Penalty for failure to furnish returns requires recorded satisfaction of no reasonable cause and a prior hearing.

Penalty for failure to furnish returns is treated as distinct from assessment, so it may be imposed even after a provisional penalty has already been levied in earlier proceedings. The statutory scheme does not bar a later penalty merely because assessment has moved to the final stage. However, the levy is sustainable only if the assessing authority records satisfaction that the dealer failed to furnish the returns without reasonable cause and gives an opportunity of hearing. In the absence of such a recorded finding and hearing, the penalty cannot stand and must be set aside.

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Issues: (i) Whether penalty for failure to furnish quarterly returns under section 7AA of the Rajasthan Sales Tax Act, 1954 could again be imposed in the final assessment order after it had already been imposed in the provisional assessment order; (ii) Whether a penalty under section 7AA could be sustained without a recorded finding that the dealer had failed to furnish the returns without reasonable cause and without affording opportunity of hearing.

Issue (i): Whether penalty for failure to furnish quarterly returns under section 7AA of the Rajasthan Sales Tax Act, 1954 could again be imposed in the final assessment order after it had already been imposed in the provisional assessment order.

Analysis: Penalty and tax are distinct concepts, and penalty proceedings and assessment proceedings are independent. Section 7AA provides for penalty for failure to furnish returns and does not contemplate only a provisional penalty akin to provisional assessment under section 7A. The statutory scheme did not bar imposition of penalty under section 7AA after assessment under section 7A or section 10.

Conclusion: The question was answered against the contention that section 7AA could not be invoked again merely because penalty had earlier been imposed in provisional assessment.

Issue (ii): Whether a penalty under section 7AA could be sustained without a recorded finding that the dealer had failed to furnish the returns without reasonable cause and without affording opportunity of hearing.

Analysis: Penalty under section 7AA is conditional upon the assessing authority being satisfied that the dealer, reasonable cause, failed to furnish the return within time. Such a finding is a condition precedent to the levy. The record did not show any such finding, and there was nothing to indicate that an opportunity of hearing had been given before the penalty was imposed.

Conclusion: The penalty order could not be sustained and was rightly set aside.

Final Conclusion: The revision failed and the assessee succeeded, as the impugned penalty order could not stand for want of the necessary statutory foundation.

Ratio Decidendi: Penalty for failure to furnish returns under section 7AA of the Rajasthan Sales Tax Act, 1954 is independent of assessment proceedings, but it can be imposed only when the assessing authority records a finding of failure without reasonable cause after giving the dealer an opportunity of hearing.

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