1973 (3) TMI 129 - HC - VAT and Sales Tax

Issues Involved:
1. Violation of Article 14 of the Constitution of India.
2. Reasonable opportunity under Section 10A of the Central Sales Tax Act.
3. Adequacy of notice under Section 10A.
4. Validity of proceedings under Section 10A.
5. Additional arguments regarding mens rea, penalty miscalculation, and jurisdiction of the Board of Revenue.

Detailed Analysis:

1. Violation of Article 14 of the Constitution of India:
The petitioner argued that the lack of guiding lines for imposing either prosecution or penalty under Section 10A of the Central Sales Tax Act resulted in a denial of equality before the law, violating Article 14 of the Constitution of India. The petitioner cited various cases to support this claim. The Additional Government Advocate countered that prosecution and penalty serve distinct purposes: prosecution vindicates public justice, while penalties augment revenue. The court agreed with the latter argument, citing that the discretion to prosecute or impose penalties lies with different authorities, thus avoiding arbitrary enforcement and not violating Article 14.

2. Reasonable Opportunity under Section 10A of the Central Sales Tax Act:
The petitioner contended that they were denied a reasonable opportunity to be heard as required by Section 10A. The notice issued (exhibit 4) under Section 10(b) threatened prosecution but did not inform the petitioner about the imposition of a penalty under Section 10A. The court emphasized that "reasonable opportunity of being heard" is a fundamental principle of natural justice and found that the notice did not adequately inform the petitioner of the intended penalty, thus failing to provide a reasonable opportunity.

3. Adequacy of Notice under Section 10A:
The court scrutinized the notice (exhibit 4) and concluded it was inadequate for the purposes of Section 10A. The notice explicitly mentioned prosecution under Section 10(b) and did not indicate the possibility of a penalty under Section 10A. The court held that the notice must clearly state the intention to impose a penalty to allow the dealer to prepare an appropriate defense. The notice in question failed to meet this requirement, rendering it insufficient.

4. Validity of Proceedings under Section 10A:
Due to the inadequate notice, the entire proceedings under Section 10A were deemed vitiated. The initial notice did not inform the petitioner about the potential penalty, thus violating the requirement for reasonable opportunity. Consequently, the orders of the assessing authority, Deputy Commissioner, and Board of Revenue were quashed. The court allowed the department to initiate fresh proceedings under Section 10A, provided they adhere to the proper legal procedures.

5. Additional Arguments:
The petitioner also raised issues regarding the absence of mens rea, miscalculation of the penalty, and the jurisdiction of the Board of Revenue. However, the court did not address these arguments in detail, as the primary conclusion regarding the inadequate notice under Section 10A rendered these points moot.

Conclusion:
The writ petition was allowed, and the orders of the assessing authority, Deputy Commissioner, and Board of Revenue were quashed due to the failure to provide a reasonable opportunity as required by Section 10A of the Central Sales Tax Act. The department was given the liberty to proceed against the petitioner under Section 10A in accordance with the law. The Sales Tax Reference No. 30 of 1967 was dismissed, and there was no order as to costs.

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