Penalty for entry tax default fails when tax is paid and records show no retained amount or statutory breach.

Penalty under Section 15 of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 was not sustainable where the entry tax had already been paid and the assessment records did not show any amount retained by the dealer. The penalty provision required a clear contravention of the Act or a proved default in payment of tax. Here, the assessment reflected payment of entry tax and retention only of the excess amount beyond the admissible set-off under Section 4, while the assumption that the dealer had collected and kept entry tax from customers was unsupported by the records. In the absence of any outstanding tax liability or material breach, the foundation for penalty was absent.

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Issues: Whether penalty under Section 15 of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 could be sustained when the entry tax had already been paid, the assessment had been completed, and no amount was shown to have been retained by the dealer.

Analysis: The levy of penalty under Section 15 depended on a clear failure to comply with the provisions of the Act or a proved default in payment of tax. The records showed that the petitioner had paid the entry tax quantified at 13% and that, in the assessment process, only the excess amount beyond the admissible set-off under Section 4 was retained by the Department. The impugned order proceeded on the assumption that the dealer had collected and retained entry tax from customers, but that assumption was not supported by the assessment records. In the absence of any outstanding tax liability or material showing contravention of the Act, the foundation for invoking Section 15 was missing.

Conclusion: Penalty under Section 15 was not attracted and the impugned orders were unsustainable.

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