R.S.Narula, J.

1. This Full Bench is called upon to answer the following question:

"Can penalty be imposed on a dealer under Section 10(7) of the Punjab General Sales Tax Act before the end of the year."

2. The circumstances which have led to the making of this reference may first be surveyed. The petitioner, a partnership firm of Amritsar, is a registered dealer under the Punjab General Sales Tax Act, 46 of 1948 (hereinafter referred to as the Act). Shri K.K. Opal, Excise and Taxation Officer (Enforcement), hereinafter called the respondent, was appointed the assessing authority under Act for the whole of the State of Punjab by notification dated February 10, 1964 (Annexure B). His authority and jurisdiction to exercise all the powers and to perform all the functions of assessing authority under the Act vis-avis the petitioner have not been questioned before us. Several points originally raised in the writ petition based on the alleged attack on the authority and jurisdiction of the respondent have been specifically given up by shri Bhagirth Dass, learned counsel for the petitioner at the hearing of this case.

3. The petitioner was required to file quarterly returns under the Act. During the year 1964-65 when the petitioner had filed the prescribed returns for the first quarter ending June 30. 1964, but had not yet submitted the returns for the next quarter, for which the Act gave him time till October 30, 1964, the respondent served upon the petitioner the impugned notice dated October 17 1964 (Annexure C) under Sub-section (7) of Section 10 of the Act calling upon the petitioner to appear before the respondent and to show cause to him on October 29, 1964, why penalty, not exceeding one and a half time of the amount of tax to which the petitioner was liable to be assessed, should not be imposed upon the petitioner--

(i) for maintaining false or incorrect account for the period ending 30-9-1964.

(ii) for furnishing false or incorrect returns of turover for the period ending 30-9-1964.

(iii) for furnishing false or incorrect list of sales made to registered dealers or goods exported outside Punjab.

4. Instead of showing cause to the respondent, the petitioner chose to invoke the extraordinary original jurisdiction of this Court under Article 226 of the Constitution on October 24, 1964, to quash the above mentioned notice and to restrain the respondent from making any assessment on its basis. The relevant attack on the notice is based on the allegations made in the first sentence of paragraph 9 and in paragraphs 12 and 13 of the writ petition which are quoted below in the language of the petitioner itself:

"9. That no proceedings for the assessment year 1964-65 can take place prior to the expiry of the year, nor can any notice be issued by the respondent under Section 10 (7) of the Act.

12. That the notice (Annexure C) is ultra vires on the fact of It. Although no return has been filed at all for the period ending 30-9-1964, and still it has been mentioned that the petitioner has furnished false or incorrect return "for the period 30-9-1964".

13. That the declaration forms, which are required to be produced at the time of assessment when the dealer claims the exemption, cannot be required to be produced at any time earlier to the time of assessment and the respondent has unnecessarily assumed jurisdiction to demand either the furnishing of accounts or of the production of declaration forms".

5. Petitioner also claimed ex parte stay of further proceedings before the respondent during the pendency of the writ petition. By order dated October 26, 1964, the Motion Bench issued notice of the petition and granted interim stay of further proceedings which interim order was thereafter extended from time to time till it was made absolute by Mahajan J. on December 2, 1964, as no one appeared to oppose the grant of interim relief in spite of service of notice of the stay matter on the respondent. On February 20, 1965, the return