Late stay of tax recovery does not cure an earlier statutory default; penalty remains sustainable absent express statutory relief.

A later stay of tax recovery does not erase or postpone a default already committed by failing to pay tax within the statutory time limit. Under the Orissa Sales Tax Act, the penalty for non-payment within the prescribed period remained sustainable because the penalty order was passed before any stay was granted, and the stay only deferred coercive recovery. In the absence of any statutory provision treating the assessee as not in default during the pendency of an appeal, the default and resulting penalty were unaffected.

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Issues: Whether penalty under section 13(5) of the Orissa Sales Tax Act, 1947 could be sustained when the assessee had obtained a stay of realisation of tax only after the penalty order was passed, and whether such stay affected the finding of default.

Analysis: The assessee was assessed to tax and did not pay it within the statutory period prescribed under section 13(4). The penalty order under section 13(5) was made before any stay order was granted. The stay granted later operated only to postpone coercive recovery of tax; it did not alter the statutory due date for payment or suspend the jurisdiction to impose penalty for the earlier default. The Act contained no provision analogous to section 220(6) of the Income-tax Act, 1961 enabling the authority to treat the assessee as not in default merely because an appeal was pending. The authorities relied upon by the assessee were held inapplicable because they arose under different statutory schemes in which either a specific discretion to treat the assessee as not in default existed or the due date itself stood superseded.

Conclusion: The penalty under section 13(5) was valid and justified, and the assessee's challenge failed.

Ratio Decidendi: A later stay of recovery does not extinguish or postpone the statutory default already committed in failing to pay tax within the time allowed, unless the governing statute expressly so provides.

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