Bona fide transport of goods not proved; penalty upheld where delay, inconsistent documents and accounting entries failed to displace tax evasion inference.

Penalty under Section 47 of the Kerala Value Added Tax Act, 2003 was upheld because the facts supported a finding that the movement of goods was not bona fide. The goods were detained after substantial delay in transport, the purchase orders and supporting letters were inconsistent, and the claimed shortage of space appeared to be an afterthought. Accounting entries alone did not displace the inference that the transport arrangement lacked bona fides or negate the conclusion that an attempt to evade tax had been established. The Tribunal was therefore wrong to set aside the penalty.

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Issues: Whether, on the facts proved, the penalty imposed under Section 47 of the Kerala Value Added Tax Act, 2003 could be sustained despite the assessee's claim that the goods had been duly accounted for by it and by the purchasers.

Analysis: The goods were detained after substantial delay in transport, and the surrounding circumstances did not support the claim of bona fide movement. The purchase orders and the letters relied on by the assessee were found inconsistent, and the letters suggesting shortage of space appeared to be an afterthought. The accounting entries relied on did not, by themselves, displace the inference that the transport was not bona fide or that the attempt to evade tax had not been established.

Conclusion: The penalty was justified and the Tribunal was not correct in setting it aside.

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