Transit declaration later produced defeats penalty where no tax evasion is proved in branch transfer movement.

Where goods in transit are initially intercepted without the declaration form required under section 78(2) of the Rajasthan Sales Tax Act, penalty under section 78(5) cannot be sustained if the assessee later produces the missing document with the reply to the show-cause notice. The later production cures the defect, and the absence of proved tax evasion remains decisive. On the facts, the goods were being moved on branch transfer from the factory to the branch office, and the record did not establish any attempt to evade tax. The Rajasthan HC therefore set aside the penalty and annulled the levy.

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Issues: Whether penalty under section 78(5) of the Rajasthan Sales Tax Act, 1994 was leviable when the declaration form required under section 78(2) was not found at the time of interception but was later produced with the reply to the show-cause notice, and the goods were being transported on branch transfer with no tax evasion involved.

Analysis: The governing principle is that where goods in transit are initially found without the requisite document under section 78(2), the assessee must be given an to cure the defect by producing the document in response to the notice. The decisive fact is production of the missing declaration form with the reply, and the court held that the Supreme Court authority did not confine such cure to cases of mere human error. It was also noted that the transportation was on branch transfer from the factory to the branch office, and no case of tax evasion was made out on the record.

Conclusion: Penalty under section 78(5) was not leviable, and the levy was set aside.

Final Conclusion: The revision succeeded and the penalty order stood annulled because the missing transit declaration was later furnished and the transaction was not one involving tax evasion.

Ratio Decidendi: When the missing transit document is produced with the reply to the show-cause notice, a penalty for non-accompaniment of documents cannot be sustained in the absence of proved tax evasion.

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