Penalty under Central Sales Tax law requires competent authority, clear false representation, and a reasoned hearing before imposition.

Penalty under section 10-A of the Central Sales Tax Act could be imposed by the competent registration authority in Tripura, so the jurisdictional objection failed. However, penalty for an alleged section 10(b) breach required a clear finding that the dealer falsely represented goods as covered by the registration certificate, together with mens rea; a technical breach or bona fide mistake was insufficient. The proceedings were also invalid because the show-cause notice lacked essential particulars of the alleged default and the penalty order was non-speaking. The penalty was therefore quashed for want of a proper finding, fair hearing, and reasoned decision-making.

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Issues: (i) whether the Superintendent of Taxes, Agartala, was the competent authority to impose penalty under section 10-A of the Central Sales Tax Act, 1956; (ii) whether penalty could be imposed under section 10(b) of the Act without a definite finding of false representation and mens rea; and (iii) whether the penalty proceedings were vitiated for breach of natural justice owing to an undetailed show-cause notice and a non-speaking order.

Issue (i): whether the Superintendent of Taxes, Agartala, was the competent authority to impose penalty under section 10-A of the Central Sales Tax Act, 1956.

Analysis: Section 10-A vests power in the authority who granted, or is competent to grant, the certificate of registration. The registration authority under the Central Act changed with the notified competent authority in Tripura, and after the Tripura sales tax law came into force, the Superintendent of Taxes became the authority competent to grant registration in the State. The power to impose penalty under section 10-A therefore did not depend on section 9(2), and no previous sanction under the State law was required for exercise of that specific power.

Conclusion: the Superintendent of Taxes, Agartala, had jurisdiction to impose penalty under section 10-A, and the objection on competence failed.

Issue (ii): whether penalty could be imposed under section 10(b) of the Act without a definite finding of false representation and mens rea.

Analysis: Clause (b) uses the expression "falsely represents", which makes dishonest or deliberate misrepresentation the gravamen of the offence. Mere purchase of goods not covered by the registration certificate, or a technical breach or bona fide mistake, is not enough. Penalty provisions are to be strictly construed, and an order under section 10-A can be sustained only where the authority records a clear finding, based on cogent material, that the dealer made a false representation with the requisite guilty mind.

Conclusion: mens rea and a finding of false representation were necessary, and the impugned penalty could not stand on this ground.

Issue (iii): whether the penalty proceedings were vitiated for breach of natural justice owing to an undetailed show-cause notice and a non-speaking order.

Analysis: A reasonable opportunity under section 10-A requires disclosure of the essential facts forming the basis of the proposed penalty, including the description and value of the goods, dates of purchase, and particulars of the declaration forms. The notice issued in the case did not furnish these particulars, and the order also failed to disclose any proper application of mind or reasons for fixing the quantum of penalty. Such a notice and order do not satisfy the requirements of audi alteram partem or the duty to record reasons.

Conclusion: the proceedings were vitiated by breach of natural justice, and the penalty order was unsustainable.

Final Conclusion: the penalty was quashed, as the authority's jurisdictional objection failed but the impugned proceedings were otherwise unsustainable for want of the requisite finding, and for non-compliance with the requirements of fair hearing and reasoned decision-making.

Ratio Decidendi: Penalty under section 10-A for an alleged offence under section 10(b) of the Central Sales Tax Act, 1956 can be imposed only by the competent registration authority after giving a real opportunity of hearing, and only where false representation with mens rea is clearly established by a reasoned order based on disclosed particulars.

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