Agency must be proved, not presumed: filial relationship alone cannot sustain a tax penalty without evidence of authority.

Mere filial relationship does not establish agency for penalty proceedings under the Rajasthan Sales Tax Act, 1954. Authority to act for a dealer must be shown by express authority or by implied authority arising from surrounding circumstances under the Indian Contract Act, and blood relation alone is insufficient. On the record, the dealer's son was not proved to be an authorised agent, as there was no material of express or implied authority. In quasi-criminal penalty proceedings, the department had to affirmatively prove statutory liability with adequate material, and the son's admission and conduct could not by themselves bind the dealer. The penalty could not be sustained on that basis.

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Issues: Whether penalty under section 22(6)(b) of the Rajasthan Sales Tax Act, 1954 could be sustained on the basis of the survey and the admission made by the dealer's son, and whether service of notice on him and his conduct could be treated as acts of an authorised agent of the dealer.

Analysis: Agency has to be shown either by express authority or by implied authority arising from the surrounding circumstances. Under sections 184, 186 and 187 of the Indian Contract Act, 1872, mere relationship by blood does not by itself establish authority to act for a principal. On the record, there was no material to show that the son had express authority, nor were there facts proving implied authority from the ordinary course of dealing. The admission of unaccounted goods and the request to impose penalty could not, by itself, bind the dealer. The penalty proceedings being quasi-criminal in nature, the burden lay on the department to establish the statutory liability with adequate material, which was not done.

Conclusion: The son was not proved to be an authorised agent of the dealer, and the penalty under section 22(6)(b) could not be sustained on that basis. The revision therefore failed.

Ratio Decidendi: Mere filial relationship does not create agency; a penalty in quasi-criminal proceedings cannot be upheld unless authority to act for the dealer is affirmatively proved.

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