Penalty for excess tax collection requires a finding of deliberate falsehood, not just an inaccurate return.

Penalty for excess collection and return of central sales tax under section 9(2) of the Central Sales Tax Act read with sections 18 and 18A of the Karnataka Sales Tax Act is penal in character and cannot rest merely on an inaccurate return. The authorities must examine whether the excess collection arose from a bona fide accounting mistake or from deliberate, mala fide conduct, and whether the return can properly be treated as false. In the absence of a reasoned finding on the assessee's explanation and guilty intention, a penalty order is vulnerable for non-application of mind and cannot be sustained.

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Issues: Whether penalty under section 9(2) of the Central Sales Tax Act, 1956 read with section 18A of the Karnataka Sales Tax Act, 1957 was rightly imposed for collection and return of central sales tax at an excess rate, and whether the authorities were required to examine the assessee's plea of bona fide mistake before sustaining penalty.

Analysis: Section 9(2) of the Central Sales Tax Act, 1956 empowers the authority to impose penalty, while section 18 and section 18A of the Karnataka Sales Tax Act, 1957 prohibit collection of tax in excess of the liability and require payment of amounts so collected. Penalty under these provisions is penal in character and cannot be sustained merely because an inaccurate return is filed. The authorities were required to examine whether the excess collection resulted from a bona fide mistake in the accounting system or from deliberate, mala fide conduct, and whether the return could fairly be treated as a false return. As no finding was recorded on the assessee's explanation or on the presence of a guilty mind, the penalty orders were vitiated by non-application of mind.

Conclusion: The penalty could not be sustained without a reasoned finding on bona fide mistake and culpable intention; the impugned orders were unsustainable.

Final Conclusion: The matter was sent back for fresh adjudication after consideration of the assessee's explanation and in accordance with the legal position on penalty for excess tax collection.

Ratio Decidendi: Penalty for excess tax collection cannot be upheld unless the authority records a finding that the inaccurate return was not a bona fide mistake and was accompanied by culpable intention or deliberate falsehood.

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