Assessment limitation cannot be stretched to penalty proceedings under sales tax exemption conditions

Penalty for alleged breach of exemption conditions under the Rajasthan Sales Tax Act could not be sustained where the assessment was already time-barred. The Court held that the limitation provision in section 10B applies to assessment proceedings and cannot be extended to penalty proceedings. It also noted that no reopening under section 12 had been initiated, and the delay was unexplained because the audit report had been received years earlier before proceedings began. On that basis, the penalty was set aside and the revision failed.

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Issues: Whether penalty under section 5CC(2) of the Rajasthan Sales Tax Act, 1954 could be sustained when the assessment proceedings were already time-barred and whether the limitation for assessment under section 10B applied to penalty proceedings.

Analysis: The revision concerned levy of penalty for alleged breach of the conditions attached to exemption under section 5CC of the Rajasthan Sales Tax Act, 1954. The Court held that section 10B deals with assessment and its language could not be extended to cover imposition of penalty. Section 5CC(2) and section 10B did not create a separate mechanism enabling penalty in the situation before the Court, and no reopening proceedings under section 12 had been initiated. The Court also found that there was no explanation for the delay, since the audit report had been received in 1979 and the proceedings were commenced nearly four years later.

Conclusion: The penalty could not be sustained and the revision was dismissed.

Ratio Decidendi: A provision governing assessment cannot be stretched to authorise penalty proceedings, and where the initiating action is unexplainedly delayed, the resulting penalty cannot be upheld.

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