Penalty for tax evasion requires material showing deliberate avoidance, not a bona fide dispute over the applicable tax rate.

Penalty under section 51(7) of the Punjab Value Added Tax Act, 2005 requires a recorded finding, supported by material, that the dealer attempted to avoid or evade tax. A mere bona fide dispute about the applicable rate of tax, where the consignor voluntarily disclosed the goods and produced bills, receipts and other documents at the information collection centre, does not by itself establish concealment or evasion. Deliberate default, contumacious conduct or conscious disregard of the statutory obligation must be shown before penalty can be sustained; on these facts, the penalty order was legally unsustainable.

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Issues: Whether penalty under section 51(7) of the Punjab Value Added Tax Act, 2005 could be imposed where the goods were voluntarily reported at the information collection centre with all documents produced, and the dispute concerned only a bona fide difference of opinion about the applicable rate of tax.

Analysis: Section 51(7) authorises penalty only when, after notice and enquiry, the designated officer records a finding that there has been an attempt to avoid or evade tax due or likely to be due under the Act. A mere dispute about the correct rate of tax does not by itself establish concealment or an attempt at evasion. Where the consignor produced the bills, receipts and other relevant documents and the explanation regarding taxability was plausible and bona fide, the precondition for penalty was absent. Penalty is not to be imposed merely because the statute permits it; there must be material showing deliberate evasion, contumacious conduct, or conscious disregard of the statutory obligation.

Conclusion: Penalty under section 51(7) was not sustainable on the facts, and the order imposing penalty was legally erroneous. The issue is decided in favour of the assessee.

Ratio Decidendi: Penalty under section 51(7) of the Punjab Value Added Tax Act, 2005 can be imposed only on a recorded finding, supported by material, that there was an attempt to avoid or evade tax; a bona fide dispute on tax rate with full disclosure of documents does not satisfy that condition.

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