Penalty for tax evasion fails when regular transport documents exist and non-reporting at the ICC is uncorroborated.

Penalty under the Punjab VAT Act could not be sustained where the consignment was supported by invoice, goods receipt, insurance papers and inspection material, and the transaction was otherwise shown as a genuine supply of machinery parts. Mere non-generation of the prescribed declaration at the ICC did not, by itself, establish an attempt to evade tax. An alleged statement of the driver, without proper examination of the documentary record and surrounding circumstances, was insufficient to justify penalty. On that footing, the penalty was held unwarranted and the assessee succeeded.

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Issues: Whether penalty under the Punjab VAT Act could be sustained on the basis of non-reporting of goods at the ICC and the driver's statement, despite the presence of invoice, goods receipt, insurance papers and inspection report, and whether these facts established an attempt to evade tax.

Analysis: The consignment was supported by invoice, goods receipt, insurance policy and inspection material, and the transaction was shown to be for supply of machinery parts to a entity. The only adverse circumstance relied upon was that the vehicle did not generate the prescribed declaration at the ICC and that the driver allegedly stated he had been asked not to do so. The Court held that mere non-generation of the declaration, by itself, does not establish an attempt to evade tax. It also held that penalty cannot rest solely on an alleged admission of the driver without examining the genuineness and effect of the documentary record and the surrounding circumstances.

Conclusion: Penalty was not justified and the assessee succeeded.

Ratio Decidendi: Mere non-reporting at the ICC or an uncorroborated statement of the driver is insufficient to establish an attempt to evade tax when the consignment is supported by regular commercial documents and the authority has not examined their genuineness.

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