Bona fide belief and reasonable cause barred penalty for non-payment of entry tax on imported goods.

Penalty under Section 10(2) of the Odisha Entry Tax Act, 1999 was held unjustified where the dealer did not pay entry tax on imported goods under a bona fide impression that the tax was not payable. The Court noted that the legal position on levy of entry tax had been settled only later, and Section 10(2) permits penalty only when escapement or under-assessment occurs without reasonable cause. As the record disclosed no wilful or deliberate default, the penalty jurisdiction could not be validly exercised, and the penalty was held not sustainable in favour of the assessee.

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Issues: Whether penalty under Section 10(2) of the Odisha Entry Tax Act, 1999 was warranted for non-payment of entry tax on imported goods.

Analysis: The legal position on levy of entry tax on imported goods had been settled only later, and the non-payment by the dealer was held to have occurred under a bona fide impression that such tax was not payable. Section 10(2) permits penalty only where the escapement or under-assessment is without reasonable cause, and the record did not disclose wilful or deliberate default. In these circumstances, the exercise of penalty jurisdiction was found to be unjustified.

Conclusion: The penalty under Section 10(2) was not sustainable and the question was answered in the negative, in favour of the assessee and against the Department.

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