Penalty for stock transfer documents was unsustainable where goods were voluntarily reported and no tax evasion was shown.

Penalty under Section 51(7)(b) of the Punjab VAT Act was found unsustainable where the goods were voluntarily reported at the information collection centre, supported by tax-paid purchase invoices and stock transfer documents, and the material did not show a sale in Punjab or an intent to evade tax. The detaining authority was required to act within the limited scope of Section 51 proceedings, and the record did not justify treating the matter as concealment or tax evasion. The penalty orders were therefore held invalid.

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Issues: Whether penalty under Section 51(7)(b) of the Punjab Value Added Tax Act, 2005 was sustainable where the goods were voluntarily reported at the information collection centre and were covered by stock transfer documents showing undervalued particulars.

Analysis: The goods were reported at the information collection centre, and the record showed that they had been purchased against tax-paid invoices and were being moved as stock transfer for sales promotion purposes. The documents and accompanying material indicated that the transaction was not a sale in Punjab and that the declared value did not reflect an intention to evade tax. In the circumstances, the detaining authority was required to confine itself to the limited scope of proceedings under Section 51, and the record did not justify treating the matter as one involving concealment or tax evasion. The impugned penalty orders were therefore held to be unsustainable.

Conclusion: The penalty under Section 51(7)(b) could not be sustained, and the assessee succeeded.

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