Procedural fairness in sales tax penalty proceedings required proper enquiry and rule compliance; penalty was set aside.

Penalty proceedings under the Rajasthan Sales Tax Act must be preceded by a proper enquiry, compliance with rule 58, and a reasonable opportunity to the assessee. Where the search and penalty process is conducted hastily, with deficiencies in the manner of search, preparation of documents, identification of witnesses, and other essential particulars, the penalty cannot be sustained. On the facts noted, the appellate authority and Tribunal were justified in quashing the penalty, and the revision failed.

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Issues: Whether the penalty imposed under section 22(6)(b) of the Rajasthan Sales Tax Act was rightly set aside in view of the manner in which the search and penalty proceedings were conducted.

Analysis: The proceedings were found to have been conducted in a hasty manner without proper enquiry and without due compliance with rule 58. The record indicated deficiencies regarding the manner of search, preparation of documents, identification of witnesses, and other essential particulars. Before imposing penalty, the assessing authority was required to conduct a proper enquiry and afford a reasonable opportunity, since procedural fairness and compliance with law are necessary elements in penalty proceedings. In these circumstances, the appellate authority and the Tribunal were justified in quashing the penalty.

Conclusion: The penalty was rightly set aside and the revision failed.

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