Penalty under sales tax law requires genuine satisfaction of concealment, even if initiated after assessment.

A penalty proceeding under section 20A of the Bengal Finance (Sales Tax) Act, 1941 may be initiated as a separate proceeding even after assessment is completed, and Rule 55C does not require the notice to be issued only while assessment is pending. The jurisdictional basis, however, is a genuine satisfaction reached in the course of a proceeding under the Act that the dealer concealed sales or furnished incorrect particulars with intent to reduce tax. On the facts, the authority acted mechanically from a recital in the assessment order without independent application of mind to the revised return and excess tax payment, so the penalty proceeding and order were quashed.

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Issues: Whether a penalty proceeding under section 20A of the Bengal Finance (Sales Tax) Act, 1941 could validly be initiated after completion of the assessment proceeding and without a fresh, independent satisfaction being reached in the course of any proceeding under the Act.

Analysis: Section 20A contemplates that the authority must be satisfied, in the course of some proceeding under the Act, that the dealer has concealed sales or furnished incorrect particulars with intent to reduce tax. Rule 55C treats penalty action as a separate proceeding beginning with a notice in form VIIE, and the statutory scheme does not require that the notice be issued only while assessment is pending. At the same time, the foundation of jurisdiction remains the existence of a proper satisfaction recorded in the course of a proceeding under the Act. On the facts, the authority acted mechanically on the basis of a recital in the assessment order, without considering the revised return filed before assessment and the accepted excess payment of tax. There was no independent satisfaction reached in the course of any proceeding, and the notice and subsequent action also reflected a lack of proper application of mind.

Conclusion: The penalty proceeding and the penalty order were not sustainable and were quashed.

Ratio Decidendi: A penalty under section 20A can be initiated as a separate proceeding even after assessment is completed, but only if the requisite satisfaction of concealment or incorrect particulars is genuinely reached in the course of a proceeding under the Act.

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