Defective transport records create only a rebuttable inference of evasion when taxability of the goods remains undecided.

Penalty for transporting goods without prescribed records could not be sustained solely on an inference of attempted evasion where the assessee had raised a specific plea that the goods were second sales and not taxable in his hands. The record showed that this taxability plea had been taken before the assessing authority and in appeal, but it had not been decided on merits. In these circumstances, defective transport documents were only a rebuttable basis for inferring evasion, and the authority had to first determine whether the goods were exigible to tax in the assessee's hands. The matter was remitted for fresh consideration of that plea before penalty could be upheld.

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Issues: Whether penalty for transport of goods without the prescribed records could be sustained without considering the assessee's plea that the goods were second sales and not exigible to tax in his hands.

Analysis: The transport of goods was found to be without the permit and stock book required for van sales, and non-compliance with the relevant provisions supported an inference of attempted tax evasion. However, the assessee had specifically pleaded that the milk powder had already suffered tax at the first sale and that his sales were only second sales. The material on record showed that this plea had been raised before the assessing authority and in appeal, but it had not been adjudicated on merits. In such a situation, the absence of accompanying records could not, by itself, conclude the issue of attempted evasion without examining whether the goods were in fact taxable in the assessee's hands.

Conclusion: The penalty order could not be sustained without a fresh determination of the assessee's plea on taxability, and the matter had to be remitted for proper consideration.

Ratio Decidendi: A finding of attempted tax evasion based on defective transport documents is only a rebuttable inference of fact, and where the assessee raises a specific plea that the goods are not taxable in his hands, that plea must be adjudicated before penalty can be upheld.

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