VAT transit penalty fails where blank Form 38 shows only procedural lapse, not intent to evade tax

Penalty under the VAT Act for a transit irregularity could not be sustained merely because column 6 of Form 38 was left blank. The goods were accompanied by Form 38 and supporting documents, the goods tallied with those documents, and the Tribunal found the omission was due to negligence or human error rather than any intent to evade tax. A penalty in such cases requires a supported finding, after considering the material and hearing the assessee, that the goods were being transported to evade tax. The revisional court also noted the departmental circular requiring the check-post to fill the blank form on verification. The penalty was therefore deleted and the assessee succeeded.

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Issues: Whether penalty under Section 54(1)(14) of the VAT Act, 2008 was sustainable where column 6 of Form 38 was left blank, but the goods were accompanied by the form and other supporting documents and no intention to evade tax was found.

Analysis: Penalty under the VAT regime could be sustained only on a finding, after considering the relevant material and giving opportunity of hearing, that the goods were being transported in an attempt to evade payment of tax. A blank column in Form 38, by itself, was treated as a procedural lapse and not conclusive proof of evasion. The record showed that the vehicle was carrying Form 38 and other documents, the goods tallied with the documents, and the Tribunal recorded a factual finding that the omission was due to negligence or human error and not with intent to evade tax. The revisional court also noted the departmental circular requiring the check-post to fill the blank form on verification, and distinguished the stricter rule applied under other statutory schemes where mens rea was excluded.

Conclusion: The penalty was not sustainable and the Tribunal's order deleting the penalty was upheld in favour of the assessee.

Ratio Decidendi: Under the VAT Act, a penalty for transit irregularity cannot be imposed merely because a declaration form contains a blank column; the authority must record a supported finding of intention to evade tax, and a procedural defect without such intent does not justify penalty.

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