Check-post tax collection cannot rest on mere suspicion of undervaluation without material showing a bona fide apprehension of evasion.

Check-post officers under section 16-A of the Orissa Sales Tax Act, read with rule 94, may detain, inspect or act against goods only where there is a statutory defect in the way-bill or a recorded, material-based apprehension of evasion. Where the goods were accompanied by proper documents and complete way-bills, and there was no factual basis for a bona fide belief of suppression or evasion, mere suspicion based on local market price or assumed undervaluation could not justify collection of tax at the check-post. The collection was therefore unauthorised and illegal.

---

---

Issues: Whether the officers-in-charge of check-posts could, under section 16-A of the Orissa Sales Tax Act, 1947 read with rule 94 of the Orissa Sales Tax Rules, 1947, collect sales tax on the basis of alleged undervaluation in way-bills and a supposed likelihood of future evasion of tax, and whether such collection was lawful.

Analysis: Section 16-A authorises establishment of check-posts to prevent or check evasion of tax and empowers detention, inspection, and seizure only within the statutory framework. Rule 94 permits action where the goods are not fully covered by a way-bill, the way-bill is defective or incomplete, or the officer, for reasons recorded in writing, apprehends likelihood of evasion of tax. The goods in question were accompanied by proper documents and complete way-bills, and there was no material showing past suppression, defective documentation, or any factual basis for a reasonable apprehension of evasion. Mere suspicion based on local market price or presumed future undervaluation could not justify levy or collection of tax at the check-post. The statutory power could not be used as a substitute for regular assessment or to collect tax in advance on conjecture.

Conclusion: The collection of sales tax by the check-post officers was unauthorised and illegal, and the challenge succeeded.

Ratio Decidendi: Check-post action under the sales tax law is valid only when founded on a statutorily relevant defect or a bona fide, reasoned apprehension of evasion supported by material; mere suspicion or perceived undervaluation does not justify collection of tax at the point of transit.

---