Retrospective penalty under sales tax law barred for completed defaults, though the penalty power operated independently of assessment.

Section 45A of the Kerala General Sales Tax Act created a separate and independent penalty power, so it was not confined to assessment proceedings and could be invoked whenever the statutory conditions were met. However, the provision could not be applied to contraventions that were already complete before its commencement, because a penal statute cannot operate retrospectively to impose liability for past defaults. The penalty notices and orders were therefore unsustainable in relation to those completed pre-commencement contraventions.

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Issues: (i) Whether penalty under section 45A of the Kerala General Sales Tax Act, 1963 could be imposed only in the course of assessment proceedings or whether it operated as an independent power. (ii) Whether section 45A could be applied to contraventions completed before the section came into force.

Issue (i): Whether penalty under section 45A of the Kerala General Sales Tax Act, 1963 could be imposed only in the course of assessment proceedings or whether it operated as an independent power.

Analysis: Section 19(2) was treated as only an enabling provision for escaped assessment cases, permitting the assessing authority, while making reassessment, to invoke section 45A. The language of section 45A itself showed that it created a separate and independent power to impose penalty, and its operation was not confined to assessment proceedings. The power could be exercised whenever the statutory conditions were satisfied.

Conclusion: The power under section 45A was not confined to the assessment stage and could be exercised independently.

Issue (ii): Whether section 45A could be applied to contraventions completed before the section came into force.

Analysis: The contraventions relied on for penalty, namely failure to maintain true and complete accounts, submission of untrue or incorrect returns, and failure to register where applicable, were complete during the relevant assessment years, before section 45A was introduced. A penal provision cannot be projected backwards to fasten liability for completed contraventions. The Court also distinguished the cited authority dealing with the Income-tax Act because the wording and scheme were materially different. Since the defaults were complete before commencement of section 45A, the provision could not govern them.

Conclusion: Section 45A could not be applied retrospectively to the completed contraventions in question.

Final Conclusion: The penalty notices and orders were unsustainable because, although section 45A was an independent penal provision, it did not apply to contraventions that had been completed before its commencement.

Ratio Decidendi: A newly introduced penal provision cannot be applied to a contravention that was already complete before the provision came into force, even if the authority's satisfaction arises later; however, the provision may operate independently of the assessment process where the statute so provides.

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