JUDGMENT A. K. GANGULY, C.J. : All these five writ petitions were heard together as common questions of fact and law are involved. This judgment decides all these cases. In all these writ peti¬tions, the show cause notices dated 15.9.2003 for imposing penal¬ty under the Central Sales Tax (Orissa) Rules, 1957 and the orders dated 30.9.2003 by which penalty was imposed for non-compliance with the notices dated 15.9.2003 are challenged. 2. The main ground of challenge is that such levy of penalty is in violation of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as ‘SICA’) and also in utter disregard of an interim order dated 8.12.2003 which was passed by this Hon’ble Court in W.P.(C) No.11691/03. 3. The relevant facts of the case are discussed below : The petitioner-company M/s. Balasore Alloys Limited, former¬ly known as Ispat Alloys Limited, is a registered company under the Companies Act. Its name has been registered as a dealer under the Orissa Sales Tax Act, 1947 (in short, ‘OST Act’) and also under the Central Sales Tax Act, 1956 (in short, ‘CST Act’). The said company was assessed under the CST Act for the assessment year 1997-98 and tax payable was assessed at Rs.1,02,73,034/-. The payment of the same was deferred for a period of 5 years in view of the provisions of the IPR, 1992 and it became payable on and from 1.3.2003. Petitioner’s case is that its Auditors while finalizing its audited accounts for the period ending 30.9.2002 reported that it has become a sick industrial company. In view of such report, the petitioner company filed a reference application to the Board of Industrial and Financial Reconstruction (hereinafter referred to as the ‘BIFR’) for registration of its case under Section 15(1) of SICA. Thereafter on 9th May, 2003, the Registrar, BIFR inti¬mated the petitioner company that the reference received from the petitioner-company stands registered as Case No.217/03. The peti¬tioner - company intimated the Sales Tax Officer, Balasore Circle vide its communication dated 26.5.2003 that it has been regis¬tered as a sick company under Section 15 of SICA. A copy of the reference application made to the BIFR was also filed as enclo¬sure to such communication. The peti¬tioner - company intimated the Sales Tax Officer, Balasore Circle vide its communication dated 26.5.2003 that it has been regis¬tered as a sick company under Section 15 of SICA. A copy of the reference application made to the BIFR was also filed as enclo¬sure to such communication. But the Sales Tax Officer, Balasore Circle - opposite party No.3 sought to recover the arrear dues from the petitioner company by issuing an attachment order di¬recting the petitioner company to deposit an amount of Rs.2,27,68,600/- for the years 1995-96 to 1997-98 and 1999-2000 respectively within seven days. 4. Challenging the said order of attachment W.P.(C) No.6549/03 was filed by the petitioner in this court on the ground that issuance of the aforesaid attachment order is prohib¬ited in view of the provisions of Section 22 of SICA. On that writ petition, a Division Bench of this Court passed the follow¬ing order on 26.8.2003 : “It is stated that attachment notice has been issued attaching the bank account of the petitioner for recovery of Rs.2,27,68,600/- and a sum of rupees one crore and odd has al¬ready been recovered. This matter will be listed on Friday (29.8.2003) for order as prayed for by Mr. Ashok Mohanty. Till further orders, no further recovery will be made from the Bank accounts of the petitioner pursuant to the impugned attachment notice.” 5. The grievance of the petitioner is that despite the said order, opposite party No.3 issued a show cause notice under Rule 16(1) of the CST (Orissa) Rules, 1957 on the petitioner company seeking to recover the arrear dues of Rs.1,02,73,034/- for the assessment year 1997-98 by 29.9.2003 failing which it was stipulated that the maximum penalty of 50% will be imposed under Rule 16(2) of the CST (Orissa) Rules, 1957. The said notice is impugned in this group of cases. 6. In answer to the said show-cause notice, the petitioner filed its reply on 29.9.2003. In the said reply it was pointed out that all ferro alloys companies in the country were going through a period of financial crunch and the petitioner suffered a financial a loss of 80 crores. Thereafter the market situation slightly improved from October, 2003 and the petitioner company had paid an amount of Rs.4.67 crores as against Rs.1.51 crores of the previous years and the petitioner was also paying the current taxes. Thereafter the market situation slightly improved from October, 2003 and the petitioner company had paid an amount of Rs.4.67 crores as against Rs.1.51 crores of the previous years and the petitioner was also paying the current taxes. The petitioner company had become sick and made a refer¬ence to the BIFR and this Hon’ble Court by its order dated 29.8.2003 stayed recovery of the dues from the petitioner. The petitioner’s case is that despite the same, the Sales Tax Offi¬cer, Balasore Circle passed the impugned order directing the petitioner to pay a penalty of Rs.51,36,517/-. 7. On 10.11.2003 this writ petition was filed and 8.12.2003 a Division Bench of this Court stayed the proceedings for recovery of the tax dues and stayed the impugned order dated 30.9.2003. Thereafter between 30.6.2004 and 29.1.2005 the sales tax dues which were sought to be recovered have been paid in instalments by the petitioner company. On 8.2.2006 BIFR disposed of the proceedings pending before it in Case No.217 of 2003 with the observation that the net worth of the petitioner company has become positive on and from 30.9.2005. 8. On these facts, the submission of the petitioner-compa¬ny is that its application dated 21.4.2003 for reference under Section 15(1) of SICA was registered on 9.5.2003 and the said fact was communicated to the Sales Tax officer on 26.5.2003. On the registration of the application of the petitioner company under Section 15 of the SICA, an enquiry under Section 16 of SICA commenced and from that time all actions against the assets of the petitioner company should remain suspended in view of the provisions of Section 22(1) of SICA. Therefore, the petitioner’s contention is that on and from 9.5.2003 all recovery proceedings against the petitioner company stood statutorily suspended and the recovery of dues by the sales tax authorities also come under such suspension order. The learned counsel further submitted that no consent was obtained by the Sales Tax Officer from the BIFR to proceed with the recovery proceedings. As such the notice dated 15.9.2003 for recovery of the arrear dues was issued in violation of Section 22 of SICA. Therefore, the order imposing penalty dated 30.9.2003 is liable to be quashed. It was also stated that issuance of the said notice for recovery was in clear disregard of the order of this Court dated 26.8.2003. Therefore, the recov¬ery and penalty proceedings are non-est. 9. Therefore, the order imposing penalty dated 30.9.2003 is liable to be quashed. It was also stated that issuance of the said notice for recovery was in clear disregard of the order of this Court dated 26.8.2003. Therefore, the recov¬ery and penalty proceedings are non-est. 9. It was also submitted that the power to impose penalty under Rule 16(2) of the CST (Orissa) Rules, 1957 is a discretionary power vested on the authority and in the instant case as soon as the petitioner got the show cause notice dated 15.9.2003, it gave its reply on 29.9.2003 contending, inter alia, that penalty should not be levied because of pendency of the reference application before the BIFR and also in view of the interim order dated 28.6.2003 passed by this Hon’ble Court. It was submitted that in the context of these facts the exercise of power by a public authority of imposing penalty is unreasonable and arbitrary. 10. Learned counsel for the Revenue on the other hand submitted that in the instant case the reference application of the petitioner company was registered on 9.5.2003 and 8.2.2006 the BIFR disposed of the said proceedings holding that the assets of the company has become positive. The Revenue contended that before registration, the petitioner cannot claim any protection. In this case, the period of deferment of payment of tax under the IPR ended on 1.4.2003. The Revenue argued that between 1.4.2003 and 9.5.2003, the petitioner company was not having any protec¬tion. In answer to the plea of the petitioner that recovery proceedings cannot be initiated, the learned counsel for the Revenue submitted that the effect of Section 22 of SICA is to suspend the recovery proceeding, but the liability of the peti¬tioner-company is not wiped out in view of such suspension. It was also urged that in view of Rule 16(2) of the CST (Orissa) Rules, if on the date fixed under Sub-rule (1), the dealer has not paid the amount due or has failed to make the advance pay¬ment, the Commissioner may impose a penalty not exceeding 1 1/2 of the total dues. Learned counsel further contended that in view of the aforesaid provision, liability arises from the moment the dues are not paid. On such liability, Section 22 of SICA does not have any effect. Section 22 merely suspends the period of recovery. Learned counsel further contended that in view of the aforesaid provision, liability arises from the moment the dues are not paid. On such liability, Section 22 of SICA does not have any effect. Section 22 merely suspends the period of recovery. The learned counsel further relied on proviso to Rule 16(3) of the aforesaid Rules in order to say that even when an appeal or revision or reference is preferred, the interest on tax together with penalty would become payable, if ultimately tax and penalty is found due from the dealer. It was submitted that in view of the aforesaid statutory provision, there was no ille¬gality in issuing the notice to show cause against imposition of penalty and ultimately in the imposition of penalty. Learned counsel further submitted that in view of the provisions of SICA, coercive measures were not taken against the petitioner for recovery of the penalty imposed. But once the proceedings under SICA are over, there is no bar to recover the penalty and/or the tax dues. It has also been submitted that in the instant case the order imposing penalty was passed after giving opportunity of hearing to the petitioner. Apart from that, in the instant case, the conduct of the dealer in not depositing the tax which it realized from the customers even before commencement of the pro¬ceeding under SICA is a relevant factor in the matter of imposi¬tion of penalty. Considering these facts, penalty has been im¬posed and it cannot be said that the Revenue has exercised its discretion in an arbitrary manner. 11. These are the rival contentions of the parties. 12. While considering the rival contentions, the Court finds that the provision of Section 22 of SICA came up for con¬sideration in various cases and the way the said Section has been construed lends considerable force to the points urged by the petitioner. 13. The admitted position in this case is that the applica¬tion of the petitioner company dated 21.4.2003 for reference under Section 15 of SICA was registered on 9.5.2003 and the said fact was communicated to the Sales Tax authorities by the peti¬tioner on 26.5.2003. 14. Upon receipt of a reference under Section 15 of SICA, the Board under Section 16 thereof, shall make an enquiry as it may deem fit for determining whether any industrial company has become sick. 15. 14. Upon receipt of a reference under Section 15 of SICA, the Board under Section 16 thereof, shall make an enquiry as it may deem fit for determining whether any industrial company has become sick. 15. In the instant case, on receipt of the reference from the petitioners, company under Section 15 of SICA, an enquiry under Section 16 commenced and the question is whether from that time the petitioner is entitled to any protection under Section 22 of SICA. 16. Somewhat similar questions came up for consideration in the case of Gram Panchayat and another v. Shree Vallabh Glass works Limited and others : (1990) 2 SCC 440 . In that case the Gram Panchayat, Salwad and its Chairman initiated coercive pro¬ceedings under Section 129 of the Bombay Village Panchayat Act to recover property tax and some other amount from the respondent-company and it moved the Bombay High Court and the High Court restrained the Gram Panchayat from recovering the amount without the consent of the Board. When the appeal came to the Hon’ble Supreme Court, considering Section 22 of SICA, the Apex Court held that when enquiry under Section 16 of SICA is pending or any scheme under Section 17 thereof is under preparation or consider¬ation by the Board or any appeal under Section 25 is pending, certain proceedings against the company are automatically sus¬pended. In paragraph 10 of the judgment, the learned Judges held that there would be an automatic suspension of the proceedings against the property of the company and it was made clear that as soon as the enquiry under Section 16 is ordered by the Board, various proceedings set out under Sub-section (1) of Section 22 would be deemed to have been suspended. The Court accepted that even though such suspension may be against the principles of equity and the creditors are not allowed to recover their dues, but such creditors may approach the Board for permission to proceed against the company for recovery of the dues and the Board at its discretion may accord approval. If the approval is not granted, the remedy is not extinguished. But as long as an enquiry is pending, a recovery proceeding cannot be initiated and the Supreme Court affirmed the order of the High Court. The recovery proceedings were quashed. 17. If the approval is not granted, the remedy is not extinguished. But as long as an enquiry is pending, a recovery proceeding cannot be initiated and the Supreme Court affirmed the order of the High Court. The recovery proceedings were quashed. 17. In Real Value Appliances Ltd. v. Canara Bank and oth¬ers; (1998) 5 SCC 554 , the Supreme Court held that once a refer¬ence is registered after scrutiny, it is mandatory for the BIFR to conduct an enquiry. In such a situation the legislative intent is to see that no proceeding against the assets are taken before any decision is given by the BIFR. The purpose is to ensure that during such enquiry the company’s assets are not dissipated or sold. If they are sold, it may become difficult for the BIFR later to restore the status quo ante. It was also made clear that the enquiry must be treated as having commenced as soon as the registration of the reference is completed after scrutiny and from that time, action against the assets of the company must remain stayed till final decision is taken by the BIFR. 18. Following the ratio of these decisions, it is clear that the petitioner was entitled to protection under Section 22 of SICA as soon as its reference was duly registered after scru¬tiny and enquiry under Section 16 commenced. 19. In Tata Davy Ltd v. State of Orissa and others : (1997) 6 SCC 669 , Section 22 of SICA again came up for consideration. It was held that the phrase ‘any other law’ in Section 22(1) of SICA, would cover the laws made under the State List. The matter went from this High Court and the Supreme Court specifically held that arrears of sales tax under the OST Act will be covered. In that case, it was held that SICA is a Central Act having been enacted under Entry 54 of List II of the Seventh Schedule to the Consti¬tution for giving effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of Arti¬cle 39 of the Constitution. Therefore, the said Act does not interfere with the right of the State to legislate in respect of the sales tax under Entry 54 of List II of the Seventh Schedule of the Constitution. Therefore, the said Act does not interfere with the right of the State to legislate in respect of the sales tax under Entry 54 of List II of the Seventh Schedule of the Constitution. It was held that the State cannot recover the arrears of sales tax from the petitioner-company without first seeking consent of the Board in that behalf. (see paragraph 14). In Tata Davy Ltd, the ratio of the decision in Shree Vallabh Glass Works Ltd. was reiterated. Learned Judges in Tata Davy Ltd. distinguished the decision in Corromandal Pharmaceuticals report¬ed in (1997) 10 SCC 649 . Learned Judges found that in Corromandal Pharmaceuticals the sick industrial company was permitted to collect the amount of sales tax even after the date of the sanc¬tioned scheme. In that peculiar factual background, the Court held that realization of the said amount cannot be said to be suspended in view of the protection under Section 22. Learned Judges made it clear that the issue which arose in Corromandal did not arise in the case of Vallabh Glass Works. 20. This Court is of the opinion that the decision in Corromandal Pharmaceutical on which reliance has been placed by the Revenue is not attracted here and that decision was distin¬guished by the Apex Court in Tata Davy. 21. In the instant case it is not in dispute that the tax liability has been paid by the petitioner company. But the ques¬tion is only whether it has to pay the penalty. To decide this question perusal of the show cause notice dated 15.9.2003 is very relevant. The said show cause notice is worded as follows : “Notice to show cause against levy of penalty under Rule 16(2) of the Central Sales Tax Rule (O), 1956. No. 9225/CT Dated 15.9.2003 To M/s. Ispat Alloys Ltd., Address - Balgopalpur, Balasore R.C. No.BAC-1330 Payment of demanded dues for the period 97-98 under CST Act. Please take notice that a sum of Rs.1,02,73,034-00 is outstanding against you for the above period. You are hereby required to pay the entire amount by 29.9.2003 failing which maximum penalty of 50% will be imposed on you under Rule 16(2) of the CST(O) Rules without further intimation. Sd. Sales Tax Officer, Balasore Circle, Balasore.” 22. Please take notice that a sum of Rs.1,02,73,034-00 is outstanding against you for the above period. You are hereby required to pay the entire amount by 29.9.2003 failing which maximum penalty of 50% will be imposed on you under Rule 16(2) of the CST(O) Rules without further intimation. Sd. Sales Tax Officer, Balasore Circle, Balasore.” 22. From a perusal of the aforesaid notice, it is clear that the penalty would be imposed on the petitioner company if it failed to pay the amount within 29.9.2003 which was during the period of suspension of its dues under Section 22. Against the said show cause notice the petitioner by its reply dated 29.9.2003 made it clear that the petitioner had gone to the BIFR and its reference has been registered by the BIFR and the case number was also given. Apart from that, the petitioner also stated that it has obtained a stay order from the High Court on 29.8.2003. Therefore, the question is whether in the background of these facts the penalty provision under Rule 16 of CST (Oris¬sa) Rules, 1957 is attracted Rule 16 of the said Rules, which is pertinent in this context, is set out below : “Rule 16. (1) In respect of any amount found payable by a dealer the Commissioner shall serve on the dealer a notice of demand in Form VII and shall fix a date for payment, such date not being less than thirty days from the date of service of the notice and also a date on which the dealer shall produce the receipted challan in proof of payment of such amount. Provided that the Commissioner may, in respect of any particular dealer and for the reasons to be recorded in writing, extend the date of such payment or allow such dealer to pay the tax due and penalty, if any, by instalments. Provided that the Commissioner may, in respect of any particular dealer and for the reasons to be recorded in writing, extend the date of such payment or allow such dealer to pay the tax due and penalty, if any, by instalments. (2) If, on the date fixed under Sub-rule (1) the dealer has not paid the amount due or has failed to produce evidence of payment by the date fixed in the notice in Form VII the Commis¬sioner may impose a penalty not exceeding one-half of the total amount due and serve a notice in Form VII directing the dealer to pay the penalty together with sums previously due by a date to be fixed in the notice and to produce the receipted challan in proof of payment of such amount by a date also to be specified in the said notice. Provided that in cases of continuing default the penalty may be levied in instalments from time to time so however as not to exceed one-half of the total amount of tax due. Provided further that if collection of the sum specified in the notice of demand in Form VII or any part thereof has been stayed in appeal or revision, penalty may be levied in the sum is not paid and proof of such payment is not produced before the Sales Tax Officer within a fortnight after the expiry of the stay period. Explanation. - Where stay of collection until disposal of appeal or revision has been ordered the stay period shall be deemed to have expired on the date of disposal of such appeal or revision and where in such cases the appeal or revision results in a reduction or increase in the sum demanded, a revised notice of demand in Form VII will issue and no penalty shall be levied until expiry of the time-limit specified in the said revised notice. (3) In case a dealer makes default in payment of the tax together with the penalty, if any, in accordance with the notice issue under Sub-rule (1) by the date of expiry of the period al¬lowed under the said sub-rule, he shall be liable to pay interest on the aforesaid amount at the rate of six per centum per annum from the date aforesaid for the first three months and thereafter at the rate of twelve per centum per annum: Provided that where any appeal or revision or reference has been preferred the interest as aforesaid shall be payable from the date specified above on the tax together with the penalty, if any, ultimately found due from the dealer. Provided further that in case the tax together with the penalty, if any, assessed on the dealer is enhanced in such appeal, revision or reference the interest on the excess amount shall be payable from the date by which the dealer is required to make payment of such excess amount.” 23. Here as against the direction upon the petitioner to pay under the provisions of Rule 16 of the said Rules, operates the protection with which the petitioner is armed under Section 22 of SICA. The Court has to remember that the protection of Section 22 of SICA is based on a non obstante clause of a very wide reach. It is worded as : “Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or any other law ...... having effect under the said Act or other law”. The obvious corallary of such a statutory protection is that it will not expose the person protected to penal provision in the absence of clear words to that effect. Here on the other hand, the penal provision confers a discretion on the donee of that power. 24. In this case, in the background of the aforesaid statutory dispensation, the imposition of penalty by the authori¬ties ignoring the legal position under Section 22 of SICA is, to say the least, not a proper exercise of discretion under Rule 16(2) of the said Rules. 25. It is well-known that when discretion is vested on a statutory authority, the same has to be exercised according to law and justice and not according to caprice and whim of the statutory authority. 25. It is well-known that when discretion is vested on a statutory authority, the same has to be exercised according to law and justice and not according to caprice and whim of the statutory authority. Reference in this connection may be given to the decision of this Court in the case of Patnaik & Co (P) Ltd. v. The State of Orissa and others reported in 36 STC 362. In that case this Court was considering the expression “may direct that the dealer..... shall..... pay by way of penalty” occurring in Section 13(5) of OST Act. The said provision is almost identical with the wording of Rule 16(2) of CST (Orissa) Rules where the crucial words are that the “Commissioner may impose a penalty.” 26. Construing the provision of Section 13(5) of the OST Act, a Division Bench of this Court held that the said expression takes within its sweep the power of the Commissioner of not directing payment of such penalty. The Court also held that there may be cases “where the authority may not impose any penalty”. It depends upon the facts and circumstances of each case and there must bean objective determination. However, the onus is on the dealer to bring to the notice of the taxing authority the facts and circumstances under which the tax due was not paid in time. In the instant case, the petitioner brought the facts and circum¬stances to the notice of the authority in its reply to the show cause notice. 27. Similar principles have been reiterated by this Court in the case of Laxmi Polythene Private Limited v. Commissioner of Sales Tax, Orissa and another reported in 105 STC 123. To the similar effect is the finding of this Court in the case of Indian Paints and Chemicals (P) Ltd. v. Sales Tax Officer, Cuttack Central I Circle, reported in 109 STC 227 (See paragraph 8, at page 231). 28. How discretion has to be exercised by the statutory authorities was stated more than a century ago by Lord Halsbury in Sharpe v. Wakefield : 1891 Appeal Cases 173 (HL) and those formulations have become classic. 28. How discretion has to be exercised by the statutory authorities was stated more than a century ago by Lord Halsbury in Sharpe v. Wakefield : 1891 Appeal Cases 173 (HL) and those formulations have become classic. The inimitable words of the learned Law Lord are that discretion has to be exercised “accord¬ing to the rules of reason and justice, not according to private opinion; according to law and not humour; it is to be not arbi¬trary, vague and fanciful, but legal and regular.” 29. These principles have been accepted by the Apex Court in a large number of cases. (See 1979 (2) SCC 80 , paragraph 11, page 86). In the case of M/s. Hindusthan Ltd. v. The State of Orissa ( AIR 1970 SC 253 ), the Apex Court held that “penalty will not 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 of all the relevant circumstances”. 30. Going by these principles, this Court comes to the conclusion that when the protection under Section 22 of SICA allows the petitioner company not to pay the demanded tax till the protection lasts, the imposition of ‘penalty’ for non-payment of the tax during that period of statutory protection is not a valid exercise of power under Rule 16 (2) of the said Rules. So the imposition of penalty in the present case cannot be sustained in law. 31. In the context of the aforesaid statutory provision, the decisions on which the learned counsel for the Revenue relied are not applicable to the facts of the case. Reliance was placed on the decision in the case of Haji Lal Mohd. Biri Works v. The State of U.P. and others reported in (32) STC 496. In that case, the Court was considering the question of interest which is to be paid under U.P. Sales Tax Act. Learned Judges held that the li¬ability to pay interest under Section 8(1-A) is automatically arising by operation of law and there is nothing in the language of Section 8(1-A) which prevents the running of interest because of the operation of any stay order. Learned Judges held that the li¬ability to pay interest under Section 8(1-A) is automatically arising by operation of law and there is nothing in the language of Section 8(1-A) which prevents the running of interest because of the operation of any stay order. The Court further held that the liability to pay interest is statutory and the Sales Tax Officer has no discretion to grant any exemption from the payment of interest. 32. Those provisions have no application to the fact situa¬tion in this case. Here, the statutory dispensation is also totally different. In Haji Lal Mohd. (supra) the Sales Tax Offi¬cer has no discretion to grant any exemption from the payment of interest, but here the imposition of penalty is discretionary. Apart from that the statutory protection under Section 22 of SICA which is available to the petitioner is totally absent in Haji Lal Mohd. (supra). 33. The other decision which was cited by the learned coun¬sel for the Revenue was rendered in the case of Calcutta Jute Manufacturing Co. and another v. Commercial Tax Officer and others, reported in 106 STC 433. In that case, Calcutta Jute Manufacturing Co. filed the writ petition in the High Court challenging the validity of Section 6B of the Bengal Finance (Sales Tax) Act, 1941, imposing tax on the annual aggregate gross turnover of a dealer whose gross turnover exceeded Rs.50 lakhs. The Court after admitting the writ petition granted interim injunction against the Government from collecting sales tax. Ultimately the writ petition was dismissed and the appellants paid the tax thereafter. Demands were made on the appellants under Section 10A for interest. The said demand was challenged before the West Bengal Taxation Tribunal and the Tribunal upheld the demand. In the context of those facts learned Judges in paragraph 16 held that the tax amount which the appellants should have paid as per section 6B remained with them for the entire period and the State to which the tax amount should have neces¬sarily gone was not able to utilize it for public purpose. When the appellants had the advantage of keeping the amount with¬out paying it to the State Exchequer the State was prevented from recovering the amount from the assessee. Learned Judges held that in that situation the State cannot be ultimately prevented from earning interest since no act of Court can prejudice any party. When the appellants had the advantage of keeping the amount with¬out paying it to the State Exchequer the State was prevented from recovering the amount from the assessee. Learned Judges held that in that situation the State cannot be ultimately prevented from earning interest since no act of Court can prejudice any party. In the instant case that is not the position. Here, there is a question of discretion to be exercised by the taxing authority in the matter of imposition of penalty. Apart from that, there is a fundamental difference between interest and penalty. Here in view of the statutory protection the petitioners were not paying their tax dues. So during such period of protection if the petitioner do not deposit the demanded tax, in the eyes of law it cannot be said that they ‘failed to pay’. In a situation where there is statutory protection under a law which has overriding effect over the law under which payment is demanded, there is no failure to pay on the part of the petitioners, so no penalty can be imposed. 34. The decision in the case of Andhra Cement Company Ltd. v. Government of A.P. and others, reported in (1993) 89 STC 124 also does not support the case of the Revenue. In that case, the Court held that the petitioner was a chronic defaulter for pay¬ment of tax and it made all attempts to evade payment of revenue. As such, the Court held that the conduct of the petitioner disentitled it to any relief. That decision was on the facts of that case and therefore, it has no presidential value. In so far as Section 22 of SICA is concerned, the only observation was made in para 8 at page 127 to the extent that SICA does not permit a company to withhold payment of taxes on sales subsequent to the proceedings under the said Act. In the instant case, the claim of the Revenue for payment of taxes is not on a period which is subsequent to the proceedings under SICA. Rather the demand on the petitioner company to pay was made at a point of time when the protection under Section 22 of SICA was continuing. There¬fore, the decision in Andhra Cement Company Ltd. has no bearing to the present case. 35. Rather the demand on the petitioner company to pay was made at a point of time when the protection under Section 22 of SICA was continuing. There¬fore, the decision in Andhra Cement Company Ltd. has no bearing to the present case. 35. Learned counsel for the Revenue also placed reliance on the decision in the case of Vijay Mills Co. Ltd and others v. State of Gujarat and others reported in 78 STC 198. In that case, learned Judges of Gujarat High Court held that Section 22 of SICA does not bar initiation of any criminal prosecution against the Company. This Court is in agreement with the said view of the Gujarat High Court. But here, we are not concerned with the question of initiation of criminal proceeding against the Compa¬ny. Therefore, the decision in the case of Vijay Mills Co. Ltd. (supra) has no application to the facts of this case. The deci¬sion of the Hon’ble Supreme Court in Corromondal (105 STC 327) has already been distinguished. In fact Tata Davy (supra), which has been followed, has distinguished Corromandal. 36. For the reasons discussed above, the Court cannot uphold the order of imposition of penalty on the petitioner-Company for their alleged failure to pay tax at the relevant point of time when by virtue of statutory protection given to it under Section 22 of SICA, the petitioner Company cannot be called upon to pay. Therefore, the very basis of imposition of penalty, which is the failure of the petitioner company to pay being not there, the order for payment of penalty cannot be sustained. As such, both the show-cause notice for imposing penalty and the order of imposition of penalty in all these writ petitions are quashed. 37. The writ petitions are allowed to extent indicated above. There will be no order as to costs. I. MAHANTY, J. I agree. Petition allowed to the extent indicated.