Reasonable cause defeats sales tax penalty where delay followed court stay and approved instalment payments.

Penalty for delayed payment of sales tax surcharge could not be sustained where the dealer showed reasonable cause for the delay. The delay arose during subsisting court-ordered stay and was later regularised through instalments approved by the Court, so it was not attributable to wilful default or absence of justification. Applying the same reasoning to penalties under the Bihar Finance Act, the Tribunal's finding of reasonable cause was upheld and the penalty provisions were held inapplicable on these facts. The penal action was therefore quashed in favour of the assessee.

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Issues: Whether penalties imposed for delayed payment of sales tax surcharge could be sustained when the delay occurred under court-ordered stay and subsequent payment was made in instalments.

Analysis: Penalty under section 25(3) of the Bihar Finance Act, 1981 is attracted only when a dealer fails, without reasonable cause, to make payment of tax within the prescribed time. The delay in payment here occurred because of subsisting stay orders and later by instalments fixed with the approval of the Court. On the facts, the delay was not attributable to any wilful default or absence of justification. The same reasoning applied to the penalties imposed under section 16(9) of the Act, and the finding of reasonable cause recorded by one Member of the Tribunal was upheld.

Conclusion: The penalties were unsustainable and were quashed; the writ petitions were allowed in favour of the assessee.

Final Conclusion: Delay in payment of the surcharge, being explained by judicial and agreed instalment arrangements, did not justify penal action under the Act.

Ratio Decidendi: Penalty for non-payment of tax cannot be imposed where the dealer establishes reasonable cause for the delay, including delay occasioned by court protection and payment pursuant to instalment arrangements.

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