Personal hearing required before coercive penalty recovery where local body tax was already paid and only penalty was disputed.

Penalty recovery for local body tax could not proceed coercively without first giving the assessee a personal hearing, where the tax for the relevant period had already been substantially, and on the record fully, paid. The dispute was confined to the penalty demand, and the Court found no material contradicting the petitioner's claim that the tax liability stood satisfied. In these circumstances, immediate coercive recovery was not justified. The matter had to be reconsidered after hearing the petitioner's explanation and documents, and then decided by a reasoned order.

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Issues: Whether the demand for penalty and the consequent coercive recovery could proceed without affording the petitioner a personal hearing, when the underlying local body tax had already been paid and the dispute was confined to penalty.

Analysis: The petition arose from a demand notice levying penalty after the local body tax for the relevant period had been substantially and, on the record, fully paid. The dispute before the Court was not whether tax remained unpaid, but whether penalty could be enforced without first giving the petitioner an effective opportunity to contest the levy. The Court noted that the material on record did not show any denial of the petitioner's assertion that the tax liability stood satisfied, and that the demand notice was effectively being pursued for penalty alone. In these circumstances, insisting on immediate coercive recovery, without a prior personal hearing and consideration of the petitioner's explanation and documents, was not justified.

Conclusion: The petitioner was entitled to a personal hearing before any coercive recovery of the penalty could be undertaken, and the matter had to be decided by a reasoned order after hearing the petitioner.

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