Penalty validity is judged on the law in force when imposed; later assessment reversal does not nullify it.

A penalty imposed under section 13(5) of the Orissa Sales Tax Act was judged by the facts and law existing when the penalty order was made. Because an assessment order was then in force, the penalty was not without jurisdiction, and the later setting aside or remand of that assessment did not automatically nullify the levy. The statute in force at the time contained no provision cancelling an already imposed penalty on that basis, and a later amendment creating such a right did not apply retrospectively. The challenge to the certificate proceeding therefore failed, and the penalty was treated as valid.

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Issues: Whether a penalty levied under section 13(5) of the Orissa Sales Tax Act became void because the original assessment order was subsequently set aside on appeal and the assessment remanded.

Analysis: The validity of the penalty had to be tested with reference to the date on which the penalty order was passed. At that time an assessment order was in force, so the levy was not without jurisdiction. The statute then in force did not contain any provision cancelling an already imposed penalty merely because the assessment was later annulled or remanded. The subsequent amendment introduced by Orissa Ordinance No. 1 of 1964 created a new right in that respect, but it did not govern the earlier penalty order. The cited income-tax decision was relied on as supporting authority for the same principle.

Conclusion: The penalty was not void, and the challenge to the certificate proceeding failed.

Ratio Decidendi: The legality of a penalty levy is to be judged on the facts and law prevailing when the order is made, and a later reversal of the assessment does not by itself nullify a penalty validly imposed under the then existing law.

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