Rebuttable presumption of local sale under transit-pass rules requires credible evidence of inter-State movement to avoid penalty.

Failure to surrender a transit pass at the exit check post under Section 28-B of the U.P. Trade Tax Act gives rise to a rebuttable presumption that the goods were sold inside Uttar Pradesh, exposing the assessee to penalty under Section 15-A(1)(q). That presumption can be displaced only by credible, consistent and contemporaneous evidence showing actual inter-State movement and delivery outside the State. Here, the documents relied on were found insufficient: supporting records for one transaction were not produced before the check post or lower authorities, the explanation for another transaction was not satisfactorily supported, the vehicle and goods were not produced for verification, and there was no convincing corroboration such as Form-C. The presumption therefore remained unrebutted and the penalty was sustained.

---

---

Issues: Whether the assessee rebutted the statutory presumption under Section 28-B of the U.P. Trade Tax Act that the goods had been sold inside Uttar Pradesh so as to avoid penalty under Section 15-A(1)(q).

Analysis: Section 28-B creates a rebuttable presumption where a transit pass obtained at the entry check post is not duly surrendered at the exit check post. The assessee was required to establish, by reliable contemporaneous material, that the goods had actually moved beyond the State and were not sold within Uttar Pradesh. The materials relied upon were found inadequate because the supporting documents for one transaction were not produced at the check post or before the lower authorities, the documents for the other transaction did not satisfactorily support the explanation, the vehicle and goods were not produced for verification despite production of the transit pass, and there was no convincing explanation for non-production of Form-C or other corroborative evidence. On the totality of circumstances, the factual presumption remained unrebutted.

Conclusion: The presumption under Section 28-B was not rebutted and the levy of penalty was sustained.

Ratio Decidendi: Failure to surrender the transit pass at the exit check post gives rise to a rebuttable presumption of local sale, and that presumption can be displaced only by credible and consistent evidence showing actual inter-State movement and delivery of the goods.

---