Purchase vouchers and bona fide transit documents defeated tax evasion inference and made penalty and seizure unsustainable.

Purchase vouchers accompanying notified goods in transit satisfied the documentary requirement under Rule 83(4)(a) of the U.P. Trade Tax Rules, 1948 where the goods themselves were not disputed and the vouchers showed the sellers, quantity and date of sale. Because those vouchers were produced at the earliest stage before the mobile squad, the transport could not be treated as one without relevant documents, and no attempt to evade tax could be inferred. The nature of mentha oil transactions under Sections 28(3-A) and 28(3-B) of the U.P. Trade Tax Act, 1948 further supported the absence of any tax evasion design. The penalty and seizure were held unsustainable.

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Issues: Whether penalty and seizure proceedings were sustainable when the goods were accompanied by purchase vouchers said to evidence a bona fide transaction and there was no intention to evade tax.

Analysis: Rule 83(4)(a) of the U.P. Trade Tax Rules, 1948 requires specified documents to accompany notified goods during transit. The goods were not disputed, and the only available documents for the stated purchase transaction were the purchase vouchers showing the sellers, quantity and date of sale. Those vouchers were produced at the earliest stage before the mobile squad. On these facts, the transportation could not be treated as lacking relevant documents so as to infer an attempt to evade tax. The nature of mentha oil transactions under Section 28(3-A) and Section 28(3-B) of the U.P. Trade Tax Act, 1948 also supported the absence of any tax evasion design.

Conclusion: The penalty and seizure were unsustainable and the revisionist succeeded on the issue.

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