Technical breach in delivery note production did not justify penalty absent reasonable suspicion of tax evasion.

Penalty under section 29A(4) of the Kerala General Sales Tax Act was held unsustainable where the goods vehicle carried only a photostat copy of the delivery note at interception, but the original was produced within the time allowed with an explanation. The authority could invoke the penalty mechanism only on a reasonable basis to suspect tax evasion, and on these facts the omission was treated as an inadvertent technical breach rather than evidence of mala fide intent or mens rea. The appellate authorities were criticised for mechanically affirming the penalty without addressing the relevant circumstances, and the assessee succeeded.

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Issues: Whether penalty under section 29A(4) of the Kerala General Sales Tax Act, 1963 was sustainable when the goods vehicle initially carried only a photostat copy of the delivery note but the original was produced within the time allowed, and whether such lapse disclosed an intention to evade tax.

Analysis: The penalty mechanism under section 29A(4) could be invoked only where the authority had a reasonable basis to suspect evasion of tax. The only defect noticed at interception was non-production of the original delivery note; the original was later produced within the time granted, along with an explanation. On the facts, the omission was found to be inadvertent and the explanation acceptable. The authorities were held to have acted on assumptions and presumptions, and the appellate authorities were found to have mechanically affirmed the penalty without addressing the relevant circumstances. The lapse was treated as a technical breach and not as evidence of mala fide intent or mens rea.

Conclusion: Penalty under section 29A(4) was not sustainable, and the assessee succeeded.

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