Declaration form requirement and tax-evasion evidence needed before seizure and penalty can be sustained under substituted provisions.

After substitution of section 31(2a) of the Bihar Finance Act, penal action for alleged non-compliance with the declaration form requirement could not rest on old forms or defects in forms unless a fresh notification prescribed or adopted the operative form; absent such notification, invocation of section 31(2b) and section 31(3) was not legally sustainable. Seizure of goods or carrier and imposition of penalty also required positive material and recorded satisfaction that the goods were sold or purchased within the State and were being transported to evade tax; mere suspicion or procedural lapse was insufficient. The impugned seizure and penalty orders were quashed and the realized penalty was directed to be refunded.

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Issues: (i) Whether, after substitution of section 31(2a) of the Bihar Finance Act, the absence of a fresh notification prescribing or adopting a declaration form prevented invocation of section 31(2b) and section 31(3) for alleged contravention of section 31(2a). (ii) Whether seizure of goods or carrier and imposition of penalty under section 31(2b) and section 31(3) could be sustained without positive material and recorded satisfaction that the goods were sold or purchased within the State and were being transported to evade tax.

Issue (i): Whether, after substitution of section 31(2a) of the Bihar Finance Act, the absence of a fresh notification prescribing or adopting a declaration form prevented invocation of section 31(2b) and section 31(3) for alleged contravention of section 31(2a).

Analysis: The substituted provision expressly required a person transporting goods to carry a declaration in such form as may be prescribed by the Commissioner by notification, or a form adopted by notification. The earlier forms issued under the pre-substitution regime could not automatically continue to govern the substituted provision when the statutory language itself made a fresh prescription or adoption by notification integral to its operation. Section 27 of the Bihar and Orissa General Clauses Act, 1917 could not be used to continue forms that were no longer consistent with the re-enacted provision. In the absence of a notification under the substituted provision, non-carrying of the old forms or defects in such forms did not amount to a legally enforceable contravention of section 31(2a).

Conclusion: In favour of the assessee. The impugned action based solely on absence, non-production, or defect in the old declaration forms was without jurisdiction.

Issue (ii): Whether seizure of goods or carrier and imposition of penalty under section 31(2b) and section 31(3) could be sustained without positive material and recorded satisfaction that the goods were sold or purchased within the State and were being transported to evade tax.

Analysis: The seizure and penalty powers were not automatic consequences of every procedural lapse. Their exercise depended on satisfaction, founded on positive material, that the transport was in contravention of the declaration requirement in a manner likely to lead to tax evasion. Mere suspicion was insufficient. The authority had to record reasons showing that the goods were in fact sold or purchased within the State and were being clandestinely moved so as to evade tax. In the absence of such foundational material, the statutory powers under section 31(2b) and section 31(3) could not be validly exercised.

Conclusion: In favour of the assessee. The seizure and penalty orders could not stand without the requisite satisfaction based on material.

Final Conclusion: The constitutional challenge was not accepted to the extent necessary for relief, but the impugned proceedings and orders under section 31(2b) and section 31(3) were quashed because the statutory preconditions for their exercise were not met; the petitions were therefore partly allowed and refund of realized penalty was directed.

Ratio Decidendi: Where a taxing statute makes the prescribed declaration form part of the operative requirement by notification, the absence of such notification after substitution disables penal action for alleged contravention of that requirement, and coercive powers such as seizure or penalty can be exercised only on recorded satisfaction founded on positive material that the goods were being transported to evade tax.

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