Check-post verification and tax evasion: seizure fails when sealed documents and vehicle clearance undermine adverse inference.

Where goods and documents are produced at a check-post, the authority affixes its seal and allows the vehicle to pass, a later allegation of tax evasion cannot rest only on an unsigned endorsement or the absence of the transit declaration. Before drawing an adverse inference, the authority must explain how the vehicle was permitted to proceed after verification. On the stated facts, the inference of deliberate violation was not sustainable, so the seizure, penalty and consequential orders were treated as invalid.

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Issues: Whether the seizure of the goods and the consequential penalty orders were valid when the check-post documents bore an official seal but no signature, the required transit declaration under the rules was not furnished, and the goods were allowed to pass through the check-post.

Analysis: The decisive question was whether there was material to conclude that the petitioner intended to evade tax. The documents had been produced at the check-post, the official seal of the authority was affixed, and the vehicle was allowed to proceed. In those circumstances, the failure to insist upon the declaration contemplated by the rules and the absence of a signed endorsement were attributable to negligence or inadvertence on the part of the check-post authorities. Before drawing an adverse inference against the petitioner, the authority was required to explain how the vehicle had been permitted to pass through after verification. On these facts, the conclusion that the goods had been brought within West Bengal in violation of law and with intent to evade tax could not be sustained.

Conclusion: The seizure was held to be illegal and invalid, and the penalty and subsequent orders were quashed in favour of the petitioner.

Ratio Decidendi: Where the goods and documents are produced before the check-post authority and the authority itself permits the vehicle to pass after affixing its seal, an adverse finding of tax evasion cannot be sustained unless the authority explains the circumstances showing deliberate violation by the transporter.

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