Penalty must stay within the show-cause notice limit; higher liability without notice is not sustainable.

Penalty proceedings must remain confined to the quantum disclosed in the show-cause notice, because a person cannot be exposed to a higher liability without specific notice and an opportunity to meet that case. Where the notice stated that penalty would not exceed 25 per cent of the value of the seized goods, a final order imposing 40 per cent travelled beyond the notice and was not sustainable. The penalty was therefore limited to the disclosed maximum, and any excess amount was liable to be refunded.

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Issues: Whether penalty imposed for contravention of the sales tax provisions could validly exceed 25 per cent of the value of the seized goods when the show-cause notices referred only to penalty up to that limit.

Analysis: The notices initiating the penalty proceedings stated that penalty could be imposed not exceeding 25 per cent of the value of the seized goods. The final orders, however, imposed penalty at the rate of 40 per cent of the value of the goods. The applicants had no notice that a higher quantum of penalty would be considered, and therefore no opportunity to meet that case. A penalty order cannot travel beyond the basis disclosed in the notice and impose a higher liability without specific notice and opportunity.

Conclusion: The penalty could not lawfully exceed 25 per cent of the value of the seized goods, and the excess amount was liable to be refunded.

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