Reasonable cause defeats penalty for delayed tax deposit when the dealer later pays tax with interest.

Penalty for delayed deposit of admitted tax under Section 15-A(1)(a) of the U.P. Sales Tax Act is not justified where the dealer shows reasonable cause for the default. The dealer's explanation of shortage of funds was not disputed, the tax was later paid with interest, and there was no material indicating mala fides. The revenue must establish absence of reasonable cause before penalty can be sustained. On these facts, the penal levy was found unsustainable and the deletion of penalty was upheld.

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Issues: Whether penalty was leviable under Section 15-A(1)(a) of the U.P. Sales Tax Act for delayed deposit of admitted tax when the dealer explained that the delay occurred due to paucity of funds and the tax was later deposited with interest.

Analysis: The explanation that the tax could not be deposited within time because of shortage of funds was not disputed by the authorities. The delay was accompanied by payment of interest and there was no material to show mala fides. Penalty under Section 15-A(1)(a) can be imposed only when the failure to deposit tax is without reasonable cause, and the absence of reasonable cause must be established by the revenue. On the facts found, the dealer had shown reasonable cause for the delayed payment, and the circumstances did not justify penal action.

Conclusion: Penalty under Section 15-A(1)(a) was not sustainable and was rightly deleted.

Ratio Decidendi: Penalty for delayed tax payment is not leviable where the dealer establishes reasonable cause for the default and the revenue fails to show absence of such cause or mala fides.

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