Penalty under trade tax law requires proof goods were outside the dealer's records; sale situs dispute alone is insufficient.

Penalty under Section 13A(4) of the U.P. Trade Tax Act, 1948 cannot be sustained unless the goods are shown either not to relate to a registered dealer or not to have been entered in the dealer's books of account. Where the record shows that the goods related to the dealer and no finding is recorded that they were outside the books, the statutory ingredients for penalty are not satisfied. A dispute about whether the goods were being transported within the State or were intended for an outside-State sale may affect tax liability, but by itself does not justify penalty. The penalty was therefore held not exigible.

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Issues: Whether penalty under Section 13A(4) of the U.P. Trade Tax Act, 1948 was sustainable when the goods were found to relate to the dealer and there was no finding that they were not entered in the dealer's books of account.

Analysis: Penalty under Section 13A(4) is attracted where the goods do not relate to a registered dealer or are not recorded in the books of account. The dispute whether the goods were being transported within the State or were meant for an outside-State sale affected the tax liability under the relevant fiscal regime, but by itself did not establish the ingredients required for penalty. The material on record showed that the goods related to the dealer, and no finding was recorded that they were outside the dealer's accounts.

Conclusion: The penalty was not exigible and its deletion by the Tribunal was justified.

Final Conclusion: The revision failed, and the penalty order was left undisturbed in favour of the dealer.

Ratio Decidendi: Penalty under Section 13A(4) cannot be imposed unless the goods are shown not to relate to a registered dealer or not to have been recorded in the dealer's books of account; a dispute about the situs of sale or tax liability is insufficient by itself.

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