Discretionary TDS penalty under VAT law cannot be imposed at the maximum where delay is bona fide and interest is paid.

Penalty under section 35(8) of the Uttarakhand Value Added Tax Act, 2005 was discretionary, and the maximum penalty for delayed TDS deposit could not be imposed mechanically. The Tribunal accepted that the dealer had deducted TDS, made bona fide efforts to deposit it on time, prepared drafts promptly, and the delay resulted from banking and logistical difficulties rather than mala fides or retention of the tax. Since interest for the delay had also been paid, the reduction of penalty was proper and the revision was dismissed.

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Issues: Whether the maximum penalty under section 35(8) of the Uttarakhand Value Added Tax Act, 2005 was justified for delayed deposit of TDS despite bona fide efforts to comply with the deposit requirement under section 35(4) and payment of interest under section 35(9).

Analysis: The statutory scheme made the penalty under section 35(8) discretionary, though the power could extend up to twice the amount deductible but not deposited. The facts accepted by the Tribunal showed that the dealer had deducted TDS, made earnest efforts to deposit it within time, prepared drafts promptly, and the delay arose from banking and logistical difficulties rather than any retention of the amount or mala fides. The dealer had also paid interest for the delayed remittance. In such circumstances, imposition of the highest permissible penalty was found to be unjustified, and the Tribunal's reduction of the penalty was held to be proper.

Conclusion: The maximum penalty was not warranted; the reduction of penalty was upheld and the revision was dismissed.

Ratio Decidendi: Where penalty for delayed TDS deposit is discretionary, the authority must consider the surrounding facts and bona fide conduct of the dealer, and the maximum penalty cannot be imposed mechanically when the delay is explained and interest for the delay has been paid.

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