Check-post penalty cannot rest on suspicion when transit documents show inter-State movement and no local sale is proved.

Penalty under the Rajasthan Sales Tax Act check-post provisions could not be sustained where the transport documents showed inter-State transit from Delhi to Gujarat, the goods were not shown to be meant for sale within Rajasthan, and there was no prima facie evidence of revenue loss. Section 22A(3) requires carriage and production of prescribed documents, while section 22A(7) permits penalty only when goods are not covered by required documents or false declarations are made. The court held that invoices in the same handwriting, without verification from the consignor or consignee, were insufficient to treat the documents as bogus. The deletion of penalty was upheld.

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Issues: Whether penalty under section 22A(7) of the Rajasthan Sales Tax Act, 1954 was justified where the documents produced showed that the goods were in transit from Delhi to Gujarat and there was no material to establish that the goods were meant for sale within Rajasthan.

Analysis: Section 22A(3) requires the person in charge of the vehicle to carry and produce the prescribed documents at the check-post, while section 22A(7) authorises penalty where goods are not covered by the required documents or where false declarations or documents are submitted. On the facts found by the appellate authorities, the assessee had produced documents showing inter-State transit, the goods were not intended for Rajasthan, and there was no prima facie evidence of loss of revenue to the State. The mere circumstance that the invoices were in the same handwriting, without further verification from the consignor or consignee, was insufficient to treat the documents as bogus or to justify levy of tax, interest and penalty. The penalty was thus based on conjectures and surmises rather than proved facts.

Conclusion: The penalty under section 22A(7) was not sustainable and its deletion was upheld in favour of the assessee.

Ratio Decidendi: Penalty under the check-post provisions cannot be sustained merely on suspicion where the documents produced establish transit of goods and there is no prima facie evidence that the goods were meant for local sale or that revenue loss occurred.

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