ORDER A. R. TIWARI, J. - At the instance of the Revenue, the Tribunal (Board of Revenue) has stated the case and referred the undernoted question of law arising out of the order dated April 26, 1985, passed by the Tribunal in Second Appeal No. 35-PBR/85, under section 44(1) of the M.P. General Sales Tax Act, 1958 (for short, "the Act"). "Whether, under the facts and circumstances of the case, when the Tribunal had itself come to the conclusion that penalty under section 19(1) of the Madhya Pradesh General Sales Tax Act, 1958 in this case had to be levied and that 'as such penalty under section 19(1) of the Madhya Pradesh General Sales Tax Act, 1958 is upheld', was the Tribunal then justified in setting aside the enhancement in the penalty which was made by the first appellate authority on the ground that the enhancement does not seem to have made on his own volition." 2. Briefly stated, the facts of the case are that the non-applicant-assessee is doing the business mainly in edible oils. It was assessed to sales tax for the period Diwali 1977-78 vide order dated September 29, 1980. Later, the record was examined by Audit Cell on March 25, 1983 when it was discovered that the assessee had indicated wrong totals. It was, therefore, deemed proper that the assessment be reopened under section 19(1) of the Act. The assessee also presented an application on April 1, 1983 saying that it has also found certain totalling mistakes in the account and that the assessment be reopened. Notice in form XVI was issued on April 7, 1983 and on reassessment, the assessing authority found that the assessee was required to pay additional amount and additional demand of Rs. 25,709 was raised against the assessee and a penalty amounting to Rs. 5,000 was imposed under section 19(1) of the Act. In the first appeal, the penalty was enhanced to Rs. 12,000. The assessee felt aggrieved by the order of penalty under section 19(1) of the Act. In the second appeal, the Tribunal reduced the amount of penalty to Rs. 5,000 as was initially imposed by the assessing authority. The appeal was, thus, allowed in part to the extent of reduction in the amount of penalty from Rs. 12,000 to Rs. 5,000. The assessee felt aggrieved by the order of penalty under section 19(1) of the Act. In the second appeal, the Tribunal reduced the amount of penalty to Rs. 5,000 as was initially imposed by the assessing authority. The appeal was, thus, allowed in part to the extent of reduction in the amount of penalty from Rs. 12,000 to Rs. 5,000. The department felt dissatisfied by the order of reduction of the penalty and thus, filed an application which was registered as Reference No. 33-PBR/85. This application was allowed on April 26, 1985 and the case was stated and referred the question as noted above. 3. We have heard Shri Piyush Mathur, Deputy Government Advocate for the Revenue and Shri S. C. Bagadiya, learned counsel for the assessee. 4. Penalty is imposable under section 19(1) of the Act. Section 19(1) of the Act as substituted with effect from October 1, 1978 vide Act No. 25 of 1978 empowers the Commissioner to proceed to reassess, within a period of two calendar years from the commencement of such proceedings, the taxable turnover of the dealer and to direct, where the omission leading to such reassessment is attributable to the dealer, to pay by way of penalty in addition to the amount of tax so assessed a sum not exceeding that amount. The aforesaid provision was substituted with effect from October 1, 1978. Earlier this provision, which was in operation from November 1, 1964 to September 30, 1978 did not envisage anything like omission attributable to the dealer. In the old provision, it was provided that the Commissioner may reassess the tax payable by such dealer and the Commissioner may direct that the dealer shall pay by way of penalty in addition to the amount of tax so assessed a sum not exceeding that amount. The significant change in the new provision vis-a-vis the old one is that now imposition of penalty depends on the conclusion about omission attributable to the dealer. These words were not available in the old provision operative till September 30, 1978. 5. It is trite law that the assessing authority is required to exercise quasi-judicial discretion in the matter of penalty. The discretion cannot be arbitrary. 6. Lord Mansfield stated elegantly in John Wilkes case (1770) 4 Burr 2528 that discretion meant sound discretion guided by law and governed by rules, not by humour. 5. It is trite law that the assessing authority is required to exercise quasi-judicial discretion in the matter of penalty. The discretion cannot be arbitrary. 6. Lord Mansfield stated elegantly in John Wilkes case (1770) 4 Burr 2528 that discretion meant sound discretion guided by law and governed by rules, not by humour. The discretion cannot be arbitrary or capricious. 7. In the case on hand, it is noticed that the assessee itself filed an application requesting for reopening of the case. This itself demonstrates that the rigour of penalty merited to be softened. The appellate authority or the Tribunal has full jurisdiction to slash the amount of penalty if it is found arbitrary or excessive. The Tribunal while reducing the amount of penalty, observed as under : "When any penalty is imposed under section 19(1) or under section 43(1) the assessing authority has to exercise equal judicial discretion. The assessing authority, namely, the Regional Assistant Commissioner has imposed a penalty of Rs. 5,000 but the Appellate Deputy Commissioner has increased it to Rs. 12,000. But this enhancement does not seem to have been made on his own volition. Order-sheet dated July 19, 1984 refers to the Commissioner's letter No. ST/5-B/15-K/84/5299 dated May 3, 1984 where the Appellate Deputy Commissioner was asked in connection with the imposition of penalty. When the Commissioner writes such letter it may be presumed that it may be further enhanced. The Appellate Deputy Commissioners are subordinate to the Commissioner and when any action for enhancement in penalty is taken under a direction of a superior authority the judicial discretion gets inhibited and when any penalty is enhanced under such executive instructions it cannot be said that the appellate authority had acted on his own volition or exercised his own discretion. Therefore, under such circumstances enhancement is set aside." 8. It is thus, clear that the first appellate authority enhanced the amount of penalty not on his own volition, but in accordance with the letter issued by the superior authority, i.e., the Commissioner. This had vitiated the order of enhancement and manifested that the discretion was not judicially exercised and enhancement was not on his own volition. 9. In the result, we are satisfied that the Tribunal was justified in setting aside the enhancement in the penalty ordered by the first appellate authority on the ground that it was not made on his own volition. 10. 9. In the result, we are satisfied that the Tribunal was justified in setting aside the enhancement in the penalty ordered by the first appellate authority on the ground that it was not made on his own volition. 10. Ex consequenti, we answer the question in the affirmative, i.e., against the Revenue and in favour of the assessee. 11. The reference stands disposed of accordingly, but without any orders as to costs. 12. A copy of this order shall be transmitted to the Tribunal under the seal and signature of Registrar of this Court in terms of section 44(5) of the Act. Reference answered in the affirmative.