1971 (12) TMI 101 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether a written notice to the assessee is necessary for showing cause why penalty should not be imposed.
2. Whether the dealer was afforded a reasonable opportunity of being heard as envisaged by rule 54 of the Rajasthan Sales Tax Rules before penalty was imposed under section 16(1)(c) of the Rajasthan Sales Tax Act.

Issue-wise Detailed Analysis:

1. Necessity of Written Notice:
The court examined whether a written notice is mandatory under rule 54 of the Rajasthan Sales Tax Rules, 1955, before imposing a penalty under section 16(1)(c) of the Rajasthan Sales Tax Act. Rule 54 mandates that no order imposing a penalty shall be passed unless the dealer has been given a reasonable opportunity of being heard. However, the rule does not explicitly require a written notice. The court opined that while a written notice is not compulsory, it is conducive to clarity and certainty, ensuring that the dealer understands the nature of the default and the consequent penalty. The court held that in this case, the notice given to the accountant and the authorized representative was inadequate and did not constitute proper notice to the dealer.

2. Reasonable Opportunity of Being Heard:
The court analyzed whether the dealer was afforded a reasonable opportunity of being heard as required by rule 54. The assessing authority claimed that the accountant of the assessee-company could not offer a satisfactory explanation for the delay in submitting returns. The Board of Revenue also noted that the accountant and the authorized representative of the assessee were asked to explain the delay but failed to provide any reason. The court found discrepancies in the statements of the assessing authority and the Board of Revenue. It emphasized that merely asking the representatives during the assessment did not meet the requirement of a reasonable opportunity. The court highlighted that the representatives were not given enough time to consult with their principal or to understand the exact charge, which could include details such as which returns were late and by how much. The court concluded that the opportunity given was not reasonable and thus, the imposition of the penalty was invalid.

Conclusion:
The court answered the first part of the question by stating that a written notice is not mandatory but recommended for clarity and fairness. For the second part, the court concluded that the dealer was not given a reasonable opportunity of being heard, thus invalidating the penalty imposed under section 16(1)(c). The reference was answered accordingly, with costs awarded to the assessee.