Bona fide cancellation of transport declaration defeats penalty where no fraudulent intent or tax evasion is proved.

Penalty under the Bihar Value Added Tax Act, 2005 could not be sustained where the e-suvidha declaration had been cancelled for bona fide reasons after the goods became unsaleable and were being returned to the consignor. The court found no material showing fraud, tax evasion, or any intention to evade tax, so the statutory basis for invoking penal provisions was absent. On that footing, the penalty order and the appellate order were held illegal and without jurisdiction, the levy was quashed, and refund of the deposited amount was directed.

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Issues: Whether penalty under the Bihar Value Added Tax Act, 2005 was sustainable when the e-suvidha declaration had been cancelled for bona fide reasons and the goods were returned to the consignor, and whether the consequential appellate order could stand.

Analysis: The penalty was founded on an alleged breach of the obligation to file a correct and complete declaration for transport of goods. The record showed that the declaration had been generated earlier, later cancelled after the goods became unsaleable upon the Supreme Court embargo on BS III vehicles, and that the goods were thereafter being sent back to the consignor. The respondents did not demonstrate any fraudulent intent or any material showing an intention to evade tax. On these facts, the cancellation of the declaration was held to be bona fide, and the premise for invoking the penal provisions was absent.

Conclusion: The penalty order and the appellate order were held to be illegal and without jurisdiction, and the levy was set aside in favour of the assessee.

Final Conclusion: The writ petition succeeded, the penalty was quashed, and refund of the deposited amount was directed.

Ratio Decidendi: Penalty for defective transport declaration cannot be sustained in the absence of proved fraudulent intent or intention to evade tax, particularly where cancellation of the declaration is shown to be bona fide and the goods are returned to the consignor.

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