Rebuttable transit-pass presumption defeats local sale inference where evidence shows goods moved and sold outside the State.

A statutory presumption arising from non-cancellation of transit passes under trade tax law is rebuttable, not conclusive. Where the assessee produced evidence that the goods crossed the State border, were entered in recipient stock registers in other States, and were ultimately sold outside the State, the presumption of local sale stood displaced. On that factual foundation, the assessment addition and the penalty based only on presumed local sale could not be sustained.

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Issues: Whether the presumption arising from non-cancellation of transit passes under the trade tax law was rebuttable and, on the evidence produced, whether the assessment and penalty based on presumed local sale could be sustained.

Analysis: The transit pass mechanism created only a rebuttable presumption that goods were sold within the State if the passes were not returned at the exit check-post. The assessee produced material showing that the vehicles crossed the State border, were entered in the stock registers of recipient stockyards in other States, and were ultimately sold there. The Tribunal, as final fact-finding authority, examined this material and found the Department's presumption to have been displaced. On that basis, the addition under the assessment provision and the penalty could not stand.

Conclusion: The presumption stood rebutted, and the assessment and penalty were not sustainable; the revisions failed.

Ratio Decidendi: A statutory presumption arising from failure to complete transit-pass formalities is rebuttable, and once reliable evidence shows that the goods were actually taken outside the State and not sold locally, tax or penalty based solely on the presumption cannot be sustained.

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