Penalty for transit goods requires a specific finding of tax evasion; mere document objections are insufficient.

Penalty under section 14B(7) of the Punjab General Sales Tax Act could be imposed only on cogent material and a specific finding that the dealer attempted to avoid or evade tax due or likely to be due. Mere non-production of documents, or an objection that the documents were not proper, was insufficient. The record showed that the assessee had filed the return before interception, disclosed the transaction, paid tax through banking channels, and carried the relevant import permit and particulars. As no finding was recorded that the documents were forged or that there was deliberate evasion, the condition precedent for penalty was not met, and the penalty was held unsustainable.

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Issues: Whether penalty under section 14B(7) of the Punjab General Sales Tax Act, 1948 was exigible on the facts and circumstances of the case.

Analysis: The penalty provision under section 14B(7) could be invoked only where there was sufficient material and a specific finding that the dealer had attempted to avoid or evade tax due or likely to be due. Mere non-production of documents, or an objection that the documents were not proper, was not enough by itself. The record showed that the assessee had filed the sales tax return prior to interception, had disclosed the transaction, had paid tax through banking channels, and the consignment was accompanied by the relevant import permit and other particulars. The authorities did not record any finding that the documents were forged or that there was any deliberate attempt to evade tax. In the absence of the requisite finding, the condition precedent for levy of penalty was not satisfied.

Conclusion: Penalty under section 14B(7) was not exigible, and the question was answered in favour of the assessee.

Ratio Decidendi: Penalty for goods in transit under section 14B(7) can be imposed only when there is cogent material and a specific finding of an attempt to avoid or evade tax; absence of such finding renders the penalty unsustainable.

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