Penalty for concealment cannot stand where the dispute is only about tax rate and statutory preconditions are absent.

Section 76 of the West Bengal Sales Tax Act, 1994 could be invoked only where a dealer concealed sales or furnished incorrect particulars with intent to reduce tax payable, and the proceeding was initiated in the manner contemplated by the Act. Notices in Forms 51 and 52 were issued outside an assessment proceeding, and the dispute concerned only the applicable rate of tax on stainless steel pipes and fittings. That was a rate controversy, not concealment or incorrect disclosure, so the statutory precondition for penalty was not satisfied and the notices and penalty were invalid. The question whether the goods were declared goods was left open for determination in appropriate assessment proceedings.

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Issues: Whether notices in forms 51 and 52 and the consequential penalty proceeding under section 76 of the West Bengal Sales Tax Act, 1994 were valid when they were not issued in the course of an assessment proceeding and the dispute related to the applicable rate of tax.

Analysis: Section 76 contemplates action where a dealer has concealed sales or furnished incorrect particulars with intent to reduce tax payable. The notices in forms 51 and 52 were admittedly not issued in the course of assessment. The controversy related to whether stainless steel pipes and fittings were taxable as declared goods at 4 per cent or at a higher rate, which was a dispute on rate of tax and not a case of concealment of sales or furnishing of incorrect particulars. In these circumstances, the statutory precondition for invoking section 76 was not satisfied, and the notices were held to be bad in law. The question whether the goods were declared goods was left open for decision in appropriate assessment proceedings.

Conclusion: The notices in forms 51 and 52 and the penalty imposed under section 76 were invalid and liable to be set aside.

Ratio Decidendi: Penalty for concealment or furnishing incorrect particulars can be sustained under section 76 only when the statutory ingredients are attracted and the proceeding is initiated in the manner contemplated by the Act; a mere dispute on the rate of tax does not justify such penalty.

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