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TMI Blog2010 (2) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... ntendent of Taxes, Charge VII, Agartala, in so far as the same relates to imposition of penalty on the petitioner, which is a public limited company incorporated under the Companies Act, 1956, in respect of the assessment year 2003-04. The materials facts, which are not in dispute and have given rise to the present writ petition, may be, first, noted. The petitioner was a registered dealer under the Tripura Sales Tax Act, 1976 (since repealed and is hereinafter referred to as the TST Act ). The petitioner presently holds a certificate of registration as a registered dealer under the Tripura Value Added Tax Act, 2004. A notice under sub-section (2) of section 9 read with sub-section (4) thereof was issued, on June 11, 2009 by respondent No. 3 to the petitioner to produce the accounts and documents for the purpose of making assessment together with any objection, which the petitioner may have, the notice having been issued on the ground that the petitioner had not furnished returns correctly for the assessment year 2003-04. The notice also directed the petitioner to show cause as to why the petitioner shall not be made liable to pay, in addition to the amount, which may be ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 13, but, while making the impugned order, no reason for such extreme step of imposing the maximum limit of liability has been assigned by respondent No. 3. Controverting the submissions made on behalf of the petitioner, learned Senior Government Advocate, appearing on behalf of the respondents, resists the writ petition by contending, inter alia, that the imposition of penalty had preceded by a notice to show cause, the petitioner had received full and effective opportunity of having its say against the imposition of penalty and that the impugned order, imposing penalty, assigns valid and justifiable reasons and, hence, the writ petition is liable to be dismissed. Before dealing with the validity and justification of the impugned order and the notice of demand, it needs to be pointed out that under section 8(1) of the TST Act, every registered dealer shall furnish such returns of his turnover by such dates and to such authorities as may be prescribed. In the case of any other dealer, whose business, in the opinion of the prescribed authority, is such as to render him liable to pay tax under the TST Act for any year or part thereof, the prescribed authority may ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the notice, which the prescribed authority may have issued under section 9(2), the prescribed authority would have, under section 9(4), the power to determine, to the best of his judgment, as to what the taxable liability of the dealer is. Considering the fact that the present writ petition challenges the impugned order only to the extent that the same imposes penalty on the petitioner and considering also the fact that the penalty can be imposed, under the TST Act, by taking resort to the provisions of section 13 thereof and under no other provisions, let me, now, take note of the provisions contained in section 13, which, I find, read as under: 13. Penalty for concealment of turnover and evasion of tax. (1) If the Commissioner, in the course of any proceedings under this Act is satisfied that any dealer, (a) has without reasonable cause, failed to furnish the return which he was required to furnish under section 8 or section 11, or has, without reasonable cause, failed to furnish it within the time allowed and in the manner required, or (b) has without reasonable cause, failed to comply with a notice under sub-section (2) of section 9, or (c) has concealed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 13, imposing penalty, shall be made unless the dealer has been heard or has been given a reasonable opportunity of being heard. Thus, granting of an opportunity of hearing, before imposition of penalty, is a mandatory pre-condition for imposition of penalty under section 13. Necessarily, therefore, imposition of penalty is not permissible unless an effective opportunity of hearing is granted to the person, on whom the penalty is proposed to be imposed, and, unless, upon such opportunity having been provided to the person concerned, the prescribed authority is satisfied that any of the conditions, embodied in sub-section (1) of section 13, is fulfilled. Though the respondents have contended that against the proposed penalty, notice, dated June 11, 2009, had been given to the petitioner before the impugned order imposing penalty was passed, what needs to be noted is that the notice, dated June 11, 2009, aforementioned, is a notice, which was, admittedly, issued under section 9(2) of the TST Act. The questions, therefore, are as to what section 9(2) provides and whether a notice, under section 9(2) or 9(4), is sufficient compliance of the requirement of giving of notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en for hearing to the person on whom the penalty is proposed to be imposed informing him as to why penalty is sought to be imposed on him. As section 13(1) contains a number of grounds on which penalty can be imposed, the prescribed authority, such as, the respondent No. 3, is dutybound to inform the person, such as, the petitioner, on whom the penalty is sought to be imposed, as to why the prescribed authority proposes to impose the penalty. A mere notice permitting a person to make his submission as to why penalty shall not be imposed upon him under section 13 will not be adequate compliance with the provisions embodied in section 13 unless the reason as to why penalty is proposed to be imposed is assigned in the notice or the prescribed authority, when questioned, can show that the ground as to why penalty was sought to be imposed was known to the person on whom the penalty was proposed to be imposed. The imposition of penalty is not a routine affair nor can the penalty be imposed as an automatic consequence of the conditions prescribed by clauses (a), (b), (c) and (d) of section 13(1). The act of imposition of penalty on failure to perform a statutory obligation is an exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whereas a penalty proceeding is, by its very nature, a criminal proceeding. The imposition of penalty is not an automatic concomitant of the assessment; it is for this reason that the safeguards have been provided by the statute itself to ensure that penalty is levied in appropriate cases only. The materials on record must prima facie reveal a tentative satisfaction of the authority concerned that penalty needs to be imposed on an assessee before a notice, seeking to impose penalty, is issued. Consequently, an order, imposing penalty, must record the findings as to what is the precise nature of default. No penalty can be imposed if no finding, as regards the precise nature of penalty, is mentioned. In the case at hand, no finding has been recorded by respondent No. 3 for imposition of penalty. In Hindustan Steel Ltd. v. State of Orissa reported in [1970] 25 STC 211 (SC); [1969] 2 SCC 627, the apex court had, which dealing with imposition of penalty under the Orissa Sales Tax Act, 1947, which provide for imposition of penalty on a person for his failure to register himself as a dealer under the said Act, pointed out (at page 214 of STC): 8. Under the Act penalty may b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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