(1) Where it appears to the Senior Joint Commissioner, Joint Commissioner, Deputy Commissioner, Sales Tax Officer, as the case may be, authorised by the Commissioner in this behalf (hereinafter referred to in this rule as authorised officer) in respect of a dealer that a person is personally liable for contravention of the provisions referred to in sub-section (5) of section 40 in relation to such dealer, whose place of business falls within his jurisdiction, such authority shall serve upon such person a notice in Form no. 4, directing him to appear personally or through an authorised agent before the said authority on the date specified in such notice and show cause as to why a penalty shall not be imposed on him under that sub-section.

(2) The authorised officer shall specify the date for hearing in the notice under sub-rule (1) not less than twenty days from the date of service of the notice.

(3) On receipt of the notice referred to in sub-rule (1), the person may prefer any objection to the imposition of penalty and adduce such evidence as he wishes to produce in support of his contention on or before the date fixed for the hearing.

(4) After hearing the person on whom notice is served under sub-rule (1), considering such evidence as may be adduced and objection as may be preferred by him, if the authorised officer is satisfied that such person is liable for contraventions referred to in sub-section (5) of section 40, such authority shall, by an order in writing impose penalty under that sub-section for such amount as he deems just and reasonable.

(5) The authorised officer shall serve upon the person on whom penalty is imposed under sub-rule (4) a notice in Form no. 5 directing him to pay the amount of penalty imposed in the manner referred to in sub-section (5) of section 40, specifying in the said notice the date by which payment shall be made and the date by which the receipted challan in proof of such payment shall be produced.