Penalty before year-end is permissible when false returns, concealment, or false accounts trigger liability under the sales tax law.

A taxing statute that permits assessment on periodical returns is not restricted to completion of the annual assessment where penalty is concerned. Section 10(7) of the Punjab General Sales Tax Act, 1948 was read as targeting false accounts, concealment of sales or purchases, and false returns or information, and its reference to tax assessed or liable to be assessed was held broad enough to allow action before the close of the financial year. The earlier view that penalty could not be initiated until year-end was reconsidered and not accepted, confirming that the penalty mechanism may operate once the statutory defaults are made out.

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Issues: Whether penalty can be imposed on a dealer under section 10(7) of the Punjab General Sales Tax Act, 1948 before the end of the financial year.

Analysis: The statutory scheme permitted returns and payment of tax at prescribed intervals, and section 11 contemplated assessment on the basis of returns furnished for any period, including a return period shorter than a year. Rule 33(b) of the Punjab General Sales Tax Rules, 1949 also envisaged assessment for a return period or periods. The earlier view that no assessment could be made before the end of the year was reconsidered and not accepted. Separately, section 10(7) was designed to curb false or incorrect accounts, concealment of sales or purchases, and false returns or information. Its language allowed action where a dealer had maintained false accounts, concealed particulars, or furnished false material, and it referred to tax to which the dealer was assessed or was liable to be assessed. That wording did not confine penalty proceedings to the completion of yearly assessment, and the provision was held capable of being invoked before the year ended.

Conclusion: Penalty under section 10(7) could be imposed before the end of the year.

Final Conclusion: The challenge to the impugned notice failed, and the legal position was affirmed that penalty proceedings under the Act were not postponed until the close of the financial year.

Ratio Decidendi: Where a taxing statute authorises assessment on periodical returns and a penalty provision is tied to tax assessed or liable to be assessed, the penalty mechanism may be invoked before year-end if the statutory defaults are made out; it is not confined to completion of the annual assessment.

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