Penalty reduction requires recorded reasons; unsupported discretionary relief was set aside and remitted for fresh decision.

The Tribunal could reduce penalty in a departmental appeal, but that discretion had to be exercised on stated reasons and disclosed circumstances. A penalty reduction affecting party rights cannot stand where the order gives no basis for the exercise of discretion. The Rajasthan High Court therefore found the reduction improper, set it aside, and remitted the matter to the Tribunal for a fresh decision after hearing both sides.

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Issues: Whether the Tribunal was justified in reducing the penalty under section 16(1)(k) of the Rajasthan Sales Tax Act without recording the reasons or circumstances for such reduction.

Analysis: The Tribunal had jurisdiction to reduce the penalty while dealing with the departmental appeal, but the order disclosed no reasons, grounds, or circumstances for the exercise of that discretion. A reduction in penalty affecting the rights of the parties must be supported by some indication of the considerations that weighed with the Tribunal. In the absence of any disclosed basis, the exercise of discretion was held to be improper.

Conclusion: The reduction of penalty was not sustained and the matter was remitted to the Tribunal for fresh decision in accordance with law after hearing both sides.

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