Natural justice in sales tax penalty proceedings requires a fair hearing before penalty for alleged declaration non-compliance is sustained.

Compliance with Section 78(2) of the Rajasthan Sales Tax Act was treated as mandatory and breach could attract penalty under Section 78(5), but penal action could not be sustained without giving the dealer a fair opportunity to explain the alleged defect and produce supporting material. Because the assessee was not afforded adequate hearing before the penalty was imposed on the spot, natural justice required fresh consideration. The penalty orders were set aside and the matter was remitted to the Assessing Authority for de novo decision after granting proper opportunity of hearing.

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Issues: Whether the penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994 could be sustained without affording the assessee adequate opportunity to explain the alleged defect in compliance with Section 78(2), and whether the matter required remand for fresh adjudication.

Analysis: The revision arose from a penalty order founded on alleged non-compliance with the declaration and identification requirements for goods in movement. The governing law, as relied upon, treats compliance with Section 78(2) as mandatory and recognises that breach may attract penalty under Section 78(5). At the same time, where the dealer is not given adequate opportunity to produce supporting material or explain the deficiency, the principles of natural justice require a fair hearing before final penal action is affirmed. On the facts, the assessee had not been given sufficient opportunity before the penalty was imposed on the spot, and a fresh consideration was necessary.

Conclusion: The penalty orders were set aside and the matter was remitted to the Assessing Authority for fresh decision on the penalty proceedings after granting adequate opportunity of hearing to the assessee.

Final Conclusion: The revision petition succeeded only to the extent of securing quashing of the concurrent orders and a de novo adjudication, while preserving the assessee's right to a fresh hearing on compliance with the statutory requirements.

Ratio Decidendi: Even where a statutory breach may attract penalty, the penal proceedings cannot be finally sustained without affording the affected dealer a fair opportunity to meet the alleged defects and produce relevant material before de novo adjudication.

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