Mandatory pre-recovery order under sales tax law governs penalty collection and supports refund where procedure is not followed

Under the Karnataka Sales Tax Act, penalty could be collected only after an order was first made under sub-section (4) of section 28A. Because no such order had been passed, the levy and collection of the penalty lacked legal authority and were treated as an arbitrary exercise of power. The explanation that the amount was voluntarily paid did not cure the statutory defect, as the prescribed procedure was mandatory before recovery. On that basis, refund of the amount collected was warranted.

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Issues: Whether penalty collected from the petitioner without passing an order under sub-section (4) of section 28A of the Karnataka Sales Tax Act, 1957 was lawful and whether refund of the amount was warranted.

Analysis: The collection of penalty could be justified only if an order had first been made under sub-section (4) of section 28A of the Karnataka Sales Tax Act, 1957. In the absence of such an order, the levy and collection of the sum of Rs. 3,000 lacked legal authority and amounted to an arbitrary exercise of power. The respondent's explanation that the amount was voluntarily paid did not cure the statutory defect, because compliance with the prescribed procedure was mandatory before recovery could be made.

Conclusion: The collection of penalty without an order under sub-section (4) of section 28A of the Karnataka Sales Tax Act, 1957 was illegal, and the petitioner was entitled to refund of Rs. 3,000.

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