They cannot issue a
Penalty Fare in these circumstances, for several reasons, including that PFs are not chargeable when there are no facilities, Gainsborough Lea Road is not a PF station, the train was not a PF train, etc...
However if they denied you a Railcard discount then I can understand how it would be percieved as a 'penalty' of sorts.
There is no guarantee that the conductor was being lazy, unless of course more information than revealed here was available to you at that time (e.g. if you knew that his Avantix machine was in working order, and had not run out of ticket stock and battery power, and there were no other issues to deal with on the train).
In general guards and on-board ticket examiners are but RPIs and booking office staff are not.
I would have simply insisted that the (discounted - if applicable) SDR was sold, and ask for details of what action will be taken to ensure lessons are learnt.