Discretion in TDS penalty matters requires consideration of taxpayer conduct; delayed deposit alone does not justify maximum penalty.

Penalty for delayed deposit of tax deducted at source under the Uttarakhand VAT Act is discretionary and cannot be imposed automatically. The assessing authority must hear the assessee and consider the surrounding facts, including whether the delay arose from circumstances beyond deliberate default. Here, the assessee had prepared drafts in time, offered to bear collection charges, and attempted deposit, but the banker refused outstation drafts; the tax was later deposited and statutory interest for delay had already been paid. On those facts, the authorities were found to have given insufficient weight to the assessee's conduct, and the maximum penalty was considered unwarranted.

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Issues: Whether penalty under Section 35(8) of the Uttarakhand VAT Act, 2005 was warranted where the assessee had attempted timely deposit of tax deducted at source, but the amount was ultimately deposited later because the bank declined to accept outstation drafts, and whether the authorities properly exercised discretion in imposing the maximum penalty.

Analysis: Section 35(8) permits penalty only after hearing the person concerned and requires the Assessing Authority to exercise discretion on the facts and conduct of the assessee. The undisputed facts showed that the assessee had prepared bankers' drafts contemporaneously with deduction, offered to pay collection charges, and attempted deposit, but the drafts were refused by the banker of the Assessing Officer because they were outstation drafts. The tax was eventually deposited, statutory interest for delay had already been paid, and the authorities below did not give due weight to these circumstances while imposing penalty.

Conclusion: The penalty could not be sustained in the form imposed by the authorities below. The orders of penalty were set aside and the matter was not remitted, the Court instead itself fixing a reduced penalty of Rs. 25,000/-.

Final Conclusion: The revision succeeded in part, with the original penalty orders vacated and a substantially reduced penalty substituted on the assessee.

Ratio Decidendi: In imposing penalty for delayed deposit of tax deducted at source, the authority must exercise statutory discretion by considering the assessee's conduct and the surrounding circumstances; where the delay is attributable to circumstances beyond deliberate default and interest has already been paid, the maximum penalty is not automatic.

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