Specific penalty notice requirement under sales tax law failed where the alleged contravention was not clearly stated

Penalty under section 10A of the Central Sales Tax Act could not be sustained where the show cause notice failed to clearly and specifically allege the exact contravention under clause (d) of section 10. A notice initiating penalty proceedings must set out the charge in clear, unambiguous terms so the dealer can answer it effectively; a vague reference that was at best referable to clause (b) did not satisfy that requirement. The deficiency amounted to breach of the statutory notice requirement and natural justice, and the subsequent penalty order and revisional affirmation could not cure the foundational defect. The penalty proceedings were therefore held invalid and set aside in favour of the assessee.

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Issues: Whether the penalty under section 10A of the Central Sales Tax Act, 1956 could be sustained when the show cause notice did not clearly specify the alleged contravention under clause (d) of section 10, and whether such deficiency vitiated the penalty proceedings for breach of natural justice.

Analysis: The show cause notice referred only to purchase of goods on the strength of declaration forms and stated that the goods were not specified in the registration certificate, without clearly alleging the distinct offence under clause (d) of section 10. A notice initiating penalty proceedings must convey the exact charge in clear and unambiguous terms so that the dealer can meet the allegation effectively. Since the notice was, at best, referable to the offence under clause (b) and did not afford a reasonable opportunity to answer the allegation under clause (d), the subsequent penalty order and revisional affirmation could not cure the foundational defect. Such omission amounted to violation of the statutory requirement under section 10A as well as the principles of natural justice.

Conclusion: The penalty proceedings were not legally sustainable and the penalty orders were liable to be set aside in favour of the assessee.

Final Conclusion: The writ petition succeeded because the penalty was imposed on a charge that was not properly put to the dealer in the notice, rendering the proceedings invalid.

Ratio Decidendi: A penalty under section 10A of the Central Sales Tax Act, 1956 cannot be sustained unless the show cause notice clearly and specifically states the exact alleged offence and affords a real opportunity to meet that charge.

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