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2022 (12) TMI 463 - HC - VAT and Sales TaxLevy of penalty under Section 42(5) of the OVAT Act - contention of the Petitioner is that upon adjustment of the ineligible ITC from the surplus ITC available, no tax would be due is to no avail since the treatment by the 1st Appellate Authority of the surplus ineligible ITC as tax due by the Petitioner has affirmed by the Tribunal and no question in that regard has been framed by this Court. HELD THAT - The decisions in STATE OF GUJARAT VERSUS JAY STEEL AND TUBES TRADERS 2015 (2) TMI 372 - GUJARAT HIGH COURT andSTATE OF GUJARAT VERSUS NISHI COMMUNICATION 2015 (2) TMI 927 - GUJARAT HIGH COURT are clearly distinguishable in view of the wording of Section 42(5) of the OVAT Act when compared to Section 34(7) of Gujarat Value Added Tax Act which beings the expression if the Commissioner is satisfied that the dealer in order to evade or avoid payment of tax . In other words, under Section 34 (7) of the GVAT Act an element of discretion is available to the Assessing Authority while imposing penalty, Section 42(5) of the OVAT Act does not. This Court answers the question framed in the affirmative i.e. in favour of the Department and against the Petitioner-Assessee. The revision petitions are accordingly dismissed, but in the circumstances, with no other as to costs.
Issues:
1. Revision petitions arising from similar facts and legal questions 2. Dismissal of Assessee's appeal by the Tribunal 3. Dispute over penalty under Section 42(5) of the OVAT Act 4. Interpretation of mens rea and tax evasion in penalty imposition 5. Comparison with previous judgments on penalty imposition 6. Analysis of Section 42 of the OVAT Act and its implications 7. Differentiation between Sections 42(5) and 43(2) of the OVAT Act Detailed Analysis: 1. The judgment involves two revision petitions stemming from the same facts and legal issues, leading to a common judgment due to identical questions of law concerning the parties involved. 2. The Tribunal dismissed the Assessee's appeal against the Additional Commissioner Sales Tax's order, reducing the assessment and imposing a penalty under Section 42(5) of the OVAT Act. 3. The core dispute revolves around the imposition of penalties under Section 42(5) of the OVAT Act, with one petition challenging the penalty amount and the other contesting the authority's decision. 4. The argument presented by the Petitioner focuses on the requirement of mens rea and tax evasion for penalty imposition, citing previous judgments to support the contention against the penalty's validity. 5. The Department, represented by the learned ASC, relies on a recent judgment addressing the mandatory nature of Section 42(5) of the OVAT Act, emphasizing the absence of discretion in penalty imposition. 6. The analysis delves into Section 42 of the OVAT Act, detailing the audit assessment process, the imposition of penalties, and the time frame for completing assessments under the Act. 7. Previous judgments, such as Jindal Stainless Limited and M/s. National Aluminium Company Ltd., are referenced to highlight the distinct nature of penalties under Section 42(5) of the OVAT Act compared to other provisions like Section 43(2). 8. The Court's consistent view is that once the tax determination occurs following an audit assessment under Section 42, the penalty under Section 42(5) of the OVAT Act is automatically triggered without discretion. 9. The Court dismisses the revision petitions in favor of the Department, emphasizing the lack of discretion in penalty imposition under Section 42(5) of the OVAT Act, thereby upholding the Tribunal's decision on penalty imposition.
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