Rebuttable transit-pass presumption defeats penalty when goods remain in transit and pass is later surrendered.

Penalty under the U.P. Trade Tax Act could not be sustained on a mere presumption of intended local sale or delivery while the goods were still in transit. The statutory presumption arising from non-surrender of the transit pass was rebuttable, and the facts showed that the surrender period had not expired, the goods were not proved to have been delivered or sold within the State, and the transit pass was later surrendered for the same goods. On that basis, the penalty under Section 15-A(1)(o) was held unjustified and the deletion of the penalty was upheld.

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Issues: Whether penalty under Section 15-A(1)(o) of the U.P. Trade Tax Act was sustainable when the goods were intercepted during transit, the prescribed period for surrender of the transit pass had not expired, the goods were not shown to have been delivered or sold within the State, and the transit pass was later surrendered at the exit check post.

Analysis: Section 28-A operates as a machinery provision to prevent tax evasion and the statutory presumption arising from non-surrender of the transit pass is rebuttable. The mere fact that the vehicle was found in a place suggesting a possible intended delivery inside the State, or that documents and the driver's statement indicated such a possibility, was not enough to sustain penalty when the goods were still in transit, had not been unloaded or finally disposed of, and the surrender period had not expired. Once the transit pass was actually surrendered in relation to the same goods and no factual dispute existed on that aspect, the earlier presumption stood rebutted.

Conclusion: Penalty under Section 15-A(1)(o) of the U.P. Trade Tax Act was not justified and the assessee succeeded on this issue.

Final Conclusion: The revision failed, and the order deleting the penalty was upheld.

Ratio Decidendi: A penalty based on transit-pass provisions cannot be sustained merely on a presumption of intended local sale or delivery before expiry of the surrender period, where the goods were not shown to have been finally disposed of and the transit pass was subsequently surrendered.

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