Penalty for tax evasion cannot rest on technical lapses where declaration papers were produced before seizure.

Penalty for alleged contravention under the U.P. Trade Tax import-control scheme was treated as unsustainable where the declaration form and supporting papers had been produced before seizure, and the relevant notification had extended the validity of Form XXXI. The court's reasoning was that penalty can be imposed only when the facts show an attempt to evade tax, not when the dispute rests on a technical defect or a transporter's lapse. On that basis, the procedural irregularities relied upon were held insufficient to infer collusion or tax evasion, and the penalty was set aside with consequential refund directions.

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Issues: Whether penalty under section 15-A(1)(o) of the U.P. Trade Tax Act, 1948 for alleged violation of section 28-A could be sustained when the declaration form and accompanying documents were produced before seizure, the declaration form was claimed to be obsolete, and the transporter's lapses were relied upon to infer intention to evade tax.

Analysis: Penalty under the import-control scheme is attracted only when the import is accompanied by an attempt to evade tax. The detention was based on non-mention of goods in the trip sheet and alleged use of an expired form XXXI, but the material showed that the documents had been produced before the seizure order and that the Commissioner had extended the validity of form XXXI by notification. The Court treated that notification as binding on the authorities. It further held that the lapse of the transporter in producing documents or in filing papers could not, by itself, establish collusion or an intention on the part of the assessee to evade tax. The alleged procedural irregularities were therefore insufficient to justify penalty.

Conclusion: The penalty was not sustainable and the revision was allowed in favour of the assessee.

Final Conclusion: The impugned penalty orders were set aside and the tax authorities were directed to refund the amount deposited with interest.

Ratio Decidendi: Penalty for import-related contravention can be imposed only where the facts establish an attempt to evade tax, and not for a mere technical or transporter-related lapse when the governing administrative notification extends the validity of the declaration form.

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