Technical way-bill breach does not justify penalty absent intent, mala fides, or tax-evasion risk under VAT rules.

Penalty for failure to present the way-bill for endorsement before taking delivery of imported goods under Rule 100 of the West Bengal Value Added Tax Rules, 2005 was held unwarranted where the consignment was accompanied by the requisite way-bill, the dealer produced the documents for endorsement, and the goods were duly recorded in stock. The breach was treated as technical only, with no material showing that the way-bill was obtained after delivery, that the transaction was a device to evade tax, or that the infringement was intentional or mala fide. The penalty order was therefore set aside as mechanically imposed without proper consideration of the record.

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Issues: Whether penalty was leviable for failure to present the way-bill for endorsement before taking delivery of imported goods under rule 100 of the West Bengal Value Added Tax Rules, 2005, when the documents showed that the consignment had been accompanied by the requisite way-bill and there was no indication of tax evasion.

Analysis: The requirement to present the way-bill before taking delivery was breached, but the breach was only technical. The dealer itself produced the way-bill and connected documents for endorsement, the goods were duly entered in stock, and the record did not show that the way-bill had been obtained after delivery or that the transaction was a device to evade tax. Penalty under the rule was held to be unwarranted unless the infringement was intentional or created a possibility of tax evasion. On the facts, there was no lack of bona fides, and the authority had acted mechanically without considering the full material.

Conclusion: Penalty was not sustainable and the impugned order imposing penalty was set aside in favour of the assessee.

Ratio Decidendi: A mere procedural breach of a transport or way-bill requirement does not justify penalty unless the infringement is shown to be intentional, mala fide, or connected with actual or possible tax evasion.

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