Check-post penalty under sales tax law fails where inquiry and fair hearing are absent before imposition.

Penalty under Section 78 of the Rajasthan Sales Tax Act was unsustainable because the check-post proceedings were conducted without a proper inquiry and without giving the assessee a reasonable opportunity of hearing. The order proceeded hastily despite the driver's explanation that documents had been shown at the check-post but were not stamped due to rush and an impending transport strike. The statutory scheme required production of documents, inquiry, and hearing before penalty. The absence of material showing tax evasion, together with the prior exoneration of the goods owner on the available documents, further weakened the basis for penalty. Relief to the assessee was therefore upheld.

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Issues: Whether the penalty imposed for alleged violation of the check-post provisions under Section 78 of the Rajasthan Sales Tax Act, 1994 could be sustained when no proper inquiry was conducted and the assessee was not given a reasonable opportunity of hearing.

Analysis: The order imposing penalty was found to have been passed in haste without conducting an inquiry into the driver's explanation that the documents had been shown at the check-post but were not stamped because of rush and the impending transport strike. The statutory scheme under Section 78 requires production of documents at the check-post, an opportunity of hearing, and an inquiry before penalty is imposed. The Tax Board also failed to meet the reasons recorded by the appellate authority and did not address the absence of material showing tax evasion. The fact that the goods owner had already been exonerated on the basis of the available documents further undermined the basis for sustaining penalty against the driver.

Conclusion: The penalty order and the Tax Board's order were unsustainable for breach of the statutory requirements and lack of proper inquiry, and the relief was rightly granted to the assessee.

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