Discretionary tax penalty for delayed payments must be proportionate, with quantum fixed judicially on surrounding circumstances.

Penalty for delayed monthly tax payments under section 12-B(3) of the Karnataka Sales Tax Act was held to be discretionary and quasi-criminal, requiring judicial assessment of the assessee's conduct and surrounding circumstances. Recurring but marginal delays, substantial tax payment, and an un-rejected explanation supported penalty, but the appellate authorities erred by computing the levy on a basis akin to section 13(2), which was not the correct measure for this provision. Penalty was therefore justified, yet confined to a nominal amount proportionate to the default, with Rs. 500 for each assessment year found appropriate.

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Issues: Whether penalty under section 12-B(3) of the Karnataka Sales Tax Act, 1957 was warranted for delayed monthly tax payments, and what should be the proper quantum of penalty.

Analysis: The delays were recurring but generally marginal, and the assessee had substantially paid the tax with only small balances remaining at the end of the assessment years. Penalty under section 12-B(3) is discretionary and must be imposed judicially, having regard to the circumstances, since penalty proceedings are quasi-criminal in nature. The explanation for delay was not rejected, and although the conduct showed some negligence in not making proper payment arrangements at Bangalore, the appellate authorities had adopted an improper method of computing the levy by resorting to a formula akin to section 13(2), which was not the correct basis for penalty under section 12-B(3).

Conclusion: Penalty was justified, but the levy had to be confined to a nominal amount; Rs. 500 for each assessment year was held to be appropriate.

Final Conclusion: The revision petitions succeeded only to the extent of reducing the penalty to a nominal sum for each assessment year.

Ratio Decidendi: Penalty for delayed tax payment under a discretionary fiscal provision must be imposed judicially on a consideration of the assessee's conduct and surrounding circumstances, and the quantum must be proportionate to the degree of default.

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