Statutory penalty for tax default requires judicial discretion and reasons, not mechanical imposition on mere proof of default.

Penalty for failure to pay advance tax under the Mysore Sales Tax Act is not automatic on proof of default. Because the liability arises in a quasi-criminal setting, the authority must exercise judicial discretion, record reasons, and consider all relevant circumstances before imposing penalty. The principle applied is that a statutory penalty for breach of obligation cannot be levied mechanically merely because power exists. On the facts stated, the penalty order was held unsustainable and quashed.

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Issues: Whether the maximum penalty under section 12-B(2) of the Mysore Sales Tax Act, 1957 could be sustained when imposed without reasons and without a judicial consideration of the relevant circumstances.

Analysis: Penalty for failure to pay advance tax under section 12-B is not automatic upon proof of default. The liability to impose penalty arises in a quasi-criminal setting and the authority must exercise discretion judicially, having regard to all relevant circumstances. The principle governing penalty for statutory default requires more than the mere existence of power to penalise; it requires application of mind to whether penalty is warranted on the facts.

Conclusion: The impugned penalty order was unsustainable and was quashed.

Ratio Decidendi: Penalty for breach of a statutory obligation is not to be imposed mechanically, but only by the competent authority's judicial discretion on consideration of all relevant circumstances.

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