Penalty for non-accounting under VAT law requires clear evidence of omission from books and intent to evade tax.

Penalty for alleged non-accounting of goods under the U.P. VAT Act could not rest on seizure and suspicion alone. The High Court noted that, after seizure, there was no inspection or survey of the business premises and no material showing that the transaction was actually omitted from the books of account. For penalty to stand, the authority had to record a clear, evidence-based finding that the goods or transaction were not accounted for and that there was an intention to evade tax. The Tribunal's contrary finding was unsupported by material and was therefore perverse. The penalty orders were set aside.

---

---

Issues: Whether penalty under section 48(5) of the U.P. VAT Act, 2008 could be sustained merely on the basis of seizure and suspicion regarding reuse of an O.C. stamp and manual numbering of invoices, without a specific finding that the transaction was not recorded in the books of account.

Analysis: The penalty was founded on an inference that the tax invoice had been reused and that the entries were not properly recorded. The record did not show any inspection or survey of the business premises after seizure to verify the books of account, nor any material showing that the transaction was in fact omitted from the accounts. For penalty under section 48(5), a definite finding based on cogent material is required that the goods or transaction were not accounted for and that there was an intention to evade tax. Mere presumption or doubt may justify seizure, but not penalty. The Tribunal's finding that the transaction was not recorded in the books was held to be unsupported by material and therefore perverse.

Conclusion: Penalty under section 48(5) could not be sustained on mere suspicion, and the orders of the authorities below were set aside.

Ratio Decidendi: Penalty for alleged non-accounting of goods cannot be imposed under section 48(5) of the U.P. VAT Act, 2008 unless the authority records a clear, evidence-based finding that the transaction was not entered in the books of account and that there was an intention to evade tax.

---