Advance tax penalty requires judicial discretion and cannot follow automatically from delay where default is not deliberate.

Penalty for default in payment of advance tax under section 12-B(3) of the Karnataka Sales Tax Act is not automatic and must rest on a judicial assessment of all relevant circumstances, including the dealer's explanation and whether there was good or sufficient cause. The authority must consider whether the conduct showed conscious disregard or deliberate defiance of the statutory obligation; the maximum penalty is only an upper limit, not a fixed rule. On the facts accepted by the Tribunal, the slump in the tea market and inability to pay punctually negatived deliberate default or dishonest conduct, so the penalty was not lawfully leviable and the penalty orders were set aside.

---

---

Issues: Whether penalty for default in payment of advance tax under section 12-B(3) of the Karnataka Sales Tax Act could be sustained without a judicially exercised discretion based on relevant circumstances, and whether the penalty imposed in this case was justified.

Analysis: Penalty under section 12-B(3) is penal in nature and cannot follow mechanically from proof of default. The authority must consider the dealer's explanation, decide whether there was good or sufficient cause, and determine whether the conduct amounted to conscious disregard of the statutory obligation or deliberate defiance of law. The maximum penalty is only an upper limit and no fixed formula governs its application. The rate prescribed under section 13 is not the basis for levy under section 12-B(3). Here, the reasons accepted by the Tribunal showed a slump in the tea market and inability to pay punctually, which negatived deliberate default or dishonest conduct; on that footing, no penalty was warranted.

Conclusion: The penalty was not lawfully leviable and the assessee succeeded on this issue.

Final Conclusion: The revision was allowed and the penalty orders passed by the authorities below were set aside.

Ratio Decidendi: Penalty for default in advance tax can be imposed only on a judicial assessment of all relevant circumstances and not as an automatic consequence of delay; where the default is not deliberate or contumacious, the levy is unsustainable.

---