Penalty under sales tax check-post rules fails when no finding records absence of sufficient cause for delayed document production.

Penalty under section 28A(4) of the Karnataka Sales Tax Act was held unsustainable where the dealer produced the supporting invoice the next day and the check-post officer accepted it. The levy required a finding that the dealer had failed to show sufficient cause for not producing the documents when demanded. Because the assessing authority recorded no finding that the explanation was unacceptable or that sufficient cause was absent, the statutory foundation for penalty was missing. The first appellate authority was therefore justified in setting aside the penalty, and the revisional authority erred in restoring it.

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Issues: Whether penalty under section 28A(4) of the Karnataka Sales Tax Act, 1957 was sustainable in the absence of a finding that the dealer had failed to show sufficient cause for non-production of the supporting documents at the time of check.

Analysis: Section 28A(4) contemplates penalty for non-compliance with the requirements relating to movement of goods, but the levy depends on a finding that the dealer has not furnished sufficient cause for the non-production of documents when demanded. The invoice was produced the next day and was accepted by the check-post officer. The assessing authority did not record any finding that the explanation offered by the dealer was unacceptable or that sufficient cause was absent. In the absence of such a finding, the foundation for penalty was missing. The first appellate authority was therefore justified in setting aside the penalty, and the revisional authority erred in restoring it.

Conclusion: The penalty was unsustainable and the order restoring it was liable to be set aside, in favour of the assessee.

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