Penalty discretion under sales tax law may extend to bona fide defaults where delay justifies a nominal levy.

Section 8(2) of the Madhya Pradesh General Sales Tax Act, 1958 was treated as conferring discretion both on the imposition of penalty and on its quantum, subject to judicial principles. The commentary states that a bona fide default does not bar penalty under this provision, and that a nominal penalty may still be imposed where the circumstances justify it, including delay in payment and resulting loss of interest to the revenue. The Board of Revenue's imposition of an additional Rs. 5,000 penalty was described as having a judicial basis and not being arbitrary.

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Issues: Whether, on the facts and circumstances of the case, the levy of an extra penalty of Rs. 5,000 under section 8(2) of the Madhya Pradesh General Sales Tax Act, 1958, in addition to the balance of proper sales tax, was justified.

Analysis: Section 8(2) was held to confer discretion both as to whether penalty should be imposed and as to its quantum, subject to judicial principles. The provision was contrasted with section 15(5) of the Act and with the principle in the cited Supreme Court decision, but it was emphasized that under section 8(2) penalty is not excluded merely because the dealer acted bona fide. Even where the default is bona fide, a nominal penalty may be imposed having regard to the circumstances, including delay in payment and the loss of interest to the revenue. The Board of Revenue had treated the delayed payment of part of the tax as a relevant circumstance and had imposed only Rs. 5,000 as penalty.

Conclusion: The levy of the additional penalty of Rs. 5,000 was justified and was not arbitrary or without judicial basis.

Ratio Decidendi: Under section 8(2) of the Madhya Pradesh General Sales Tax Act, 1958, penalty is discretionary and may be imposed even in a bona fide case if the circumstances justify a nominal penalty assessed on judicial principles.

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