Transit documents and bona fide sale in transit protected the assessee from penalty for alleged documentation breach.

Penalty for alleged breach of transit documentation was held unsustainable where the goods were accompanied by bill, bilty and declaration form, satisfying the prescribed requirements, and the documents were not shown to be forged or false. The checking authority was confined to verifying the accompanying transit papers and could not go behind them to defeat the assessee's claim of a sale in transit under the Central Sales Tax Act. Non-entry of the transaction in the books at the time of checking was immaterial because the sale was not yet complete. The revision was allowed and the penalty order set aside.

---

---

Issues: Whether penalty under section 78(5) of the Rajasthan Sales Tax Act, 1994 could be sustained when the goods in movement were accompanied by the prescribed transit documents and the assessee claimed a sale in transit under section 6(2) of the Central Sales Tax Act, 1956.

Analysis: The goods were being carried with bill, bilty and declaration form, which satisfied the documentary requirements under section 78(2) of the Rajasthan Sales Tax Act, 1994. The authorities did not undertake any enquiry into the genuineness of those documents. The Court found that the checking authority could only verify the documents accompanying the goods in transit and could not extend the enquiry to defeat the assessee's asserted transfer of documents of title during transit under section 6(2) of the Central Sales Tax Act, 1956. The non-entry of the transaction in the books of account at the time of checking was held immaterial because the sale was not complete then, and the accompanying documents were not shown to be forged or fake.

Conclusion: The penalty under section 78(5) of the Rajasthan Sales Tax Act, 1994 was unsustainable and the assessee succeeded.

Final Conclusion: The revision was allowed and the penalty order passed by the tax authorities was set aside with consequential refund of the recovered amount in accordance with law.

Ratio Decidendi: Where goods in transit are accompanied by the prescribed documents and the documents are not shown to be false or forged, penalty for breach of transit documentation requirements cannot be upheld merely because the underlying sale transaction is disputed or not yet entered in the accounts.

---