JUDGMENT : A. Pasayat, J. - Petitioner calls in question legality of order passed by the Sales-tax Officer, Cuttack I West Circle (opp. party No. 2) imposing penalty u/s 13 (8) of the Orissa Sates Tax Act, 1947 (in short, 'the Act'). 2. Background facts giving rise to filing of the present writ application are essentially as follows : A demand notice for payment of Rs. 3,81,959.00 being tax/ penalty levied for the assessment year 1888-83 was served on the petitioner on 23-6-1992. Since there was default in payment, notice was issued to it to show cause as to why penalty shall not be imposed u/s 13 (5) of the Act as according to the Sales-tax Officer, there was failure to produce evidence of payment during prescribed time. Reply was submitted by the petitioner which was not considered satisfactory, and in view of non-payment, it was held that imposition of penalty was called for and accordingly, a sum of Rs. 38,200/-was imposed as penalty. 3. The learned counsel for petitioner submitted that in the meantime the assessments made u/s 12 (8) of the Act and under Rule 5 of the Orissa Additional Sales-tax Rules, 1975 (in short, the Additional Rules')were nulified, and therefore, question of imposition of penalty does not arise. Reference in this context is made to the order of the Full Bench of Orissa Sales-tax Tribunal (in short, 'the Tribunal') dated 9-12-1394, It is also submitted that the order imposing penalty did not consider the explanation of the petitioner, and did not even indicate any reason as to why the explanation offered for non-payment was not considered sstisfactory. Learned Standing Counsel for the Revenue with reference to records submitted 'that during pendency of the appeal petitioner was directed to pay certain amounts which was not done, and therefore, imposition of penalty was called for. Since there was no payment, that itself attracted levy of penalty and indication of reason was not necessary. Additionally it is submitted that the impugned order is revisable in terms of Section 23 (4) (a) of the Act. 4. Though there is substance in the plea of learned counsel for the Revenue that the petitioner should have moved the revisional authority for interference, we find that the imposition of penalty was made on 31-12-1994. and the order of the Tribunal was issued to the petitioner on 10-1-1995. 4. Though there is substance in the plea of learned counsel for the Revenue that the petitioner should have moved the revisional authority for interference, we find that the imposition of penalty was made on 31-12-1994. and the order of the Tribunal was issued to the petitioner on 10-1-1995. In other words, the Sales-tax Officer did not have the benefit of considering the appellate order passed by the Tribunal. Therefore, we are entertaining the writ application. 5. A brief reference to the third proviso to Section 13 (5) of the Act is necessary which reads as follows : "Provided also that where as a result of an order passed in an appeal, revision or reference- (i) the assessment with or without penalty u/s 12 or 12-A; or (ii) the penalty imposed under Sub-section (3) of Section 11 or under Sub-section (3) of Section 9-B; or (ii-a) the penalty imposed under Sub-section (5) of Section 13-AA; or (iii) the interest charged under Sub-section (4-s) of Section 12, (a) is annulled, the penalty imposed under this sub-section shall be refunded; or (b) is reduced, the penalty imposed under this subsection shall be proportionately reduced and the excess amount shall be refunded, and all such refunds shall be made in the manner provided u/s 14." Obviously when an assessment relating to tax/penalty/nterest, is nullified/varied, third proviso to Section 13 (5) of the Act comes into operation. In view of the assertion of petitioner that the demand has been nullified, and the third proviso to Section 13 (5) of the Act operates, we think It necessary to remit the matter back to the Sales-tax Officer concerned to consider applicability of the third proviso to Section 13 (5) of the Act taking into consideration the order of the Tribunal. 6. So far as question whether there is necessity to record reasons, it has to be noted that levy of penalty is not automatic, whenever there is non-payment of demanded tax within prescribed time. The expression 'may direct' in Section 13 (5) of the Act shows that the imposition of penalty for non-payment of tax in time is not mandatory but discretionary. Although as to how this discretion is to be exercised has not been indicated in the provision, it is clear that it must be exercised judiciously and not arbitrarily. The expression 'may direct' in Section 13 (5) of the Act shows that the imposition of penalty for non-payment of tax in time is not mandatory but discretionary. Although as to how this discretion is to be exercised has not been indicated in the provision, it is clear that it must be exercised judiciously and not arbitrarily. Discretion is a science of understanding to discern between falsity and truth, between right and wrong, between shadow and substance, between equity and colourable glosses and pretences and not to do an act according to one's will and privates affections. The discretion of a statutory body is never unfettered. It is a discretion which is to be exercised according to law. That means at least this the statutory body must be guided by relevant considerations and not by irrelevant. If its decision is influenced by extraneous considerations which it ought not to have taken into account, the decision cannot stand. No matter that the statutory body may have acted in good faith, nevertheless the decision will be set aside. The position was stated succinctly by Lord Denning in Breen v. Amalgamated Engineering Union : (1971) 2 QB 175. Discretion must be exercised honestly and in the spirit of the statute. It is not to be arbitrary, vague and fanciful but legal and regular; to be exercised not capriciously but on judicial grounds and for substantial reasons. Acting under Section13 (5) of the Act, the authority has to consider the facts and circumstances of each case. There may be cases where the authority may not impose penalty. There must be objective determination. It is for the assessee to bring to the notice of the authority the circumstances for which payment was not made. These have to be considered and reasons have to be assigned as to why they are not accepted as plausible and/or satisfactory. Reasons are the links between-the materials on which certain conclusions are based and the actual conclusions. The giving of reasons is one of the fundamentals of good administration. The requirement of furnishing reasons is a shackle on acting arbitrarily and whimsically. Even when the statute does not impose such an obligation, it is necessary for the quasi-judicial authority to record reasons as it is the only visible safe-guard against possible injustice and arbitrariness. The giving of reasons is one of the fundamentals of good administration. The requirement of furnishing reasons is a shackle on acting arbitrarily and whimsically. Even when the statute does not impose such an obligation, it is necessary for the quasi-judicial authority to record reasons as it is the only visible safe-guard against possible injustice and arbitrariness. They disclose how the mind is applied to the subject-matter for a decision, whether it is considered purely administrative or quasi-judicial. They should reveal a rational nexus between the facts and the conclusions reached. Reasons if given substitute objectivity for subjectivity. There fore, the authority while adjudicating the question whether penalty is to be imposed has to record reasons, if it is not done, the order becomes vulnerable. The writ application is disposed of accordingly. R.K. Dash, J. 7. I agree.