Reasoned exercise of statutory discretion required for penalty waiver under sales tax law; cryptic rejection set aside and remitted.

Section 16B of the Tamil Nadu General Sales Tax Act, 1959 confers discretion on the Commissioner to reduce or waive penalty only where the statutory conditions are met, and any refusal must show reasons and application of mind. A cryptic order stating only that the conditions were not fulfilled was inadequate because it did not identify the specific failure or consider the surrounding circumstances, including disclosure of turnover and a pending exemption claim. The Madras High Court set aside the rejection and remitted the matter for fresh consideration and disposal by a speaking order in accordance with law.

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Issues: Whether the order rejecting the application for waiver of penalty under section 16B of the Tamil Nadu General Sales Tax Act, 1959 was unsustainable for want of reasons, and whether the matter required reconsideration by a speaking order.

Analysis: Section 16B confers discretion on the Commissioner to reduce or waive penalty if the statutory conditions are satisfied. The rejection order merely stated, in a cryptic manner, that the conditions were not fulfilled, without identifying the particular failure or examining the surrounding circumstances. The record showed that the assessee had disclosed the turnover and had sought exemption from tax, and the application for exemption had been pending during the relevant period. An order exercising or refusing statutory discretion must disclose reasons and must reflect application of mind to the conditions prescribed by the statute.

Conclusion: The rejection order was set aside and the matter was remitted to the Commissioner for fresh consideration and disposal by a speaking order in accordance with law.

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