Penalty for non-filing of return is unsustainable when seized account books made compliance impossible and natural justice was violated.

Penalty for failure to file a sales tax return was held unsustainable where the assessee's account books remained in departmental custody during the filing period and the assessing authority knew of that fact. The power under Section 12(3) of the Madras General Sales Tax Act, 1959 could not be used to penalise an assessee for not doing what the authority's own conduct had made impossible. On those facts, insisting on a return and levying penalty was a gross breach of natural justice, and the availability of an appellate remedy did not bar relief under Article 226 where the impugned action itself was unlawful.

---

---

Issues: Whether the levy of penalty for failure to file a return was sustainable when the assessee's account books had been seized by the tax authorities, and whether the availability of statutory appellate remedies barred relief under Article 226 of the Constitution of India.

Analysis: Section 12(3) of the Madras General Sales Tax Act, 1959 empowered the assessing authority to impose penalty for failure to submit a return, but the power could not be exercised so as to punish an assessee for not doing what the authority's own conduct had made impossible. The books of account had remained in departmental custody during the period for filing the return, and the assessing authority was aware of that fact. In those circumstances, insisting on a return and then levying penalty for non-filing amounted to a gross violation of the principles of natural justice. The existence of an appellate remedy did not bar relief where the impugned action itself disclosed such violation.

Conclusion: The penalty was unsustainable and the writ petition was rightly allowed in favour of the assessee.

---