Transit-pass compliance under sales tax law places the burden on the transporter, with presumption of intra-State sale on default.

Section 28-B of the U.P. Sales Tax Act places the burden on the owner, person in charge, or hirer of a vehicle carrying goods through the State to obtain a transit pass at the first check post and surrender it at the last check post. If compliance is not proved, a statutory presumption arises that the goods were sold within the State. On the facts described, the failure to prove surrender of the transit pass and actual exit of the goods justified the penalties, and the Tribunal erred in cancelling them; the penalties were restored.

---

---

Issues: (i) Whether the owner, person in charge, or hirer of a vehicle carrying goods through the State was liable to establish compliance with the transit-pass requirements under Section 28-B of the U.P. Sales Tax Act; (ii) Whether the Tribunal was justified in deleting the penalties despite the finding that the assessees had failed to prove surrender of the transit pass and actual movement of goods outside the State.

Issue (i): Whether the owner, person in charge, or hirer of a vehicle carrying goods through the State was liable to establish compliance with the transit-pass requirements under Section 28-B of the U.P. Sales Tax Act.

Analysis: Section 28-B required the driver or other person in charge of the vehicle to obtain a transit pass at the first check post and surrender it at the last check post before exit from the State. The provision, read with its proviso and explanation, placed the burden on the owner or person in charge, including a hirer deemed to be the owner, to prove that the goods had actually moved out of the State. In default, a presumption arose that the goods had been sold within the State.

Conclusion: The burden lay on the assessees, and a transporter or hirer was within the scope of the provision.

Issue (ii): Whether the Tribunal was justified in deleting the penalties despite the finding that the assessees had failed to prove surrender of the transit pass and actual movement of goods outside the State.

Analysis: The first appellate authority had recorded detailed factual findings that the transit pass was not surrendered, the relevant record was suspicious, and the assessees failed to substantiate that the goods had been taken out of the State. The Tribunal upset those findings by placing the burden on the department and by disregarding the evidence and manipulated records, which was contrary to the statutory scheme and the established presumption under Section 28-B.

Conclusion: The Tribunal erred in law in cancelling the penalties.

Final Conclusion: The revisions succeeded, the Tribunal's order was set aside, and the penalties restored.

Ratio Decidendi: Under Section 28-B of the U.P. Sales Tax Act, the person bringing goods through the State, including a hirer deemed to be the owner, must prove that the goods actually exited the State by compliance with the transit-pass procedure, failing which the statutory presumption of intra-State sale and the consequent penalty may follow.

---