Strict construction of penalty provisions bars tax penalty for late monthly payment absent express statutory default.

A penalty provision under section 17(3)(b) of the M.P. General Sales Tax Act had to be read strictly on its plain language, so liability could not be extended by implication. Monthly tax was required to be paid before filing returns, but mere non-payment or late payment of monthly tax was not treated as a penal default under that provision unless the statute expressly so provided. The breach was characterised as non-compliance with the payment rule rather than an offence attracting penalty, and the penalty was therefore not legally sustainable. The reference was answered against the department on the penalty issue.

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Issues: Whether penalty under section 17(3)(b) of the M.P. General Sales Tax Act, 1958 was sustainable for non-payment or late payment of monthly tax and for delay in filing returns.

Analysis: The provision was construed according to its plain language, and nothing could be added to or subtracted from it. On that reading, monthly tax was required to be paid before filing the return, but mere non-payment or late payment of monthly tax was not treated as an offence under the substantive provision unless the deficiency remained uncured. The breach of the rule governing monthly payment was treated as a violation of the rule rather than an offence attracting penalty under section 17(3)(b). The factual position also supported that the penalty was imposed primarily for non-payment of monthly tax in time, while late submission of returns was only incidental.

Conclusion: The penalty was not legally sustainable and the question was answered in the negative, in favour of the assessee.

Final Conclusion: The reference was answered against the department on the penalty issue, while liberty was left with the Tribunal to proceed afresh if the question was to be reframed on the corrected statutory basis.

Ratio Decidendi: A taxing provision creating penalty must be construed strictly on its plain words, and unless the statute expressly treats non-payment or late payment of monthly tax as a penal default, penalty cannot be imposed by extending the provision beyond its language.

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