Retrospective tax liability cannot sustain penalty where the assessee could not have anticipated the later-enacted amendment.

Penalty under section 15-A(1)(o) of the U.P. Sales Tax Act could not be sustained where the liability arose only because an amendment was later given retrospective effect to cover an earlier period. The court noted that the amendment creating the liability was enacted on 5 October 1982 but made effective from 27 September 1979, so the assessee could not reasonably have anticipated that the earlier import transaction would later attract tax and penalty. In that setting, the Tribunal was justified in setting aside the penalty, and the revision failed.

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Issues: Whether penalty under section 15-A(1)(o) of the U.P. Sales Tax Act, 1948 could be sustained when the relevant amendment was given retrospective effect so as to cover a prior period.

Analysis: The amendment creating liability was enacted on 5 October 1982 but was made effective from 27 September 1979. On those facts, the assessee could not reasonably have anticipated that the import transaction, which had taken place during the earlier period, would later be treated as attracting tax and penalty. In that setting, the Tribunal was justified in holding that the penalty imposed by the assessing authority and affirmed in appeal could not stand.

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

Final Conclusion: The order of the Tribunal was upheld and the revision was dismissed, leaving the assessee free from the penalty imposed.

Ratio Decidendi: A penalty cannot be sustained for conduct that became actionable only by a later enactment given retrospective effect, where the party could not have anticipated the liability during the original period.

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