Penalty for notified goods requires proper hearing and obedience to court directions; registered dealers remain within section 4A.

Section 4A of the Bengal Finance (Sales Tax) Act, 1941 was treated as applicable to notified goods even where the dealer was registered, because the statutory scheme of sections 4A, 4B and 14A was not confined to unregistered dealers. On penalty, the Tribunal held that seizure for want of a permit did not by itself sustain penalty where the permit was produced soon after interception and the proceedings were conducted in disregard of a binding interim court direction. It further held that penalty required a proper adjudication with reasonable opportunity of hearing, including an opportunity to explain the late production and delayed application for the permit. The existing penalty order was declared non est, the notices were quashed, and the matter was remitted for fresh decision after hearing.

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Issues: (i) Whether section 4A of the Bengal Finance (Sales Tax) Act, 1941 was inapplicable to a registered dealer in respect of notified goods; (ii) Whether production of a permit after interception of the goods and the circumstances of the High Court's interim order negatived the penalty proceedings and the penalty order.

Issue (i): Whether section 4A of the Bengal Finance (Sales Tax) Act, 1941 was inapplicable to a registered dealer in respect of notified goods.

Analysis: The provision was read as having two parts. The first part is concerned with specification of notified goods by the State Government and operates generally in relation to all notified goods. The heading referring to unregistered dealers did not control the whole section. The statutory scheme of sections 4A, 4B and 14A showed that the notified-goods machinery was not confined to unregistered dealers alone.

Conclusion: Section 4A was held applicable to the assessee as regards notified goods, and the contention that the section had no application merely because the dealer was registered was rejected.

Issue (ii): Whether production of a permit after interception of the goods and the circumstances of the High Court's interim order negatived the penalty proceedings and the penalty order.

Analysis: The goods had been seized for want of a permit, but the permit was produced soon after issue and the subsequent proceedings took place in the face of the High Court's interim direction. The penalty proceeding was heard and the penalty was imposed despite that order, and the order was treated as having been made in wilful disregard of it. The Tribunal also held that the statutory scheme required an adjudicatory process with a reasonable opportunity of being heard, including a chance to explain the failure to produce the permit in time and the delay in applying for it.

Conclusion: The penalty order was declared non est and the impugned notices were quashed, while the authority was directed to make a fresh adjudication after giving the assessee a fresh opportunity of hearing.

Final Conclusion: The assessee obtained quashing of the existing penalty action, but the matter was remitted for fresh decision on penalty after due hearing, so the relief was only partial.

Ratio Decidendi: Under the statutory scheme governing notified goods, penalty can be imposed only after a proper adjudication with a reasonable opportunity of being heard, and an order passed in disregard of a binding court direction is void.

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