Penalty under VAT law requires clear findings of statutory infraction and intent to evade tax, not mere document discrepancies.

Penalty under section 48(5) of the Uttar Pradesh Value Added Tax Act, 2008 cannot be sustained unless the authority records a finding that the statutory infraction occurred and that the dealer intended to evade tax. Mere discrepancies in explanations or accompanying documents are insufficient without a definite finding that the goods were not properly accounted for, were not traceable to a bona fide dealer, or were undervalued with evasion intent. As no such findings were recorded, the penalty was held unsustainable on the stated reasons and the matter required fresh consideration by the assessing authority.

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Issues: Whether penalty under section 48(5) of the Uttar Pradesh Value Added Tax Act, 2008 could be sustained without a finding that the goods were not properly accounted for or otherwise fell within the statutory infractions, and without a finding of intention to evade tax.

Analysis: The statutory scheme requires the authority to be satisfied that one or more of the specified infractions occurred and, in addition, that the dealer acted with intention to evade payment of tax. Mere discrepancies or inconsistencies in the explanation or accompanying documents are not enough unless they lead to a definite finding on the statutory requirements. In the present case, neither the assessing authority nor the Tribunal recorded any finding that the seized goods were not accounted for in the books, were not traceable to a bona fide dealer, or were undervalued with an intention to evade tax. The orders were founded mainly on discrepancies in the explanation and documents, which was insufficient to support the penalty.

Conclusion: The penalty could not be sustained on the findings recorded, and the matter required fresh consideration by the assessing authority.

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