Tax-free classification in regular assessment barred contrary taxability findings and penalty in summary proceedings.

Where regular assessment had already treated submersible water pumps as tax-free, check-post authorities could not take the opposite view in summary penalty proceedings or infer tax evasion on that basis. The High Court followed its earlier view that, on admitted facts, a penalty order in such circumstances was without jurisdiction and that the taxability issue need not be sent through the reference process. The authorities' attempt to determine taxability and impose penalty in the summary proceedings was therefore not legally sustainable.

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Issues: Whether the authorities could determine the taxability of goods and impose penalty in summary proceedings when the regular assessment had treated the same goods as tax-free.

Analysis: The assessment records showed that submersible water pumps had been accepted as tax-free in regular assessment proceedings for the relevant years. In that situation, the check-post authorities had no basis to reach the opposite conclusion in summary penalty proceedings and infer an intention to evade tax. The Court relied on its earlier view that such an order of penalty in similar circumstances was without jurisdiction and that the question could be answered on the admitted facts instead of sending the matter through the reference process.

Conclusion: The issue was answered in favour of the assessee and against the respondents; the action of the authorities in determining taxability in summary proceedings was held not legally sustainable.

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