As per the case facts a company engaged in pipe coating contracts opted to pay lump-sum tax at under the Gujarat Sales Tax Act treating the work as a civil ... works contract The Assessing Officer determined that the work was not a civil works contract and fell under a different category levying higher tax interest and penalty The First Appellate Authority and the Tribunal upheld this decision The High Court set aside the penalty and interest The appeal to the Supreme Court was brought by the State challenging the High Court's decision to remove the penalty and interest The question arose whether the High Court was correct in setting aside the penalty and interest levied under the relevant sections of the Act especially when the assessee's belief about the tax rate was bonafide Finally the Supreme Court found the High Court's decision to set aside the penalty and interest unsustainable It noted that the payment of tax by the assessee or their bonafide belief did not justify deleting the penalty and interest distinguishing the case from the Hindustan Steel Ltd precedent and reaffirming the applicability of the Shriram Mutual Fund case