Bona fide technical mistake defeats fiscal penalty where no revenue loss or dishonest intent is shown.

Penalty under a fiscal statute is not attracted by a bona fide technical mistake where there is no deliberate, contumacious, or dishonest conduct. The assessee's input-tax credit claim exceeded its output tax liability, and the disputed credit was claimed in one instalment rather than spread over the year, causing no revenue loss or unlawful gain. On those facts, the Punjab and Haryana High Court held that the penal provision could not be invoked and the consequential additional demand was unsustainable.

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Issues: Whether penalty under section 56 of the Punjab Value Added Tax Act, 2005 was sustainable where the assessee's claim of input-tax credit was an apparent mistake, no tax was actually payable, and there was no deliberate or dishonest conduct.

Analysis: The assessee was otherwise entitled to input-tax credit exceeding the output tax liability, and the disputed credit was claimed in one instalment instead of being spread over the year. On these facts, the act did not result in any gain to the assessee or any loss to the Revenue. Penalty provisions of a penal character are not attracted by a mere technical or venial breach; they require deliberateness, contumacious conduct, dishonest intention, or conscious disregard of the statutory obligation. A bona fide mistake, without an element of deliberateness, does not justify imposition of penalty.

Conclusion: The question of law was answered in favour of the assessee. The penalty and consequential additional demand were unsustainable.

Ratio Decidendi: Penalty under a fiscal statute is not leviable for a bona fide and technical breach absent mens rea or deliberateness, particularly where the mistake causes no revenue loss or unlawful gain.

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