Reasonable cause defeats trade tax penalty where delayed payment followed sickness and financial constraint, with interest paid later.

Penalty under section 15-A(1)(a) of the U.P. Trade Tax Act could not be sustained because the dealer showed reasonable cause for delayed deposit of admitted tax. The unit had been declared sick and was facing financial constraint and sickness-related difficulty, which the court treated as sufficient cause negating penalty. The statutory provision for interest on delayed payment did not, by itself, justify penalty without a finding that the delay was without reasonable cause. Subsequent payment of tax with interest did not cure the defect in the penalty order or support its continuation.

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Issues: Whether penalty under section 15-A(1)(a) of the U.P. Trade Tax Act, 1948 could be sustained when the dealer failed to deposit admitted tax within time on account of financial constraint and sickness of the unit, and subsequently deposited the tax along with interest.

Analysis: Penalty under section 15-A(1)(a) is attracted only where the assessing authority is satisfied that the dealer failed to deposit the tax due without reasonable cause. The material showed that the unit had been declared sick and was facing financial constraint, which constituted reasonable cause. The statutory scheme under section 8, including the provisions for interest on delayed payment, did not by itself justify imposition of penalty in the absence of a finding that sufficient cause was lacking. Mere subsequent deposit of tax with interest after the penalty order was not a ground to sustain the penalty, and the reasoning that delayed payment alone was enough was rejected.

Conclusion: Penalty was not sustainable and the revisionist succeeded.

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