JUDGMENT : D.P. Mohapatra, J. - The controversy raised in these cases relates to levy of panalty for default in payment of the tax due under the Orissa Motor Vehicles Taxation Act, 1975 (the Act" for short). 2. M/s. Hindustan Aeronautics Limited, Koraput represented by its General Manager which is a Govt. of India Undertaking has filed these applications under Arts. 226 and 227 of the Constitution of India for quashing the orders passed by the Regional Transport Officer-cum-Taxing Officer, Koraput ("the Taxing Officer" for short) levying penalty for default in payment of tax due in respect of certain vehicles of the Company during the period between 1977-78 and 1991-92 which were confirmed by the appellate and revisional authorities. The factual backdrop leading to the present proceedings may be stated thus: The petitioner Company owns nineteen buses registered as private vehicles/private service vehicles. Tax in respect of all the vehicles was paid under item No. 6 of the Schedule of the Act. On 22-2-1991 and 4-3-1991 the motor vehicle enforcement staff under the Taxing Officer-cum-Regional Transport Officer, Koraput (opp. party. No. 1) checked five of the the buses. ORK 3597, ORK 3810, ORK 5638, ORK 5639 and ORK 1563 and found them carrying passengers on realisation of hire charges. Certain other defects were also detected in ORK 3597 and ORK 3310. On receiving notice from opp. party No. 1 that tax ought to have been paid under Item No. 4 of Schedule instead of item No. 6, the petitioner paid Rs. 7,00,260/-in two instalments on 4-3-1991 and 20-3-1991. Thereafter the opp. party No. 1 issued notice to the petitioner to furnish details about the manner of use of the other vehicles, the amount of fare collected from the users, etc The petitioner did not furnish the requisite particulars. On enquiry made by the Taxing Officer it came to light that hire charges at different rates were being realised from passengers on issue of receipt; that in February, 1984 the vehicle bearing registration No. ORK 5639 was found to have carried 40 passengers from Sunabeda to Vizianagaram on realisation of fare/hire charges at the rate of Rs. 10/ from each passenger and that the Financial Controller of the Company by the order dated 27-2-1988 had revised the rate of hire charge from 1-3-1988 for private use of the vehicles. 10/ from each passenger and that the Financial Controller of the Company by the order dated 27-2-1988 had revised the rate of hire charge from 1-3-1988 for private use of the vehicles. From these facts the Taxing Officer concluded that the vehicles were being used for hire and reward. Accordingly the differential tax was assessed u/s 6 of the Act in respect of ten buses. The amount of differential tax was Rs. 33,10,393/- for the period from April. 1977,to August,1992 excluding the period from July, 1989 to April, 1991 in respect of five vehicles mentioned earlier. Thereafter notice was issued to the petitioner to show cause why penalty shall not be levied; the reply submitted by it was considered and by the orders passed on 25-8-1992 and 26-8-1992 penalty to the tune of Rs. 63,22,384/- was imposed for the delay default in payment of tax by the due date. The said amount was reduced to Rs. 61,40,143/- on deduction of the amount in respect of a vehicle which was off road for some time during the period in question. The petitioner filed O. M. V. T. Appeal Case Nos. 6/92 to 21/92 before the Collector-cum-Chairman, Regional Transport Authority, Koraput u/s 18 of the Act assailing the imposition of panalty. The appellate authority by the order passed on 27th of February, 1993 (Annexure 2) dismissed all the appeals holding, inter alia, that the Taxing Officer rightly imposed panalty u/s 13 of the Act read with Rule 9 of the Orissa Motor Vehicles Taxation Rules, 1976 (for short, "the Rules"). M. V. T. Revision No. 6/93 to 21/93 filed by the petitioner against the order of the appellate authority proved fatile which is evident from the order dated 17-8-1993 of the Transport Commissioner-cum-Chairman, S.T.A., Orissa (Annexure-4). These orders are assailed by the petitioner in these writ petitions. 3. The orders passed by the statutory authorities are assailed by the petitioner mainly on the grounds that levy of penalty has been made under an erroneous impression that in every case of default in payment of tax penalty must be levied as a matter of course. These orders are assailed by the petitioner in these writ petitions. 3. The orders passed by the statutory authorities are assailed by the petitioner mainly on the grounds that levy of penalty has been made under an erroneous impression that in every case of default in payment of tax penalty must be levied as a matter of course. Under such misconception the authorities have not applied their mind to the facts and circumstances of the case and have not recorded any specific that there was lack of bona fide on the part of the petitioner in not paying tax under Item 4 of Schedule I of the Act. It is the further case of the petitioner that additional tax was paid by the petitioner under protest since the demand was challenged by the Company in the writ petitions filed in this Court. Those cases were pending when the present cases were filed. It may be noted here that in the meantime the cases have been disposed of the petitioner's challenge against the demand of additional tax has been negatived and the writ petitions have been dismissed. In such circumstances, the petitioner contends that it cannot be held to be guilty of contumacious conduct which is a sine qua non for levy of penalty. 4. In the counter affidavit filed by them the opp. parties have taken the stand that penalty has been duly and legally imposed u/s 13 of the Act after considering the reply submitted by petitioner to the show cau5e notice issued by the Taxing Officer. From the facts found on enquiry by the Taxing Officer it is clear that the vehicles in question ware being plied for carrying passengers for hire and hire charges were being realised at different rates depending on user. It is therefore clear that vehicles were being plied to different destinations not as private vehicles/private service vehicles as mentioned in the registration certificates but as public service vehicles (contract carriages). As such, the appropriate item of the Schedule I applicable to the vehicles is item No. 4 and not item No. 6. In reply to the show cause notice the petitioner did not assail the aforementioned factual position but only harped on the fact that the demand of additional tax is under challenge before the High Court. As such, the appropriate item of the Schedule I applicable to the vehicles is item No. 4 and not item No. 6. In reply to the show cause notice the petitioner did not assail the aforementioned factual position but only harped on the fact that the demand of additional tax is under challenge before the High Court. Considering the reply of the petitioner the Taxing Officer levied penalty for default in payment of the tax due at twice the tax due as provided u/s 13. Therefore there was no illegality or infirmity in the order passed. The opp. parties contend that the grounds urged and the contentions raised by the petitioner were duly considered and on being satisfied that there was no merit in the appeals and the revisions filed by the petitioner the orders as per Annexures 2 and 4 dismissing the appeals and revisions were passed. 5. Shri Y. S. N. Murty, learned counsel for the petitioner, has strenuously urged that the impugned orders are vitiated due to the erroneous approach of the statutory authorities that any default in payment of tax automatically attracts levy of penalty; they have made no attempt at all to ascertain whether there was bona fide in the actions taken by the petitioner and whether it was guilty of contumacious conduct. In the absence of such a finding, the orders levying penalty, according to Shri Murty, are unsustainable. Hs has placed reliance on the decision of the Supreme Court reported in Hindustan Steel Ltd. Vs. State of Orissa, Shri Murty prayed that the case should be remitted to the R. T. 0. for reconsideration and for fresh disposal. 6. Learned Standing Counsel urged that is the facts and circumstances of the case there is no scope for interfering with the impugned orders and there is no necessity for remitting the cases for fresh consideration. According to him, the petitioner has not made out any such case and in the facts and circumstances there was no scope for making out a case that it was under a bona fide impression that these vehicles are private service vehicles and tax is to be paid on that basis. 7. Before considering the rival contentions raised on behalf of the parties we may notice some relevant statutory provisions. Section 2(i) of the Act provides that tax means the tax leviable under the Act. 7. Before considering the rival contentions raised on behalf of the parties we may notice some relevant statutory provisions. Section 2(i) of the Act provides that tax means the tax leviable under the Act. Section 3 lays down, inter alia, that subject to the other provisions of th3 Act there shall be levied on every motor vehicle used or kept for use within the State tax at the rate specified in Schedule I. Section 3-A provides for levy of additional tax on every public service vehicle and goods carriage. In Section 4(i) it is laid down, inter alia that the tax shall be paid in advance within such time and such manner as may be prescribed, to the taxing officer by the registered owner or person having possession or control of the vehicle. Section 6 makes provision regarding payment of differential tax. In Sub-Section (1) it is laid down that when any motor vehicle in respect of which tax for any period has been paid, is altered during such period or proposed to be used during such period in such manner as to cause the vehicle to become a vehicle in respect of which higher rate of tax is payable, the registered owner or the person having possession or control of the vehicle shall pay to the taxing officer differential tax of a sum which is equal to the difference between the tax already paid and the tax which is payable in respect of such vehicle for the period for which the higher rate of tax is payable in consequence of the alteration or proposed user, as the case may be. In Explanation II of the section it is laid down that a motor vehicle shall be deemed to have been altered if there is a change in its construction, design or adaptation or it there is a change in the manner of its actual user irrespective of the fact as to whether such alteration has or has not been taken notice by the registering authority u/s 52 of the Motor Vehicles Act. Section 13 which contains provision for imposition of penalty lays down in Sub-Section (1) that if the tax due in respect of any motor vehicle has not been paid as specified in Sections 4 and 4-A the registered owner of the person having possession or control thereof, shall, in addition to payment of tax due, be liable to pay penalty which may extend to twice the tax due in respect of that vehicle to be levied by such officer by order in writing and in such manner as may be prescribed. Sub-Section2) of the said section provides that the penalty imposed under Sub-section (1) shall be without prejudice to the liability, if any. that may be incurred under any of the other provisions of the Act or the Rules made thereunder but no such penalty shall be imposed without giving the party concerned a reasonable opportunity of being heard. Item 4 of Schedule prescribes the tax in respect of motor vehicles plying for hire and used for conveyance of persons or passengers including motor cabs whereas item 6 of the said Schedule makes provision for payment of tax of motor vehicles other than those liable to tax under the foregoing provisions of the Schedule. Section 2(33) of the Motor Vehicles Act, 1988 defines "private service vehicle" to mean a motor vehicle constructed or adopted to carry more than six persons excluding the driver and ordinarily used by or on behalf of the owner of such vehicle for the purpose of carrying persons for, or in connection with his trade or business otherwise than for hire or reward but does not include a motor vehicle used for public purposes. "Public service vehicle" is defined in Section 2(35) to mean any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward and includes a maxi-cab, a motor-cab, contract carriage and stage carriage. "Public service vehicle" is defined in Section 2(35) to mean any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward and includes a maxi-cab, a motor-cab, contract carriage and stage carriage. Section 2(7) defines "contract carriage" as a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or on agreed rate or sum (a) on a time basis, whether or not with reference to any route or distance or (b) from one point to another and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, and includes (i) a maxi-cab, and (ii) a motor-cab notwithstanding that separate fares are charged for its passengers. 8. In the case at hand, as discussed earlier, the vehicles in question were detected on different dates carrying persons to their destinations on collection of hire not charges and it was ascertained on enquiry that different rates of tax had been prescribed under order of concerned authority of the petitioner-company. In such circumstances, there is no escape from the position that vehicles in question were used as contract carriages during the concerned period. it follows that tax in respect of the said vehicles was to be paid under item No 4 of Schedule I while payment was made under item No. 6 of the said Schedule, It is therefore manifest that the tax due in respect of the vehicles had not been paid as per the statutory provision. 9. u/s 13 of the Act non-payment of tax due in respect of a motor vehicle attracts liability for penalty. This ingredient is apparently satisfied in the circumstances of the case. But the question that arises for consideration is whether penalty is to be levied in any case of non-payment of tax due. The Apex Court in the case of Hindustan Steel Ltd. Vs. This ingredient is apparently satisfied in the circumstances of the case. But the question that arises for consideration is whether penalty is to be levied in any case of non-payment of tax due. The Apex Court in the case of Hindustan Steel Ltd. Vs. State of Orissa, ruled ; "Under the Act penalty may be imposed for failure to register as a dealer; Section 9(1) read with Section 23(1 )(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration or all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute, Those in charge of affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer. Granting that they erred, no case for imposing penalty was made out." This principle was noticed by the Court in M/s. N.M. Goel and Co. Vs. Sales Tax Officer, Rajnandgaon and another, . In the case of Akbar Badrudin Jiwani of Bombay Vs. Collector of Customs, Bombay, considering the questing of levy of penalty the Court observed that even if it is taken for argument's sake that the imported article is marble falling within Entry 62 of Appendix 2, the burden lies on the Customs Department to show that the appellant has acted dishonestly or contumaciously or with the deliberation, or distinct object of breaching the law. Referring to the principle laid down in Hindustan Steel Ltd. Vs. State of Orissa, and certain other cases, the Court observed that even if it is assumed for argument's sake that the stone slabs imported for home consumption are marble, still in view of the finding arrived at by the Appellate Tribunal that the said product was imported on a bona fide belief that it was not marble, the imposition of such a heavy fine is not at all warranted and justifiable. 10. Testing the impugned orders on the touch stone of the principles laid down in the aforementioned decisions, it is manifest that the statutory authorities have proceeded on the footing that since the petitioner failed to pay the tax due it must pay penalty to the tune of twice the tax due. They have not considered whether in the facts and circumstances of the case the petitioner can be said to be guilty of conduct contumacious or dishonest, or having acted' in conscious disregard of its obligation to pay the tax due. As observed by the Supreme Court in Hindustan Steel Ltd. Vs. State of Orissa, penalty will not be imposed merely because it is lawful to do so. Further, even if it is held that the petitioner in the circumstances should pay penalty then the amount has to be determined considering the attending circumstances of the case. The amount of penalty may not be twice the tax due. This position is clear from the words, "Beliable to pay penalty which may extend to twice the tax due in respect of that vehicle" in Sub-Section (1) of Section 13 of the Act . As appears from the discussions in the impugned orders the petitioner-Company in its reply to the show cause notice did not give the requisite particulars nor stated the circumstances in which the tax due was not paid. It merely relied on its challenge to the demand of tax at higher rate. Those litigations are over and demand of additional tax has been upheld by this Court. It merely relied on its challenge to the demand of tax at higher rate. Those litigations are over and demand of additional tax has been upheld by this Court. Taking into account the facts and circumstances of the case it is our considered view that the question of levy of penalty should be reconsidered by the Taxing Officer in accordance with the statutory provisions and keeping in view the discussions in this judgment and the petitioner should be afforded an opportunity to file further show cause if it so likes. 11. Accordingly the writ applications are allowed, the orders passed by the Taxing Officer, the appellate authority and the revisional authority vide Annexures. 1, 2 and 4 are quashed. The matter is remitted to the Taxing Officer for fresh consideration and disposal in accordance with law. He will give an opportunity to the petitioner to file a further show cause if it so likes There will be no order as to costs. P.C. Nayak, J. 12. I agree. Final Result : Allowed