Declared value of goods may be scrutinised at check-post, and undervaluation can trigger a statutory presumption of tax evasion.

Section 45-A of the Madhya Pradesh Commercial Tax Act, 1994 authorises a Check-post Officer, after examining the vehicle, declaration and accompanying documents, to verify not only the kind and quantity of goods but also the correctness of the declared value. If the declared value appears false or incorrect, a presumption arises of an attempt to facilitate tax evasion unless the transporter rebuts it with evidence. On the facts noted, the transporter failed to prove the asserted market rate with reliable material, and the authorities found the declared value below the prevailing market value. The declaration made for crossing the Kerala border did not bind the Madhya Pradesh authorities when the goods were brought for sale within the State.

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Issues: Whether the Check-post Officer was entitled under section 45-A of the Madhya Pradesh Commercial Tax Act, 1994 to question the declared value of the goods and whether the penalty imposed for undervaluation was liable to be interfered with.

Analysis: Section 45-A(7) empowered the Check-post Officer, after searching the vehicle and verifying the declaration and accompanying documents, to examine not only the kind and quantity of goods but also the correctness of the declared value. Where the declaration appeared false or incorrect as to value, a presumption arose that there was an attempt to facilitate evasion of tax, unless the transporter proved the contrary. The appellants failed to substantiate their asserted market rate by reliable evidence, while the authorities found on the record that the declared value was below the prevailing market value. The declaration made for crossing the Kerala border did not bind the Madhya Pradesh authorities when the goods were brought for sale within the State.

Conclusion: The challenge to the inquiry into valuation and to the penalty failed. The finding of undervaluation and the consequent penalty were upheld, in favour of the Revenue.

Ratio Decidendi: Under section 45-A of the Act, the Check-post Officer may inquire into the correctness of the declared value of goods and, where undervaluation suggests tax evasion, the transporter must rebut the statutory presumption with evidence.

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