Judicial discretion can justify penalty reduction below a statutory minimum where the breach is technical and bona fide.

Penalty for failure to perform a statutory obligation is subject to judicial discretion, which must be exercised with regard to all relevant circumstances. Even where the statute prescribes a minimum penalty, reduction below that minimum may be justified where the breach is technical or venial, or where the default arises from a bona fide belief. Here, the cheque for admitted tax was dishonoured, but the assessee paid promptly after intimation and no mala fide was found, so reduction of the penalty below the statutory minimum was upheld in the assessee's favour.

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Issues: Whether penalty under section 15-A(1)(i) of the U.P. Sales Tax Act could be reduced below the minimum prescribed amount on the facts of the case.

Analysis: A penal order for failure to perform a statutory obligation is controlled by judicial discretion and must be exercised on a consideration of all relevant circumstances. Even where a minimum penalty is prescribed, refusal to impose the full penalty may be justified where the breach is merely technical or venial, or where the default is attributable to a bona fide belief. In the present case, the cheque towards admitted tax was dishonoured, but the assessee deposited the amount promptly after intimation, and no mala fide was found.

Conclusion: The reduction of penalty below the statutory minimum was held to be a proper exercise of judicial discretion and was upheld in favour of the assessee.

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