Mandatory notice and hearing under tax penalty law are jurisdictional; non-compliance invalidates the penalty.

Penalty under section 13(5) of the Bihar Sales Tax Act was not invalid merely because it was applied to the later period arising from the same continuing default; the assessing authority could proceed on that basis. However, the penalty failed because the statutory condition of a reasonable opportunity of being heard was not satisfied. The notices did not clearly inform the dealer that penalty under section 13(5) would be imposed, and the Form XV notice was not served as required by the rules. Since the notice requirement was jurisdictional, non-compliance made the penalty unsustainable.

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Issues: (i) Whether penalty under section 13(5) of the Bihar Sales Tax Act, 1947 could be sustained for the later period on the footing that the dealer must be deemed to have been registered after the earlier default; (ii) Whether the penalty was valid when the statutory notice and reasonable opportunity of being heard required by section 13(5) were not duly afforded.

Issue (i): Whether penalty under section 13(5) of the Bihar Sales Tax Act, 1947 could be sustained for the later period on the footing that the dealer must be deemed to have been registered after the earlier default.

Analysis: The assessment and penalty were treated as part of one continuous proceeding under section 13(5), and the provision empowered the assessing authority to proceed against a dealer for the defaulting period as well as subsequent periods. The contention that the dealer must be deemed registered for the later period was rejected because the order of assessment and the accompanying penalty were founded on the same wilful failure to apply for registration.

Conclusion: This objection failed; the penalty was not invalid on the ground that it related to the later period.

Issue (ii): Whether the penalty was valid when the statutory notice and reasonable opportunity of being heard required by section 13(5) were not duly afforded.

Analysis: Section 13(5) expressly made the power to assess and impose penalty conditional upon giving the dealer a reasonable opportunity of being heard. The notices issued earlier did not inform the dealer that penalty under section 13(5) would be imposed, and the notice in Form XV was not served in the manner required by the Rules. As the statutory notice was the foundation of jurisdiction, non-compliance with that condition rendered the penalty unsustainable.

Conclusion: The penalty was invalid for want of the notice and hearing mandated by section 13(5).

Final Conclusion: The reference was answered in favour of the assessee, and the penalty imposed under section 13(5) was held to be legally invalid for want of compliance with the mandatory notice requirement.

Ratio Decidendi: Where a taxing provision makes the grant of a reasonable opportunity of being heard a condition precedent to the exercise of penal jurisdiction, strict compliance with that notice requirement is mandatory, and failure to comply deprives the authority of power to impose the penalty.

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