Bona fide belief does not defeat penalty where entry-tax liability is clearly imposed and validity is already upheld.

The Court reiterated that the third proviso to section 3(1) of the M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 remained valid, and the challenge to its validity therefore failed. It further held that penalty could not be avoided on the basis of bona fide belief or absence of mens rea where the proviso clearly fastened a statutory obligation to pay entry tax and penalty on goods entering the local area without having suffered tax. The assessee's reliance on cases involving arguable interpretative disputes was distinguished, and the petition was dismissed with the tax and penalty liability left undisturbed.

---

---

Issues: (i) Whether the third proviso to section 3(1) of the M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 was invalid; (ii) whether penalty could be avoided on the ground that the assessee acted bona fide and without mens rea.

Issue (i): Whether the third proviso to section 3(1) of the M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 was invalid.

Analysis: The validity of the third proviso had already been upheld by the Court in earlier proceedings. The proviso made the purchaser liable to pay entry tax and penalty where the goods entering the local area had not suffered tax. In view of that binding position, the challenge to validity could not survive.

Conclusion: The challenge to the validity of the third proviso was rejected.

Issue (ii): Whether penalty could be avoided on the ground that the assessee acted bona fide and without mens rea.

Analysis: The Court distinguished the authorities relied upon on the basis that those cases involved a serious and arguable dispute on interpretation. Here, the proviso was clear, and the assessee was under a statutory obligation to pay the tax and the penalty. The plea of bona fide pursuit of remedy did not displace the statutory liability.

Conclusion: The penalty was held leviable and the assessee was not entitled to escape liability.

Final Conclusion: The petition failed on merits and was dismissed, with the statutory liability for entry tax and penalty left undisturbed.

Ratio Decidendi: Where the taxing provision clearly fastens liability and the underlying validity has already been upheld, a plea of bona fide belief or absence of mens rea does not by itself defeat penalty.

---