Penalty requires proof of statutory preconditions; suspicion and missing transport form were not enough to sustain action.

Penalty under the Madhya Pradesh General Sales Tax Act could not be sustained unless the department first proved the statutory preconditions for action: that taxable goods were stored or kept without accounting, with a view to surreptitious sale and tax evasion, and that such storage was in the dealer's own premises or in another person's premises with express or implied permission. Goods found at a transporter's garage did not satisfy those requirements on the record, because there was no proof of the dealer's knowledge, request for storage, or permission. Mere absence of form XXV-A and suspicion of collusion were insufficient, and penalty could not rest on conjecture. The penalty and revisional orders were therefore unsustainable and required fresh reconsideration.

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Issues: Whether penalty under section 29(8) of the Madhya Pradesh General Sales Tax Act, 1958, could be sustained without proof of the preconditions for action under section 29(6) of that Act.

Analysis: The power under section 29(6) could be exercised only where the department established that the dealer had stored or kept taxable goods without accounting for them, with a view to surreptitious sale and evasion of tax, and that such storage or keeping was in the dealer's own premises or in another person's premises with express or implied permission. On the record, the goods were found at the transporter's garage, but there was no proof that the petitioner had been informed of their arrival, had requested storage there, or had given express or implied permission for such keeping. The mere absence of form XXV-A by the transporter, and the suspicion of collusion, were insufficient. In penalty matters, the revenue had to establish the necessary ingredients, and penalty could not rest on conjecture. The authorities also failed to record a specific finding on the existence of the statutory conditions before imposing penalty.

Conclusion: The penalty and revisional orders could not be sustained, and the matter had to be reconsidered afresh in accordance with the statutory preconditions.

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