Suspicion of tax evasion through repeated transport documents sustains penalty liability, but excessive quantum may be reduced.

Interception and delay during transport under the Kerala Value Added Tax Act, 2003 were treated as sufficient to sustain a penalty where the authorities suspected repeated movement of goods on the same documents to evade tax. The Court did not disturb the finding of liability in principle. It nevertheless examined the surrounding circumstances and the value of the goods and held that the penalty amount was excessive. The quantum was therefore moderated, with the penalty reduced by 50%.

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Issues: Whether the penalty imposed under the Kerala Value Added Tax Act, 2003 for suspected multiple transportation of goods warranted interference, and whether the quantum of penalty required reduction.

Analysis: The interception and delay in transport were treated as sufficient to support the authorities' suspicion that the goods were being moved with the same documents so as to evade tax. On that basis, the finding sustaining liability to penalty was not disturbed. However, the Court examined only the quantum of penalty and took into account the surrounding circumstances and the value of the goods transported, holding that the amount deserved moderation.

Conclusion: The penalty was upheld in principle, but its amount was reduced by 50%.

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