Check-post detention and penalty require reasonable suspicion of tax evasion; stock transfer documents can defeat recovery through bank guarantee.

Detention of goods at a check-post under section 14-B of the Punjab General Sales Tax Act, 1948 is confined to cases where there are reasonable grounds to suspect tax evasion or absence of proper, genuine documents. Production of a goods receipt, stock transfer invoice and agreement showing movement to an agent may negate such suspicion, and a mere mismatch in the names of consignor and consignee does not, by itself, justify detention. Recovery of penalty through a bank guarantee without supplying the penalty order or serving a demand notice raises fairness concerns; even a patently illegal order may be examined in writ jurisdiction despite the availability of an appeal.

---

---

Issues: (i) Whether detention of goods and imposition of penalty at the check-post were justified on the facts and in the circumstances of the case. (ii) Whether recovery of the penalty through the bank guarantee was lawful without supplying the penalty order or serving a demand notice.

Issue (i): Detention under section 14-B of the Punjab General Sales Tax Act, 1948 is permissible only where there are reasons to suspect evasion of tax or absence of proper and genuine documents. Where the goods receipt, stock transfer invoice and agreement showing consignment to an agent were produced, and there was no legal requirement that consignor and consignee be the same person, mere difference in names could not justify suspicion of evasion. A stock transfer through an agent is legally distinct from a sale, and the authority recorded no finding that the transaction was a sale in disguise.

Conclusion: The detention and penalty were unjustified and liable to be quashed.

Issue (ii): Recovery of penalty from the bank guarantee without furnishing the penalty order or serving notice offended basic fairness. Even though an appeal lay against the penalty order, a patently illegal order passed in colourable exercise of power could be examined in writ jurisdiction, and recovery could not be sustained without communicating the operative order to the affected party.

Conclusion: Recovery from the bank guarantee without supply of the penalty order was unlawful.

Final Conclusion: The impugned detention and penalty orders were set aside, and the writ petition succeeded with costs.

Ratio Decidendi: Check-post powers under section 14-B of the Punjab General Sales Tax Act, 1948 can be exercised only on reasonable grounds of suspected tax evasion, and a bona fide stock transfer supported by proper documents cannot be treated as a taxable sale or used to sustain detention and penalty.

---