Reasonable cause shields non-payment from penalty when appeal and stay are filed in time and stay disposal is delayed.

Penalty under section 15-A(1)(e) of the U.P. Trade Tax Act was held unsustainable where the assessee filed the statutory appeal and stay application within time and the stay request remained undecided because of delay at the authority's end. The court reasoned that penalty can arise only on failure to pay tax without reasonable cause, and timely pursuit of appellate and stay remedies shows reasonable cause for non-payment during that period. Treating such non-payment as penal would undermine the effectiveness of the statutory appeal process. The earlier view that diligent use of the remedy negatives penalty liability in these circumstances was followed, and the penalty order was set aside.

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Issues: Whether penalty under section 15-A(1)(e) of the U.P. Trade Tax Act was sustainable where the assessee had availed the statutory appeal remedy within time and filed a stay application, but the stay order was passed later.

Analysis: Section 15-A(1)(e) authorises penalty only where the dealer, without reasonable cause, fails to pay the tax within the time allowed. The assessee had pursued the statutory remedy by filing the appeal and stay application within the prescribed period. The delay in disposal of the stay application was attributable to the authority and not to the assessee. In such a situation, non-payment during the pendency of the stay request could not be treated as a failure without reasonable cause, since that would make the statutory appellate remedy ineffective. The view taken in earlier authority that timely pursuit of the remedy negatives liability to penalty in these circumstances was followed.

Conclusion: The penalty was not justified and was set aside.

Final Conclusion: The revision succeeded and the penalty order could not be sustained because the assessee's non-payment occurred while the statutory appellate and stay remedies were being diligently pursued.

Ratio Decidendi: Penalty for failure to pay tax within time cannot be imposed under section 15-A(1)(e) when the assessee has filed the statutory appeal and stay application within time and the delay in deciding the stay request is attributable to the authority, as such non-payment is with reasonable cause.

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