Fiscal penalty requires wilful default; pre-assessment tax payment without contumacious conduct will not justify penalty.

Penalty under fiscal law is not automatic and must be imposed only where the default is deliberate, wilful, or contumacious. Here, the dealer had filed the returns on time, the further tax liability arose on internal audit, and the outstanding tax was paid before assessment proceedings began. On those facts, there was no basis for treating the delay as a penal default. The penalty under Section 16(9) of the Bihar Finance Act, 1981 was therefore not exigible, and the orders imposing penalty were unsustainable.

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Issues: Whether penalty under Section 16(9) of the Bihar Finance Act, 1981 was leviable where the dealer had deposited the outstanding tax before assessment proceedings, and whether the orders imposing penalty were sustainable.

Analysis: The admitted position was that the returns and the tax shown therein had been filed within time, and the additional tax liability emerged on internal audit. The outstanding amount was deposited by the dealer before the assessment proceedings commenced. The statutory scheme in Section 16(9) permits penalty for failure to pay tax or extra tax due within the prescribed time, but the power to impose penalty is not automatic. Penalty proceedings are quasi-criminal in nature and must be exercised judicially, with due regard to whether the default was deliberate, wilful, contumacious, or otherwise deserving of penal action. Mere delay in payment, without a finding of conscious disregard of statutory obligation, does not by itself justify penalty.

Conclusion: Penalty under Section 16(9) was not exigible on these facts, and the orders imposing penalty were unsustainable.

Ratio Decidendi: Penalty under a fiscal statute is not to be imposed mechanically; where the tax has been paid before assessment and there is no finding of deliberate, wilful, or contumacious default, penalty is not warranted.

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