Jammu, Aug 1, KNT: The Division Bench of the High Court of Jammu & Kashmir and Ladakh, comprising Justice Sanjeev Kumar and Justice Sanjay Parihar, has dismissed a petition filed by the Commissioner of State Taxes and the Assessing Authority against Reliance Jio Infocomm Ltd, ruling that the penalty imposed on the telecom giant was not supported by the Jammu & Kashmir Entry Tax Act, 2000.
The case originated from a November 15, 2016, incident when a vehicle transporting Reliance Jio’s equipment was intercepted at the Lower Munda Check Post for allegedly bypassing Lakhanpur without the required tax clearance. Authorities imposed a penalty of over ₹1.48 crore under the VAT Act. Although the Appellate Authority upheld the penalty, the Sales Tax Tribunal later struck it down.
The Tribunal reasoned that the documents provided by Reliance Jio were neither fake nor false — the only conditions under which a penalty can be imposed under Section 4(3) of the Entry Tax Act. It also pointed out that the case had been wrongly pursued under the VAT Act instead of the Entry Tax law.
Upholding the Tribunal’s stance, the High Court emphasized that the Entry Tax Act only permits penalties when there is evidence of forged documentation. It clarified that other tax laws, such as VAT or GST, cannot be applied to Entry Tax cases unless specifically mentioned in the statute. Moreover, Section 6 of the Entry Tax Act only allows for the adoption of procedural aspects from other laws, not punitive ones.
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“Penalty is a statutory liability,” the court noted. “There must be a clear charging section to impose such liability. In this case, that condition was not met.”
The ruling reaffirms the principle that tax penalties must be grounded in the specific provisions of the law under which they are imposed, and not borrowed from other statutes arbitrarily. [KNT]
