Adoption by reference does not import later State penalty provisions into the Central Sales Tax Act without express Central authorisation.

Section 9(3) of the Central Sales Tax Act adopts State procedure for assessment, collection and enforcement, but it does not create an independent penalty liability by importing a State penalty provision unless the Central Act itself authorises that liability. Section 10 of the Central Act was the only penalty provision relied on, and it did not cover the penalty imposed under section 12(3) of the Madras General Sales Tax Act, 1959. A later State amendment could not be treated as automatically incorporated into the Central law, because adoption by reference extends only to the law as it stood when adopted. The penalty was therefore unsustainable and was set aside.

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Issues: Whether penalty could validly be levied under section 9(3) of the Central Sales Tax Act, 1956 by importing section 12(3) of the Madras General Sales Tax Act, 1959, and whether the later State penalty provision could be treated as adopted for purposes of the Central Act.

Analysis: Section 9(3) adopts the State procedure for assessment, collection and enforcement of tax under the Central Act, including any penalty payable by a dealer under the Central Act. The provision does not create an independent liability to penalty by borrowing a penalty provision from the State Act unless such liability is already provided for under the Central Act. Section 10 of the Central Sales Tax Act, 1956 was the only penalty provision in the Central enactment, and it did not cover the kind of penalty imposed under section 12(3) of the Madras General Sales Tax Act, 1959. The earlier State enactment of 1939 contained no such penalty provision, and a later State amendment could not be treated as automatically incorporated into the Central law, since adoption by reference applies to the law as it existed when adopted and does not extend to provisions subsequently enacted.

Conclusion: The penalty was not legally sustainable and was set aside in favour of the assessee.

Ratio Decidendi: A Central taxing provision adopting State procedure by reference does not incorporate a later State penalty provision unless the Central Act itself authorises that penalty liability; incorporation by reference applies to the law as it stood when adopted, not to subsequent State amendments.

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