Sales tax penalty and prosecution may coexist where the statute preserves both sanctions and double jeopardy does not apply.

Penalty and prosecution under the sales tax law were held to be distinct sanctions, because the statute expressly preserved criminal proceedings notwithstanding departmental penalty. The scheme under section 30 was also upheld as a reasonable classification: offences punishable only with fine were treated differently from those warranting imprisonment, and the distinction was linked to prompt tax recovery and deterrence of evasion. Article 20(2) was not attracted because a departmental penalty is not prosecution for the same offence. The combined operation of penalty and prosecution was therefore valid, and the impugned notice was within jurisdiction.

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Issues: (i) whether levy of penalty and initiation of prosecution under the sales tax law are mutually exclusive; (ii) whether the penal scheme in section 30 violates Article 14 of the Constitution of India; (iii) whether levy of penalty and prosecution for the same default offend Article 20(2) of the Constitution of India.

Issue (i): Whether levy of penalty and initiation of prosecution under the sales tax law are mutually exclusive.

Analysis: The statutory scheme treated penalty and prosecution as distinct sanctions. Section 16(5) expressly provided that the levy of penalty would be without prejudice to prosecution for an offence under the Act. The existence of a fiscal penalty did not bar criminal proceedings for the same default.

Conclusion: The two remedies are not mutually exclusive, and both penalty and prosecution may be pursued.

Issue (ii): Whether the penal scheme in section 30 violates Article 14 of the Constitution of India.

Analysis: The classification between offences punishable only with fine and those punishable with imprisonment was held to rest on an intelligible differentia. The distinction was linked to the object of the Act, namely, securing prompt realisation of tax and discouraging persistent default and fraudulent evasion. The provision therefore satisfied the test of reasonable classification.

Conclusion: Section 30 does not offend Article 14 of the Constitution of India.

Issue (iii): Whether levy of penalty and prosecution for the same default offend Article 20(2) of the Constitution of India.

Analysis: Article 20(2) applies only where a person has been both prosecuted and punished for the same offence. A fiscal penalty imposed by the department is not a prosecution. As the penalty proceedings were not criminal prosecution, the subsequent or concurrent criminal process was not barred.

Conclusion: Article 20(2) is not attracted, and the combined operation of penalty and prosecution is valid.

Final Conclusion: The impugned notice was within jurisdiction, and no ground for prohibition was made out.

Ratio Decidendi: Under a fiscal statute, penalty and prosecution may coexist where the enactment expressly preserves criminal proceedings, and a departmental penalty is not prosecution for the purpose of double jeopardy.

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