Check-post penalty requires proof of evasion and fake documents; disputed sale-versus-stock-transfer issues belong in assessment proceedings.

Penalty under section 14B(7) of the Punjab Value Added Tax Act, 2005 requires cogent material and a specific finding, after notice and enquiry, that the documents produced at the check-post were fake or not genuine and that there was an attempt to avoid or evade tax. The power is conditional, and the existence of the penalty provision alone does not justify its use. Where the driver produced relevant documents and the Department failed to show forgery, penalty could not be sustained. The character of the movement of goods as inter-State sale or stock transfer was a matter for assessment, not summary penalty proceedings, and the record disclosed no deliberate or dishonest conduct.

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Issues: Whether penalty under section 14B(7) of the Punjab Value Added Tax Act, 2005 could be imposed in the absence of cogent material and a specific finding that the documents produced at the check-post were fake or not genuine and that there was an attempt to avoid or evade tax.

Analysis: The statutory scheme of section 14B(1), (6) and (7) requires the detaining officer to verify the documents and, after notice and enquiry by the authorised officer, to record a finding that there was an attempt to avoid or evade tax before penalty can be imposed. The power is thus conditional and the existence of penalty provision does not by itself justify its levy. On the facts, the vehicle drivers produced relevant documents at the information collection centre, and the Department did not establish that those documents were forged or otherwise not genuine. The dispute whether the movement of goods amounted to inter-State sale or stock transfer was held to be a matter for assessment and not a basis for summary penalty proceedings. Penalty also could not be sustained as the record disclosed neither deliberate defiance of law nor contumacious or dishonest conduct.

Conclusion: Penalty under section 14B(7) was not exigible and the authorities were not justified in sustaining it; the decision was in favour of the assessee.

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