ASHWANI KUMAR MISHRA,J. - (1.) An order of Tribunal dated 15.9.2006, passed in Second Appeal No. 163 of 2005, is under challenge in this revision. Penalty proceedings have been initiated by the department under Section 13-A(4) of the U.P. Trade Tax Act, which has been affirmed by the Tribunal. The defence taken by the assessee was that the product in question was manufactured from paper upon which entry tax had already been paid. Notification dated 30th October, 2001 has been relied upon, which provides that rebate of full amount of tax under the U.P. Trade Tax Act would be allowed on the sale of paper or product manufactured from paper, upon which entry tax is paid. Admittedly the paper from which the paper pouches were manufactured and sold, the assessee had paid entry tax. Revenue Authorities were of the opinion that the pouches were wax coated and therefore would seize to be products manufactured from paper. This view of the authorities has been accepted by the Tribunal.
(2.) Learned counsel for the revisionist submits that once the entry tax was paid, the payment of trade tax in view of the notification upon the product manufactured was clearly exempted, and there could be no intention on part of the assessee to evade payment of tax, so as to justify levy of penalty.
(3.) The notification dated 30th October, 2001 has been brought on record. It clearly exempts levy of tax under the U.P. Trade Tax Act, where entry tax is paid upon the paper brought in within the local area. It is not in dispute that entry tax in fact was paid upon the paper used for manufacturing pouches. The question as to whether pouches prepared were other than products prepared from paper because it was wax coated may have relevance for the issue of classification or taxability, but no intention to evade payment of tax could be inferred in the facts and circumstances, so as to initiate proceedings under Section 13-A(4) of the U.P. Trade Tax Act. The Authorities and Tribunal have failed to take note of this crucial aspect, which vitiates the order itself. The order of the Tribunal, in such circumstances, imposing penalty cannot be sustained. The question posed for consideration is answered, accordingly, in favour of the assessee.;