Total turnover audit compliance applies to exempt goods too, but penalty requires prior hearing and proper notice.

Where a taxing provision substitutes "total turnover" for "taxable turnover", the audit and disclosure obligation extends to the dealer's total turnover, including exempt goods, and cannot be confined by interpretation to taxable turnover alone. Any penalty for non-compliance must however be preceded by a fair opportunity of hearing, supported by a proper show-cause process; an endorsement that does not itself impose a speaking penalty order may be treated as notice. The compliance requirement was upheld, while the penal consequence was subject to procedural fairness.

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Issues: (i) Whether the audit and disclosure requirement under Section 31(4) applied only to taxable turnover or also to total turnover including exempt goods. (ii) Whether penalty could be sustained without affording the dealer an opportunity of hearing, and whether the impugned endorsement could be treated as a notice.

Issue (i): Whether the audit and disclosure requirement under Section 31(4) applied only to taxable turnover or also to total turnover including exempt goods.

Analysis: The statutory scheme distinguished exemption from tax under Section 5 from the compliance obligations imposed by Sections 31, 33 and 34. The substituted language in Section 31(4) referred to "total turnover" and not "taxable turnover". On that basis, the obligation to get accounts audited and to furnish the prescribed documents was not confined to taxable goods alone. The dealer could not insist on reading the provision back as "taxable turnover" when the legislature had used "total turnover".

Conclusion: The contention that the requirement applied only to taxable turnover was rejected.

Issue (ii): Whether penalty could be sustained without affording the dealer an opportunity of hearing, and whether the impugned endorsement could be treated as a notice.

Analysis: Before imposing penalty, the authority was bound to give the dealer an opportunity to explain its case. The impugned endorsement did not disclose that a prior show-cause notice had been issued specifically on the question of penalty, and the endorsement itself did not amount to a speaking order imposing penalty. It was therefore appropriate to treat it as a notice and require the dealer to submit its explanation before any penal order was passed.

Conclusion: Penalty could not be finally imposed without hearing the dealer, and the endorsement was to be treated as a notice.

Final Conclusion: The challenge succeeded only to the extent of the penal consequence, while the statutory compliance requirement based on total turnover was upheld.

Ratio Decidendi: Where a taxing statute substitutes "total turnover" for "taxable turnover", the compliance obligation extends to the dealer's total turnover, but any penalty for non-compliance must be preceded by a fair opportunity of hearing and a proper show-cause process.

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