Penalty discretion under Tamil Nadu sales tax law requires consideration of bona fide belief, explanation for delay, and paid tax.

Section 22(2) of the Tamil Nadu General Sales Tax Act does not impose an automatic penalty merely because tax was collected during a period when registration after change in constitution had not yet taken effect. The assessing authority must exercise discretion, give the assessee an opportunity of being heard, and consider the surrounding circumstances, including a bona fide belief, a prompt explanation for delay, and whether the tax collected had already been paid. On the stated facts, the one-day delay in filing the registration application after seeking clarification did not justify the enhanced penal levy, and relief was warranted.

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Issues: Whether penalty under section 22(2) of the Tamil Nadu General Sales Tax Act could be sustained when the assessee collected tax during the period in which registration had not yet taken effect after change in constitution, and whether the authority was bound to levy the maximum penalty despite the assessee's explanation and bona fide belief.

Analysis: The registration provisions required a successor in business to apply within the prescribed period, but the assessee's application was filed one day late after seeking clarification from the assessing authority. Section 22(2) was held not to create an automatic penalty merely because tax was collected during a period of non-registration. The use of the word "may" and the requirement of an opportunity of being heard show that the assessing authority must consider the circumstances, including bona fide belief and any acceptable explanation for delay. The fact that the tax collected had already been paid also weighed against a punitive levy at the enhanced rate.

Conclusion: The penalty under section 22(2) was not warranted on the facts, and the assessee was entitled to relief.

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