Sales tax penalty for delayed payment fails where tax was not finally due and reasonable cause was shown.

Penalty for delayed sales tax payment under section 36(3) of the Bombay Sales Tax Act was held unsustainable where the tax relating to the relevant branch had already been paid before assessment or was not finally due in the statutory sense. The court also noted that, even if the provision applied, the assessee showed reasonable cause for the timing issue, which arose from technical complications in assessment rather than deliberate or contumacious default. The Tribunal's finding of no mala fide intention supported remission, and the penalty was therefore not justified.

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Issues: Whether penalty under section 36(3) of the Bombay Sales Tax Act, 1959 was justified on the facts where the tax relating to the Pune branch was paid before assessment at Pune, and whether the assessee had failed to pay tax without reasonable cause.

Analysis: Penalty under section 36(3) is attracted only when tax is not paid within the time required by the Act. In the circumstances of the case, the consolidated return filed at Bombay had been acted upon for a period, and for the relevant quarter there was either no return at Pune to support payment as per return or, if the Bombay return was treated as the relevant return, tax had already been paid before filing. The liability therefore stood in the realm of assessment rather than default in payment of tax due within the statutory time. Even assuming section 36(3) applied, the facts showed reasonable cause for the delay, which arose from technical complications in assessment and not from any deliberate or contumacious conduct. The Tribunal itself had found absence of mala fide intention.

Conclusion: Penalty under section 36(3) was not justified, and the assessee was entitled to full remission of the penalty.

Final Conclusion: The reference was answered against the Revenue and the assessee succeeded on the question of penalty.

Ratio Decidendi: Penalty for delayed payment of sales tax cannot be sustained where the tax was not yet finally due in the statutory sense, or where delay occurred with reasonable cause and without deliberate defiance of law.

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