Penalty for tax default requires opportunity to show sufficient cause before final imposition, not before initiation.

Under section 17(3) of the M.P. General Sales Tax Act, penalty proceedings may be initiated on the fact of default without first recording a positive finding that the dealer lacked sufficient cause. The provision, however, requires that before any penalty is finally imposed, the dealer must be given a reasonable opportunity to explain the default, and the authority must record a finding that no sufficient cause was shown or that the explanation was insufficient. If no such opportunity is afforded, the penalty cannot stand; if it is afforded, the penalty is sustainable.

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Issues: Whether penalty under section 17(3) of the M.P. General Sales Tax Act, 1958 can be initiated and imposed only after a positive finding that the dealer lacked sufficient cause for the default, and whether the dealer must be given an opportunity to show cause before penalty is finally imposed.

Analysis: The provision makes penalty dependent on the dealer having failed without sufficient cause to furnish return or pay tax in the prescribed manner. The use of the word "may" indicates discretion in the imposition of penalty, and the reasonable opportunity of being heard is intended to enable the dealer to establish sufficient cause. On that construction, initiation of penalty proceedings is not conditioned on a prior recorded finding that sufficient cause is absent. However, before a penalty order is passed, the authority must record a finding that no sufficient cause was shown or that the cause shown was not sufficient. If no opportunity to show cause was afforded, the penalty cannot stand; if such opportunity was in fact given, the penalty would be justified.

Conclusion: The view that penalty proceedings could be initiated only after a positive finding of absence of sufficient cause is incorrect. The legal requirement is that the dealer must be given an opportunity to explain the default and the final penalty order must contain a finding on sufficient cause.

Final Conclusion: The referred question was answered by clarifying that prior finding of lack of sufficient cause is not a for initiation, but observance of opportunity and a finding on sufficiency of cause are necessary before sustaining the penalty.

Ratio Decidendi: Under a penalty provision framed around default "without sufficient cause", initiation of proceedings is permissible on the fact of default, but the final penalty order is valid only after affording the dealer a reasonable opportunity to explain the default and after recording a finding on the sufficiency of cause.

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