Govinda Bhat, J.
1. These two writ petitions preferred by an assessee under the Mysore Sales Tax Act, 1957, are directed against the orders levying penalty under section 18-A of the Act.
2. The assessee is a dealer manufacturing castings and is styled as Ganesh Foundry. It was assessed to tax for the period 1st April, 1963, to 31st March, 1964, by an assessment order made on 11th April, 1967, levying tax on its turnover at the rate of four per cent. The assessee which is a registered dealer had collected tax from its customers at four per cent. The assessee preferred an appeal before the Deputy Commissioner of Commercial Taxes, Bangalore Division, Bangalore, against the said assessment order contending that the goods in question are not liable to tax at the rate of four per cent. but only at two per cent. That contention found favour with the appellate authority and the assessee's turnover was assessed at the rate of two per cent. The order of the appellate authority was made sometime in October, 1967.
3. During the period from 1st April, 1964, to 31st March, 1965, the assessee had collected tax from its customers at the rate of four per cent. But, by the time the assessment order came to be passed, the Deputy Commissioner in the assessment relating to the previous year had held that the goods in question were liable to be taxed only at the rate of two per cent. Following the decision of the appellate authority, the Commercial Tax Officer by his order dated 10th January, 1970, assessed the petitioner's turnover for the year 1964-65 at two per cent.
4. Since the petitioner had collected tax at the rate of four per cent., the assessing authority has levied penalty under section 18-A of the Act equal to the excess amount of tax collected on the ground that it has contravened the provisions of section 18(1) of the Act. Aggrieved by the orders levying penalty, the assessee has preferred the above writ petitions.
5. Sri K. Srinivasan, learned counsel for the petitioner assesses relying on the decision in V. B. Patil v. Commercial Tax Officer, Haveri, and Others ( 25 S.T.C. 449), submitted that since the goods in question were exigible to tax only at the rate of two per cent. any excess collection made by the dealer does not amount to collection of any amount by the dealer by way of tax. He further submitted that the order under section 18-A must be a speaking order giving reasons for imposing penalty and the impugned orders in question cannot be considered as speaking orders since they give no reasons for imposing the penalties.
6. The second ground urged by Sri K. Srinivasan, in our opinion, is well-founded. It is not obligatory to levy penalty under section 18-A of the Act wherever there is contravention of the provisions of sub-section (1) or sub-section (2) of section 18, however technical the contravention may be. The authority imposing penalty has to consider the circumstances in which the alleged contravention has taken place.
7. In the instant case, there was a bona fide doubt as to the rate of tax chargeable on the goods in question. In fact, the assessing authority when he made the assessment order for the year 1963-64 on 11th April, 1967, had held that the goods are liable to tax at four per cent. The petitioner had made collection at four per cent. It was only on appeal to the appellate authority that the rate was reduced to two per cent. If the petitioner had collected tax at two per cent. but the assessing authority and the appellate authority had held that tax is chargeable at four per cent., the assessee would be left without any means to collect the deficit tax from the customers. These are circumstances which the authority exercising powers under section 18 has to take into consideration before levying penalty. What is the amount of penalty that should be levied would also depend upon the facts and circumstances of each case. Without considering the circumstances under which the collection was made, the assessing authority could not have straightaway levied penalty under section 18-A equal to the excess amount collected by it.
8. Since the impugned orders are liable to be quashed on the second ground urged by the learned counsel, it is unnecessary for the purpose of these two cases to pronounce on the correctness of the first ground urged by the learned counsel for the petitioner. That question is left open.
9. In the result, these writ petitions are allowed and the impugned orders so far as they levy penalty are hereby quashed. No costs.
10. Petitions allowed.