Transit document lapse without intent to evade tax cannot sustain penalty where supporting papers show substantial compliance.

Penalty for transit-document irregularity under the Rajasthan Value Added Tax Act, 2003 was held unsustainable where goods were supported by invoice, bilty and other transit papers, were to be sent for demonstration, and the VAT-49 declaration was later filed with the reply to the show-cause notice. The court found no false explanation, no dishonest design, and no material showing intent to evade tax. On those facts, substantial compliance was accepted and the statutory breach did not justify penalty under the transit provisions.

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Issues: Whether penalty under the Rajasthan Value Added Tax Act, 2003 was leviable for absence of form VAT-49 during transit when the goods were supported by invoice and bilty, the declaration form was later furnished with the reply to the show-cause notice, and the goods were found to be sent only for demonstration purposes.

Analysis: The goods were not meant for sale and were being transported for demonstration, a fact not found to be false. The accompanying certificate and other transit documents supported that position. Form VAT-49 was also produced along with the reply to the show-cause notice. In these circumstances, the statutory breach alleged under the transit requirements did not establish a dishonest design or any intention to evade tax. The principle applied was that where the facts disclose substantial compliance and no intent to evade, penalty cannot be sustained.

Conclusion: Penalty under section 76(6) of the Rajasthan Value Added Tax Act, 2003 was not leviable and the revision petition failed.

Ratio Decidendi: Penalty for transit-document irregularity cannot be imposed unless the revenue establishes an intention to evade tax; later production of the declaration and the surrounding facts may amount to sufficient compliance.

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