Penalty cannot rest on a ground not put in the show-cause notice; fair hearing requires notice of the exact penal provision.

Penalty proceedings under the U.P. Value Added Tax Act were held unsustainable where the show-cause notice invoked one penal limb, but the final order imposed penalty under a different limb. A notice must inform the dealer of the very ground on which penalty is ultimately founded so that a proper reply and hearing can be given. Because no notice was issued under the provision actually applied, the assessee was denied a reasonable opportunity of hearing and the penalty order was vitiated for breach of natural justice.

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Issues: Whether the penalty order was vitiated for want of a proper show-cause notice and reasonable opportunity of hearing when the notice referred to one penal clause but the penalty was imposed under another.

Analysis: The writ petition arose from penalty proceedings under the U.P. Value Added Tax Act. The notice was issued with reference to one limb of the penalty provision dealing with concealment or furnishing of inaccurate particulars, while the impugned penalty order was ultimately framed under a different limb relating to failure to issue a tax invoice or sale invoice. Since no show-cause notice was given under the provision actually applied in the penalty order, the petitioner was denied a fair opportunity to meet the case against it. An order imposing penalty without notice on the very ground finally adopted is contrary to the requirement of reasonable opportunity of hearing.

Conclusion: The penalty order was vitiated and unsustainable for breach of natural justice.

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