Technical breach of transit requirements does not justify full penalty absent intent to evade tax.

Penalty for contravention of the transit/form requirement under the U.P. Sales Tax Act is not justified on a mere technical breach. Where the goods were supported by an eligibility certificate, recorded in the assessee's books, tax had been paid, and the incorrect document description was found to be a bona fide mistake by the clearing agent, the absence of mala fides and of any intention to evade assessment or tax payment meant that only a nominal penalty could be sustained. The Tribunal's factual finding on lack of intent to evade was not shown to be perverse, so the reduction of penalty to a token amount was upheld.

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Issues: Whether penalty under section 15-A(1)(o) of the U.P. Sales Tax Act could be sustained, or reduced, where goods were imported without the prescribed form but the finding was that there was no intention to evade assessment or payment of tax.

Analysis: Penalty under section 15-A(1)(o) is attracted for import or transport of goods in contravention of section 28-A, but the provision has to be applied in light of the settled principle that a penalty is not justified merely because a technical breach is established. The controlling consideration is whether the import was made with an intention to evade assessment or payment of tax. On the facts accepted by the Tribunal, the assessee had an eligibility certificate under section 4-A, the goods were recorded in the books, duty had been paid, and the wrong description in the transport documents was attributed to a bona fide mistake of the clearing agent. The Tribunal's finding of absence of mala fides and absence of intent to evade tax was not shown to be perverse or unsupported by the record. In such circumstances, only a technical violation of section 28-A remained, which did not warrant full penalty.

Conclusion: The reduction of penalty to a token amount was legally justified and the Revenue's challenge failed.

Final Conclusion: The revision was dismissed, and the Tribunal's view that only a nominal penalty could be sustained on the proved facts was left undisturbed.

Ratio Decidendi: Penalty for contravention of the transit requirement is not sustainable on a mere technical breach unless the facts establish an intention to evade tax or assessment; in the absence of mala fides, only a nominal or no penalty may be justified.

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