Due diligence by transporter justified sales tax penalty, but excessive valuation led to reduction of the amount.

Penalty under section 45B of the Kerala General Sales Tax Act was justified against the transporter because the consignment was described as dinner plates while carrying liquor, the packets could have revealed glass bottles on a preliminary check, and the transporter failed to verify the consignee's genuineness. That lack of due diligence supported the levy. However, the penalty quantum was found excessive because the goods were not sold in Kerala, had been seized, and there was no detailed inventory supporting the valuation. The penalty was therefore sustained but reduced.

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Issues: Whether penalty under section 45B of the Kerala General Sales Tax Act, 1963 was sustainable against the transporter, and whether the quantum of penalty required reduction.

Analysis: The transporter carried liquor under documents describing the consignment as dinner plates, and the packets could have been found to contain glass bottles containing liquid even on a preliminary check. The transporter also failed to verify the genuineness of the consignee. On these facts, the failure to exercise due diligence justified the levy of penalty. At the same time, the valuation adopted for the penalty was found to be rough and excessive, as the goods were not sold in Kerala, had been seized, and there was no detailed inventory showing premium valuation.

Conclusion: Penalty under section 45B was upheld, but the amount was reduced to Rs. 75,000.

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