under Article 226
of the Constitution of India.

29. In the result, I respectfully agree with the view that on the facts and
circumstances of the case this Court should decline to invoke its extraordinary jurisdiction under
Article 226 of the Constitution of India and the writ petition is dismissed. I regret my inability to
subscribe to the view that the writ petition should be allowed and or the entire proceedings
beginning with show-cause notice and terminating in the impugned orders of seizure and the order
demanding security to the extent of Rs. 3,708 were liable to be quashed."

23. The second aspect of the case as noted above and which needs to be underlined is that
Jagatjit was dealing with a case of seizure and not imposition of penalty. In fact the learned Judge
in Jagatjit itself noted the distinction between the power to seize and levy penalty in the following
terms: -

"21. ............................The test for imposition of penalty is more stringent than at the
stage when the order directing the seizure of goods in terms of sub-section (1) or (1-A) of Section
13-A may be passed on a prima facie belief based on direct or circumstantial evidence that the
goods are not accounted for by the dealer or they are not traced to a bona fide dealer or it was
doubtful that the goods are accounted for by any dealer."
7 All. Hindustan Coca Cola Beverage Pvt. Ltd. Vs The Commissioner, Commercial Taxes
325
24. The more fundamental distinction of Jagatjit is the facet of a statutory requirement of a batch
number being mentioned on IMFL under the U.P. Excise Act and the absence of any such similar
requirement under the VAT Act or the Rules. As noted above, no such requirement stands placed upon the
revisionist under the VAT Act. In fact the authorities themselves noted that the requirement of mentioning
the date of manufacture and batch number was one which stood imposed by virtue of the provisions of a
separate statute.

25. In view of the above, this Court is of the firm view that Jagatjit is not an authority for the
proposition that a wrong mention of/discrepancy in the batch number or date of manufacture would
warrant the imposition of penalty under the VAT Act.

26. Additionally the Court finds that Jagatjit was duly noted and distinguished in Central
Distillery. The learned Judge held:

"4. It is admitted that the goods were accompanied by the documents referred to above and
the only ground of seizure was that the batch numbers of the goods were different. It has been held by this
Court in Lipton India Ltd. v. Commissioner of Sales Tax, 1993 U.P.T.C. 368 and M/s. Great Glen
Distilleries & Wineries v. Commissioner of Sales Tax 1995 U.P.T.C. 699 that the seizure of goods was not
justified in cases where there is merely a difference of batch number of the goods. The learned Standing
Counsel placed reliance on M/s. Jagatjit Industries Ltd. v. State of U.P., 1997 U.P.T.C. 1011 in which the
question was whether on the facts of that case the High Court should exercised its jurisdiction under
Article 226 of the Constitution of India for quashing the notices of seizure. It was held that the necessary
facts have to be found by the authorities under the Act and, therefore, the High Court should not interfere
under Article 226 of the Constitution of India. The view taken by this Court in the aforesaid cases has
neither been considered nor a different view taken. Therefore the aforesaid judgments are applicable to the
facts of the present case in which the dealer preferred by appeal to the Tribunal in terms of Section 10(2)
of the Act and the Tribunal has recorded a finding of fact that the goods were duly recorded in the books of
account of the dealer. This finding is not open to challenge in the present revision petition."

27. The issue as to whether a discrepancy in the batch number would be sufficient to warrant the
imposition of a penalty, as the learned Judge noted, had been negatived in Great Glen and other
judgments. This is what the learned Judge observed in Great Glen: -

"7. ..........................................The difference in the batch number mentioned in the excise
export permit was of no consequence whatsoever. Firstly that was not a document required under Rule
83(4) and secondly the batch number did not in any manner make the goods different from what they were
mentioned to be in the other documents. Rule 83 (4) of the Sales Tax Rules and Section 28-A have to be
read keeping in view the purpose for which they have been incorporated in the Sales Tax Act and the
Rules. The purpose is to ensure proper recovery of sales tax. The batch number of a product has no
relevance whatsoever, so far as sales tax is concerned. The goods being carried were cases of Ritz whisky
and what was material was the number of cases and the bottles and the value thereof. The difference in
batch number did not effect these things and the contention of the learned Standing Counsel that the
difference in the batch did make the goods different is thoroughly unacceptable."
326 INDIAN LAW REPORTS ALLAHABAD SERIES

28. Great Glen, it may be noted, was rendered prior in point of time to Jagatjit and itself
followed an earlier judgment of the Court rendered in Lipton India Ltd. Vs. Commissioner of Sales
Tax8. Neither of these judgments were noticed or referred to in Jagatjit.

29. Having dwelt upon Jagatjit and the distinguishing backdrop in which the same came to be
rendered, the Court lastly takes note of what was held in Shadi Lal Enterprises where the learned Judge
held:-

"6. Batch number is only mentioned in only in Bill No. 25. In other papers accompanying
the disputed consignment Batch number is not mentioned. There is no finding of the Tribunal that the
goods despatched through the consignment in question there was omission, as shown in the accounts,
registers and other documents. Penalty under these circumstances, could be imposed only when a
categorical finding is recorded to this effect. There is nothing to show that the Tribunal examined the
matter with reference to these stipulations. It is undisputed that if goods are shown in the accounts,
registers and other documents, no penalty could be imposed. Consequently, the penalty imposed by the
Tribunal must be held to be illegal on the face of it, and it has to be quashed."

30. For all the aforesaid reasons, the Court has no hesitation to hold that the imposition of penalty
upon the assessee on account of a discrepancy in the batch numbers and date of manufacture was clearly
unjustified and unwarranted in the facts and circumstances of the case. The orders of the assessing
authority, the first appellate authority as also that of the Tribunal sustaining the levy of penalty upon the
revisionist, therefore cannot be sustained.

31. Accordingly this revision shall stand allowed. The order of the assessing authority dated 31
July 2009, the order of the first appellate authority dated 19 August 2013 and that of the Tribunal dated 15
January 2016 are hereby set aside. The revisionist shall be entitled to the refund of the amounts deposited
towards penalty. This claim of the revisionist shall be processed by the assessing authority in accordance
with the provisions of the VAT Act expeditiously.
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REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 09.11.2022

BEFORE

THE HON'BLE YASHWANT VARMA, J.

Sales/Trade Tax Revision No.- 160 Of 2006

M/S Maiden Industries ...Applicant
Versus
The Commissioner Of Trade Tax, U.P. Lucknow ...Respondents

Counsel for the Applicant:
Ashok Kumar