Detained goods penalty proceedings require notice and hearing before liability is fixed under sales tax procedure.

Where goods are detained and penalty is proposed under section 14-B(7) of the Punjab General Sales Tax Act, the authority must follow the prescribed procedure and comply with natural justice before fixing liability. If the claimant asserts ownership and has furnished a bank guarantee for release, notice must be issued to both the claimant and the consignee, and their versions must be heard before ownership and penalty liability are decided. The impugned procedure was treated as irregular, and the matter was sent back for fresh decision after notice and hearing, with consequential refund of the encashed bank guarantee if no penalty is ultimately leviable.

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Issues: Whether the order imposing penalty and dealing with the detained goods was passed without following the procedure under section 14-B(7) of the Punjab General Sales Tax Act, 1948 and in breach of natural justice; and whether the matter required fresh notice and reconsideration after hearing the petitioner and the consignee.

Analysis: The detention and penalty proceedings were required to be conducted in the manner prescribed by section 14-B(7). Since the petitioner claimed ownership of the goods and had furnished a bank guarantee for their release, the authority was obliged to issue notice to the petitioner as well as to the consignee and determine ownership and liability after giving both sides an opportunity of hearing. The procedure adopted by the authority was found to be irregular and contrary to the principles of natural justice. The authority was therefore directed to issue notice, hear the parties, and pass a fresh order in accordance with law, with consequential refund of the encashed bank guarantee if no penalty was ultimately found leviable.

Conclusion: The impugned penalty proceedings were not upheld as finally concluded against the petitioner, and the matter was sent back for fresh decision after notice and hearing.

Final Conclusion: The writ petition was disposed of with directions for reconsideration of the penalty and ownership issue in accordance with law, with protection of the petitioner's claim to refund of the bank guarantee if no penalty was ultimately sustainable.

Ratio Decidendi: Where goods are detained and penalty is proposed under section 14-B(7) of the Punjab General Sales Tax Act, 1948, the affected claimant to ownership must be given notice and an opportunity of hearing before liability is determined.

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