Penalty for tax evasion cannot rest on a mere transport form defect where the dealer is an exempted unit.

Penalty under section 37(6) of the Haryana General Sales Tax Act applies only where inquiry shows an attempt to evade tax. If the dealer is an exempted unit with no tax liability, a mere defect in the accompanying transport form does not, by itself, prove evasion. A technical lapse in documentation, without material indicating a design to evade tax, is insufficient to support penalty. On that basis, the penalty was held unsustainable and liable to be set aside in favour of the assessee.

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Issues: Whether penalty under section 37(6) of the Haryana General Sales Tax Act, 1973 was sustainable when the goods belonged to an exempted unit and the defect was only in the accompanying form.

Analysis: Penalty under section 37(6) is attracted only when the authority, upon inquiry, finds an attempt to evade tax due under the Act. Where the dealer is an exempted unit and there is no liability to pay tax, the mere absence of a duly filled transport form does not by itself establish an attempt to evade tax. A technical defect in documentation, without any material showing a design to evade tax, is insufficient to justify penalty.

Conclusion: The penalty was not justified and was liable to be set aside in favour of the assessee.

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