Transit penalty for attempted tax evasion depends on factual findings, jurisdiction under the transit provision, and discretionary limits.

Penalty for attempted tax evasion during transit under section 37(6) depends on factual appreciation of interception, inquiry and recorded satisfaction, so it may not raise a referable question of law where the finding is evidence-based. The officer's power to impose penalty under that provision is part of the transit check mechanism and does not depend on an assessment proceeding. Rule 27, which governs penalties under other provisions, does not apply to section 37(6). A maximum penalty within the statutory range may be sustained where the facts show evasion, use of a duplicate bill and a reasoned exercise of discretion.

---

---

Issues: (i) Whether the imposition of penalty under section 37(6) of the Haryana General Sales Tax Act, 1973, on the facts found was a question of law referable to the High Court. (ii) Whether the Excise and Taxation Officer lacked jurisdiction to impose penalty under section 37(6) because the matter was not one of assessment. (iii) Whether rule 27 of the Haryana General Sales Tax Rules, 1975, requiring notice and ten days' time, applied to penalty proceedings under section 37(6). (iv) Whether the levy of the maximum penalty of twenty-five per cent required interference for want of reasons or non-application of mind.

Issue (i): Whether the imposition of penalty under section 37(6) of the Haryana General Sales Tax Act, 1973, on the facts found was a question of law referable to the High Court.

Analysis: The detaining officer had intercepted the goods in transit, conducted an inquiry, afforded opportunity, and recorded a reasoned finding that there was an attempt to evade tax. The conclusions reached were based on evidence and turned on factual appreciation rather than any debatable legal principle.

Conclusion: The question was one of fact and not a referable question of law.

Issue (ii): Whether the Excise and Taxation Officer lacked jurisdiction to impose penalty under section 37(6) because the matter was not one of assessment.

Analysis: Penalty under section 37(6) is part of the machinery for checking tax evasion during transit and is distinct from assessment proceedings. An officer competent to detain and inquire into goods in transit may, upon satisfaction of attempted evasion, impose penalty under that provision; the power does not depend on framing of an assessment.

Conclusion: The officer had jurisdiction and the contention was rejected.

Issue (iii): Whether rule 27 of the Haryana General Sales Tax Rules, 1975, requiring notice and ten days' time, applied to penalty proceedings under section 37(6).

Analysis: Rule 27 specifically governed penalties under sections 46 to 51 of the Act and made no reference to section 37. Since the impugned penalty was imposed under section 37(6), the rule had no application.

Conclusion: Rule 27 did not apply and no referable question of law arose.

Issue (iv): Whether the levy of the maximum penalty of twenty-five per cent required interference for want of reasons or non-application of mind.

Analysis: Section 37(6) vested discretion to impose penalty between ten and twenty-five per cent according to the facts. The circumstances showed an attempt to evade tax, use of a duplicate bill not issued from the regular bill book, and transit on an escape route. The Tribunal also considered the quantum and reduced the amount, showing due application of mind.

Conclusion: The maximum penalty was sustainable and did not justify reference.

Final Conclusion: No referable question of law arose from the Tribunal's order, and the petition for reference was dismissed.

Ratio Decidendi: A penalty imposed for attempted tax evasion on transit interception, when based on a reasoned factual finding and within statutory discretion, gives rise to no referable question of law unless a distinct legal issue on jurisdiction or applicability of the governing provision is shown.

---