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Issues: Whether penalty under Section 17(3)(b)(ii) of the M.P. General Sales Tax Act, 1958 could be sustained when the dealer had shown cause for the delayed payment and was not afforded a reasonable opportunity of hearing before the penalty was imposed.
Analysis: Section 17(3)(b) makes the levy of penalty contingent upon a registered dealer failing without sufficient cause to comply with the prescribed payment or return obligations. The provision is penal in nature and, therefore, the authority must apply its mind to whether the default occurred without sufficient cause and must also afford a reasonable opportunity of being heard before imposing penalty. The material on record showed that the assessing authority did not record a finding that the delay was without sufficient cause and did not properly consider the explanation based on the prevailing legal dispute and subsequent settlement. The revisional authority also did not address the absence of a proper opportunity and merely maintained the penalty in a reduced form.
Conclusion: The penalty order was unsustainable for want of consideration of sufficient cause and for failure to afford reasonable opportunity of hearing; the levy of penalty was quashed.
Ratio Decidendi: A penalty under Section 17(3)(b) can be imposed only after the authority records that the default was without sufficient cause and gives the dealer a reasonable opportunity of being heard.
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