Tax evasion intent is essential for goods interception penalty when genuine transport documents show bona fide movement.

Penalty for interception of goods under the Punjab VAT Act could be sustained only if the surrounding circumstances established an intention to evade tax. Here, the goods were supported by invoices, goods receipts and a supply order to a Government department, and the documents were produced at the information collection centre. The later discovery of remaining invoices at detention did not, by itself, prove evasion. As the movement of goods was shown to be bona fide and no tax-evasion intent was made out, the penalty was held unsustainable and was set aside.

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Issues: Whether penalty under Section 51(7)(c) of the Punjab VAT Act, 2005 was justified on the allegation that the driver had not furnished complete information at the information collection centre and that the goods were being moved with an intention to evade tax.

Analysis: The goods were accompanied by invoices, goods receipts and the supply order showing supply to a Government department. The material on record showed that the transaction was genuine and that the documents were produced at the information collection centre. The later discovery of the remaining invoices at the time of detention did not, by itself, establish a design to evade tax. Penalty under the statutory provision could not be sustained merely because the statutory declaration form was not generated when the surrounding documents established the bona fides of the movement of goods and no intention to evade tax was made out.

Conclusion: The penalty was not sustainable and was set aside.

Ratio Decidendi: Penalty for interception of goods can be imposed only where the surrounding circumstances establish an intention to evade tax and not merely because a statutory declaration form was not generated when genuine transport documents and a bona fide Government supply are shown.

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