Tax evasion penalty on detained goods rejected where transaction documents showed successive sales and no perverse finding emerged.

Penalty for alleged tax evasion on detention of goods at a check-post was held unsustainable where invoices, delivery challans and goods receipts showed a chain of successive transactions and identified the intervening parties and ultimate consignee. The timing difference between the documents, by itself, was insufficient to infer an attempt to evade tax, especially when the goods were intercepted at the check-post and the transaction trail was otherwise supported. The Tribunal's finding that no evasion attempt was made was not shown to be perverse. The distinct question whether the later sale to BSNL was a sale in transit under section 6(2) of the Central Sales Tax Act, 1956, or an intra-State sale, was left open.

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Issues: Whether the penalty imposed for alleged attempt to evade tax on detention of goods at the check-post was justified, and whether the Tribunal was right in holding that the material documents did not show any attempt to evade tax.

Analysis: The goods were intercepted with a chain of transactions reflected in the documents, including invoices, delivery challans and goods receipts, showing successive endorsements by the parties concerned. The checking authority treated the chronology of the documents as indicative of evasion, but the Tribunal accepted the explanation that the goods had moved through multiple sales and that the documents disclosed the intervening parties and the ultimate consignee. The Court found that the mere timing difference between invoices, delivery challans and goods receipts was not enough to infer an attempt to evade tax, particularly when the goods were checked at the check-post and the transactions were supported by the participating parties. The Tribunal's finding that no attempt to evade tax was made was not shown to be perverse. The Tribunal also left open the distinct question whether the later sale to BSNL was a sale in transit under section 6(2) of the Central Sales Tax Act, 1956 or an intra-State sale.

Conclusion: The penalty was not sustainable, and the Tribunal's decision in favour of the dealer was upheld.

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