Penalty for railway transport documentation lapses was unsustainable absent proof of tax evasion or effective inquiry.

Penalty for alleged non-compliance in railway transport of goods was found unsustainable because the assessee had produced the railway receipt, proforma invoice, road permit and delivery note, and the railway authorities had not accepted any enclosure or declaration form at booking. The transporter could not be faulted for not filling or signing the declaration form in those circumstances, and the consignee's name appeared on the railway receipt. As no effective further inquiry established an intention to evade tax, the adverse inference based only on doubt and suspicion was rejected, and deletion of the penalty was upheld.

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Issues: Whether penalty under section 76(6) of the Rajasthan Value Added Tax Act, 2003 was justified on the facts relating to transport of goods by railway and the alleged non-compliance with Rule 53.

Analysis: The assessee had produced the railway receipt, proforma invoice, road permit and delivery note form JJ. The record showed that the railway authorities did not accept any enclosure or declaration form at the time of booking and, therefore, the transporter could not be expected to fill or sign the relevant part of the declaration form. The consignee's name appeared on the back of the railway receipt, and the assessing authority did not conduct any effective further inquiry to establish that the goods were being transported with an intention to evade tax. The adverse inference drawn by the assessing authority rested only on doubt and suspicion, while the Tax Board found the documents to be materially complete and treated the penalty as unsustainable.

Conclusion: The penalty was not warranted; the Tax Board's deletion of the penalty was upheld and the petitions were dismissed.

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