Penalty under an inapplicable provision set aside, with remand for fresh consideration of alternative penalty under Rule 173Q.

A penalty imposed under Section 11AC could not stand because that provision was inapplicable to the relevant period. However, where the original proceedings also disclosed a proposed penalty under Rule 173Q, the appellate authority could cancel the invalid penalty and remit the matter for fresh consideration under that rule. The Tribunal should not have finally exonerated the respondent without allowing adjudication on the alternative penalty basis. The matter was therefore remanded for notice and hearing before reconsideration of penalty under Rule 173Q.

---

---

Issues: Whether the penalty could be sustained or the matter should be remanded for consideration of penalty under Rule 173Q after holding that Section 11AC was inapplicable.

Analysis: The first appellate authority had power to enhance the penalty. Since the penalty originally proposed included liability under Rule 173Q as well, and Section 11AC was found inapplicable because it was introduced after the relevant period, the proper course was to cancel the penalty imposed under Section 11AC and remit the matter for consideration of penalty under Rule 173Q. The Tribunal ought not to have finally exonerated the respondent, and the defect in procedure required a remand for fresh consideration after notice and opportunity.

Conclusion: The appeal was allowed and the matter was remanded to the Deputy Commissioner to consider penalty under Rule 173Q after issuing notice and granting an opportunity of hearing.

Ratio Decidendi: Where a penalty imposed under an inapplicable provision is set aside, but the proceedings themselves disclose an alternative penalty proposal, the appellate authority may remit the matter for fresh adjudication after following natural justice.

---