Penalty under entry tax law is not automatic; absence of wilful default and prior tax payment defeats levy.

Penalty under the Orissa Entry Tax Act was treated as discretionary and not automatic, because the statutory presumption of evasion is rebuttable and can be sustained only where the facts show wilful, culpable, or contumacious default. The court applied the settled principle that penalty under a taxing statute is quasi-criminal, so bona fide conduct and the absence of deliberate violation are material to the exercise of discretion. As the assessee had already discharged the tax liability and no violation in payment was established, the foundation for penalty failed and the penalty was quashed.

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Issues: Whether penalty imposed under Section 7(5) of the Orissa Entry Tax Act, 1999 was sustainable when the assessee had already paid the tax and there was no established wilful default.

Analysis: The penalty provision was treated as discretionary and not automatic. The presumption of evasion under Section 7(5) was held to be rebuttable, and penalty could be levied only where the facts showed a culpable or contumacious failure. The Court relied on the settled principle that penalty under a taxing statute is quasi-criminal in nature, that bona fide conduct and absence of wilful violation are relevant, and that the authority must exercise discretion judicially on the facts of the case. Since the tax liability had already been discharged and there was no violation in payment of tax, the foundation for penalty did not survive.

Conclusion: The penalty under Section 7(5) of the Orissa Entry Tax Act, 1999 was unsustainable and was quashed, in favour of the assessee.

Ratio Decidendi: Penalty under a taxing statute is not automatic and cannot be sustained in the absence of wilful default or contumacious conduct, particularly where the assessee has already paid the tax and the statutory presumption is rebutted.

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