2017 (4) TMI 1322 - HC - VAT and Sales Tax

Penalty u/s 34 12 of the VAT Act - Tribunal has deleted the said penalty levied though the learned Tribunal confirmed the levy of tax under Entry 87 of Schedule-II to the VAT Act and also confirmed the interest - whether in the facts and circumstances of the case the learned Tribunal is justified in deleting the penalty levied u/s 34 12 of the VAT Act? Held that - the levy of penalty under Section 34 12 of the VAT Act is mandatory once it is found that in the case of a dealer the amount of tax assessed for any period or reassessed for any period under Section 35 exceeds the amount of tax already paid under sub-sections (1) (2) or (3) of Section 30 by the dealer in respect of such period by more than twenty five per cent of the amount of the tax so paid there shall be levied on such dealer a penalty not exceeding one and one-half times the difference between the tax paid under section 30 and the amount so assessed or reassessed. The learned Tribunal has materially erred in deleting the penalty under Section 34 12 of the Act - petition allowed - decided in favor of Revenue.

Summary

Issues:
1. Whether the Tribunal was justified in deleting the penalty levied under Section 34 [12] of the VAT Act?

Analysis:
The petitioner-Revenue sought to quash the Tribunal's order partly allowing the Revision Application by the respondent-Dealer. The Tribunal confirmed the tax levy under Entry 87 of Schedule-II to the VAT Act and the interest liability but deleted the penalty under Section 34 [12] of the Act. The main issue was whether the Tribunal was correct in deleting the penalty. The petitioner argued that the penalty under Section 34 [12] is mandatory when the tax assessed exceeds the tax already paid by more than twenty-five percent.

The Court noted that previous decisions by the Division Bench had held the penalty under similar provisions to be mandatory. Section 34 [12] of the VAT Act specifies the penalty when the tax assessed exceeds the tax already paid by more than twenty-five percent. The penalty can be up to one and a half times the difference between the tax paid and the amount assessed. Therefore, the Court held that the Tribunal erred in deleting the penalty as it is mandatory under the law.

Consequently, the Court allowed the petition, quashed the Tribunal's order to the extent that it deleted the penalty under Section 34 [12] of the VAT Act, and upheld the rest of the Tribunal's decision. The Court made the rule absolute in this regard and did not award any costs in the matter.