Natural justice bars penalty where notice and hearing were absent, and unauthorised representation could not cure the defect.

Penalty under the Rajasthan Sales Tax Act could not be sustained where no notice was served on the assessee and no opportunity of hearing was afforded before the penalty order. The record showed no prior notice, and appearance by the vehicle driver did not cure the defect because he was not an authorised representative of the assessee-firm. The authorities were therefore justified in treating the penalty order as vitiated for breach of natural justice, and the finding in favour of the assessee was upheld.

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Issues: Whether penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994 could be sustained when no notice or opportunity of hearing was given to the assessee before passing the penalty order.

Analysis: The penalty was set aside by the appellate authorities on the ground that no opportunity of hearing had been afforded before the order imposing penalty. The record did not show that any notice had been served upon the assessee-firm before the penalty order was passed. The driver of the vehicle could not be treated as an authorised of the assessee-firm in the absence of authority. In these circumstances, the authorities below were justified in concluding that the penalty order was vitiated for want of hearing.

Conclusion: The penalty could not be sustained for breach of natural justice, and the finding in favour of the assessee was upheld.

Ratio Decidendi: A penalty order cannot be sustained where it is passed without serving notice on the assessee and without affording an opportunity of hearing, and representation by an unauthorised person does not cure the defect.

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