Check-post penalty provisions upheld as valid machinery measures; natural justice satisfied when opportunity to explain is given.

A check-post penalty under section 28A(4) of the Karnataka Sales Tax Act was upheld where a show cause notice had been issued after physical verification revealed a discrepancy between transported goods and the documents produced. The court held that natural justice was satisfied because an opportunity to explain was afforded, and the affected person's choice not to use it did not invalidate the order. It further held that section 28A, including section 28A(4), was a valid machinery provision incidental to the State's power to levy sales tax and was aimed at preventing evasion, not confiscating goods. The penalty order and writ challenge were therefore rejected.

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Issues: (i) Whether the penalty order under section 28A(4) of the Karnataka Sales Tax Act was invalid for want of reasonable opportunity and violation of natural justice. (ii) Whether section 28A and, in particular, section 28A(4), was ultra vires or otherwise beyond the legislative competence of the State Legislature.

Issue (i): Whether the penalty order under section 28A(4) of the Karnataka Sales Tax Act was invalid for want of reasonable opportunity and violation of natural justice.

Analysis: A show cause notice had been issued after physical verification disclosed a discrepancy between the goods transported and the documents produced. The order also recorded that the driver declined to avail himself of the opportunity to explain the defects noticed. No affidavit or other material was produced to dispute that recorded statement. The requirement of natural justice is satisfied when an opportunity is afforded to the affected person; it is not necessary that the person must choose to utilise it.

Conclusion: The challenge based on violation of natural justice failed.

Issue (ii): Whether section 28A and, in particular, section 28A(4), was ultra vires or otherwise beyond the legislative competence of the State Legislature.

Analysis: Section 28A was treated as a machinery provision intended to prevent evasion of tax and was held to be incidental to the power of the State Legislature to levy sales tax. The provision did not authorise confiscation of goods merely for failure to produce documents, but only enabled imposition of penalty subject to appeal under section 28A(7). The power to check evasion could operate even before the taxable sale event occurred, and the provision was held not to be in pari materia with the provision considered in the cited Supreme Court decision.

Conclusion: Section 28A, including section 28A(4), was held to be constitutionally valid and within legislative competence.

Final Conclusion: The writ petition was rejected in its entirety, and the penalty order under the check-post provisions was sustained.

Ratio Decidendi: A statutory check-post penalty provision aimed at preventing tax evasion is a valid machinery measure incidental to the power to levy sales tax, and natural justice is satisfied when a real opportunity to explain is afforded, even if the person chooses not to avail it.

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