M. RAMA JOIS, J. ( 1 ) THIS appeal is presented under S. 24 (1) of the Karnataka Sales Tax Act 1957 (hereinafter referred to as the Act) against the suo motu revisional order made by the Commissioner in exercise of his powers under S. 22-A of the Act setting aside the order of the Deputy commissioner of Commercial Taxes who had modified the assessment order made by the Assistant Commissioner of Commercial Taxes, (Assessment-I) Bangalore under S. 12-B of the Act. ( 2 ) BRIEFLY stated the facts of the case are :-The appellant is M/s Modi rubber Limited having its registered office at Modinagar, U. P. It started its branch depot at Bangalore on 19th June 1975. It is a dealer in tyres and tubes. For the assessment period commencing from 19th June, 1975, to December 1975 there had been delay on the part of the appellant in paying monthly taxes every month as required under S. 12-B (1) of the Act. The Assistant Commissioner of Commercial Taxes (Assessment-I), bangalore issued a notice under S. 12-B (2) of the Act calling upon it to show cause why penalty as provided in that provision should not be imposed. ( 3 ) IN reply to the said notice the assessee stated as follows : The company went into the market for the first time in October, 1974. Its depot in Bangalore was opened only on 19th June, 1975. At the initial stages the company had to face difficulties as the market was highly competitive. In the circumstances, the company had to effect sales on credit basis to its customers. As there was delay on the part of the purchasers in making payment of sale price it was not in a position to pay the advance tax be- fore the prescribed date. However, the entire tax for the period had been paid before filing the final returns. It had paid tax of Rs. 10 lakhs and odd. The turnover figures furnished by the company had been accepted. The delay in payment of instalments under these circumstances was bona fide and inevitable. ( 4 ) AFTER considering the facts put forward by the assessee, the Assistant commissioner was of the view that it was not a fit case where maximum penalty under S. 12-B (2) of the Act should be levied, but it was sufficient to levy penalty of Rs. 15. 000. ( 4 ) AFTER considering the facts put forward by the assessee, the Assistant commissioner was of the view that it was not a fit case where maximum penalty under S. 12-B (2) of the Act should be levied, but it was sufficient to levy penalty of Rs. 15. 000. Aggrieved by the said order the assessee preferred an appeal before the Deputy Commissioner of Commercial Taxes. The same grounds which had been urged before the Assistant Commissioner were urged in the appeal. The appellate authority was satisfied that the delay in payment of tax was bona fide and the reason put forth for the delay was genuine. The relevant portion of his judgment is contained in para 13; it reads :"after considering the arguments urged before me and the facts and circumstances of the case, I am of the view that the imposition of penalty of Rs. 15,000 appears to be not justified, because I am of the view that such imposition of penalty of Rs. 15,000 is contrary to the observations made by the Honourable High Court in Manilal Monaji somayya's case (1) and it is an imposition of penalty made without paying regard to the principles enunciated in that case. There is however default by the appellant in the payment in advance of monthly tax and notwithstanding the fact that f am satisfied that the appellant has submitted genaline grounds', nevertheless in the ends of justice the appellant should be imposed with a reasonable amount of penalty. On consideration of all the circumstances I am of the view that the imposition of the penalty of a sum of Rs. 1,000 would meet the ends of justice". (underlined Italics by us)THE Commissioner thereafter being of the view that the order of the appellate authority was erroneous and prejudicial to the revenue issued notice under s. 22-A of the Act proposing to set aside the order of the Deputy Commissioner. ( 5 ) THE learned counsel for the assessee submitted before the Commissioner that there was no delay in payment of tax and all the sales effected by the assessee during the period were on credit basis and the delay in payment of tax was as a result of delay in payment of sale price by its customers and there was no mens rea and even the penalty of Rs. 1,000 imposed by the deputy Commissioner of Commercial Taxes (Appeals) cannot be sustained and should be waived. The Commissioner however was of the opinion that the Assistant Commissioner had considered all the pleas put forward by the assessee and had levied penalty of Rs. 15,000 and therefore there was no justification for the Deputy Commissioner to interfere. Aggrieved by the said order the assessee has presented this appeal. ( 6 ) SRI B. P. Gandhi, the learned counsel appearing for the appellant, contended that though in view of the findings recorded by the appellate authority, levying the penalty of Rs. 1,000 was also not justified, the assessee accepted the said order and did not prefer any further appeal. He, however, submitted that there was no ground for the Commissioner to interfere with the appellate order. ( 7 ) MISS. M. R. Vanaja, the learned high Court Government Pleader for the revenue, contended that as the delay in payment of tax during almost every month commencing from June to December 1975, had not been disputed, it was not open for the appellate authority to interfere with the discretion exercised in fixing the quantum of penalty by the assistant Commissioner and hence the order of the Deputy Commissioner was erroneous, and therefore the commissioner was right in interfering with the said order. ( 8 ) AS pointed out sarlier, the deputy Commissioner, in the course of his order, had clearly recorded that he was satisfied that the appellant had not acted deliberately or in defiance of law or was guilty of contumacious conduct and there was no proof that it was dishorest or acted in conscious disregard of its obligation. He applied the ratio of the decision in Manilal Monaji Somayya v. Commercial Tax Officer (1) and came to the conclusion that ends of justice would be met by levying penalty at rs. 1,000. The wording of S. 12-B (2) of the Act itself indicates that the penalty of 1-1/2 times the amount of tax payable is the maximum imposable penalty, but no penalty could be levied under that sub-section unless the dealer concerned had a reasonable opportunity of showing cause against such imposition. 1,000. The wording of S. 12-B (2) of the Act itself indicates that the penalty of 1-1/2 times the amount of tax payable is the maximum imposable penalty, but no penalty could be levied under that sub-section unless the dealer concerned had a reasonable opportunity of showing cause against such imposition. ( 9 ) IN the present case, the assessee had sufficient cause, namely, that it had started its depot in Bangalore only in june, 1975 and having regard to the competitive market, it had to effect the sales on credit basis and there was delay in receipt of sale price from its customers. This factual plea put forward by the assessee has not been found to be incorrect by any one of the authorities including the Commissioner. After noticing that this plea of the assessee was based on facts, the appellate authority came to the conclusion that there was no intention on the part of the assessee to delay the payment of tax to the state and therefore it was a fit case fof levying penalty at Rs. 1,000. In the order of the Commissioner he has not come to the conclusion that the reason given by the assessee which was also reiterated before him, viz. , that credit sales were effected and there was delay in the receipt of sale price, was not true. Therefore, in our opinion this was a case in which the exercise of discretion by the appellate authority was sound and could not be characterised as arbitrary or perverse. Therefore the Commissioner could not interfere with the exercise of discretion by the appellate authority in such a manner under S. 22-A of the Act. ( 10 ) FOR the reasons aforebaid, we make the following order :1. The appeal is allowed. 2. The order of the Commissioner dated 23rd August, 1977, is set aside. --- *** --- .