Procedural breach in transport documents cannot justify penalty unless it creates a real possibility of tax evasion.

Penalty under section 73 of the West Bengal Value Added Tax Act, 2003 could not be sustained for delayed production of a way-bill for endorsement where the documents were produced shortly after delivery and there was no finding of concealment, stock omission, incorrect particulars, or any real possibility of tax evasion. The revenue authorities erred in treating every procedural breach as automatically punishable. Penalty requires a reasoned finding that the contravention was deliberate, bona fide was absent, or the breach had a nexus with actual or possible evasion. On the stated facts, the penalty orders were liable to be set aside.

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Issues: Whether penalty under section 73 of the West Bengal Value Added Tax Act, 2003 could be sustained for delayed production of the way-bill for endorsement in the absence of any finding that the contravention created a possibility of tax evasion.

Analysis: The way-bill and accompanying documents were ultimately produced within a short time after delivery, and the materials did not disclose any concealment of the consignment or any incorrectness in the particulars of the goods. The orders of the revenue authorities proceeded on the assumption that any breach of the procedural requirement automatically attracted penalty. Such an approach was inconsistent with the settled view that penalty is not to be imposed mechanically for every technical infringement and that the adjudicating authority must examine whether the breach was bona fide and whether it had any nexus with actual or possible evasion of tax. On the facts, there was no finding of stock omission, concealment, or revenue prejudice.

Conclusion: Penalty was not sustainable, and the orders imposing penalty were liable to be set aside in favour of the assessee.

Final Conclusion: The delayed endorsement of the way-bill, by itself, did not justify penalty where no possibility of tax evasion was established and the default was not shown to be deliberate or revenue prejudicial.

Ratio Decidendi: A procedural breach in transport documentation does not justify penalty unless the authority finds, on a reasoned assessment, that the breach was intentional or created a real possibility of tax evasion.

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