Transit penalty fails where capital goods were for internal use and no intent to evade tax was shown.

Penalty for a transit irregularity was held unsustainable where the goods were capital goods imported for use in the assessee's unit, not for resale, and the authorities had found no material indicating an intention to evade tax. The omission of Form-38 at interception was treated as an inadvertent lapse because the form had been sent in advance and was later produced before the assessing authority. In the absence of cogent evidence supporting evasion, the statutory basis for penalty under the U.P. Value Added Tax Act was not made out, and the deletion of penalty was upheld.

---

---

Issues: Whether penalty under Section 54(1)(14) of the U.P. Value Added Tax Act, 2008 was sustainable when the goods were capital goods meant for use in the assessee's unit, the statutory form was later produced, and no intention to evade tax was established.

Analysis: The goods were found to be air-colling unit and parts imported for installation in the assessee's unit for processing frozen meat and not for resale. They had been purchased against Form-C, and the authorities below recorded concurrent findings that the goods were capital goods and that there was no material showing any intent to evade tax. The absence of Form-38 at the time of interception was treated as an inadvertent lapse because the form had already been sent in advance and was subsequently produced before the assessing authority prior to seizure. In these circumstances, the prerequisite for levy of penalty under Section 54(1)(14), namely a cogent basis for inferring evasion, was not made out.

Conclusion: The penalty was not leviable and the order setting aside the penalty was upheld.

Final Conclusion: The revision failed, and the order of the Tribunal sustaining deletion of penalty remained undisturbed.

Ratio Decidendi: Penalty for a transit irregularity under Section 54(1)(14) of the U.P. Value Added Tax Act, 2008 is not sustainable in the absence of cogent material showing an intention to evade tax.

---