Contemporaneous penalty levy under sales tax law cannot be imposed years after assessment; post-assessment action is unauthorised.

Penalty under section 14 of the Andhra Pradesh General Sales Tax Act, 1957 had to be imposed contemporaneously with the assessment, because the provision treats penalty as part of the assessment process. The court explained that sections 14(2), 14(3) and 14(4) authorise levy of penalty when the assessing authority makes the assessment, not as a separate later proceeding. A penalty initiated years after the assessment order therefore falls outside the statutory power. The article affirms that a belated post-assessment levy is impermissible and that deletion of the penalty was in favour of the assessee.

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Issues: Whether penalty under section 14 of the Andhra Pradesh General Sales Tax Act, 1957 could be imposed long after the assessment order, and whether such penalty had to be levied at the time of making the assessment.

Analysis: The statutory language of section 14(2) makes penalty part of the assessment process, since the assessing authority may direct payment of penalty when making an assessment to the best of judgment. The same timing requirement applies to sections 14(3) and 14(4), which also contemplate levy of penalty in addition to the tax assessed when the relevant assessment is made. A penalty initiated years after the assessment, and not contemporaneously with it, falls outside the authority conferred by these provisions.

Conclusion: Penalty could not validly be imposed long after the assessment order, and the levy was unauthorised. The decision upholding deletion of penalty was correct and is affirmed in favour of the assessee.

Final Conclusion: The statutory scheme requires penalty under section 14 to be determined at the stage of assessment itself, so a belated post-assessment levy is impermissible.

Ratio Decidendi: Where a taxing provision authorises penalty to be imposed when making the assessment, the penalty must be levied contemporaneously with that assessment and cannot be initiated or imposed subsequently as a separate later proceeding.

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