Transit penalty for goods can stand only on a specific finding of tax evasion, not mere document absence.

Penalty under the Haryana VAT transit interception provisions requires a specific, reasoned finding after enquiry that the movement of goods involved an attempt to evade tax. Mere absence of documents at the time of checking, or their delayed production, is insufficient to sustain penalty. Where the consignment was accompanied by an invoice from a foreign supplier and there was no cogent material showing forgery, fabrication, or tax evasion, penalty orders cannot rest on suspicion or presumption and are liable to be set aside.

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Issues: Whether penalty under Section 31(8) of the Haryana Value Added Tax Act could be sustained in the absence of a specific finding that the movement of goods involved an attempt to evade tax, and whether the impugned penalty orders were liable to be set aside.

Analysis: The goods were intercepted while being transported without accompanying documents, but the record showed that the consignment consisted of imported badam giri intended for storage and that the invoice produced was issued by a foreign supplier. The decisive requirement under the penalty provision was a finding, after due enquiry, that there had been an attempt to avoid or evade tax. The reasoning applied to the comparable provisions governing interception and penalty for goods in transit made it clear that mere absence of documents at the time of checking, or delayed production of documents, does not by itself establish evasion. A penalty cannot be imposed on suspicion or presumption, and a finding of forgery or fabrication cannot be recorded without enquiry into the genuineness of the supporting invoice and surrounding circumstances.

Conclusion: The penalty could not be sustained, as there was no cogent material or specific finding of an attempt to evade tax; the impugned orders were liable to be set aside.

Ratio Decidendi: Penalty for interception of goods in transit can be imposed only where the authority records a specific, reasoned finding, after enquiry, that there was an attempt to evade tax; mere non-production or late production of documents is insufficient.

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