Way-bill endorsement breach justified penalty, but equitable factors warranted reduction of the penalty amount.

Penalty for delivery of consigned stock-transfer goods before endorsement of the way-bill was justified because the VAT procedure required endorsement before delivery, and the goods had already been taken delivery of and disposed of before verification could occur. The Tribunal distinguished the earlier relied-on precedent on facts, noting that the present case involved non-compliance with the transport requirements and that setting aside the penalty entirely would undermine the statutory procedure. However, because the documents were produced suo motu soon after delivery and the circumstances warranted equitable consideration, the penalty was held excessive and reduced.

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Issues: Whether penalty was justified for taking delivery of consigned goods before endorsement of the way-bill, and whether the revisional authority was bound to interfere with the penalty imposed for such breach of the transport requirements.

Analysis: The consignment was admittedly a stock transfer and was delivered before the way-bill was endorsed by the sales tax authority. The governing VAT requirements required endorsement before delivery, and the documents were produced only after the goods had already been taken delivery of and disposed of, leaving no scope for physical verification at that stage. The earlier Tribunal decision relied on by the petitioner was distinguished on facts, because there the conduct had been treated as a tolerated irregularity and no comparable repeated non-compliance was shown. In the present facts, the Tribunal held that setting aside the penalty altogether would amount to permitting violation of the statutory procedure. At the same time, since the documents were produced suo motu soon after delivery and the surrounding circumstances called for equitable consideration, the penalty was found excessive.

Conclusion: The penalty was upheld in principle, but the amount was reduced to Rs. 50,000.

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