2023 (6) TMI 1098 - HC - VAT and Sales Tax

Amount of penalty for compounding the offence - grant of right to the applicant to be treated as registered dealer eligible to claim input tax credit and/or collect tax on sales - Section 53 of the Goa Value Added Tax Act, 2005 - HELD THAT - The grievance of the petitioner with regard to penalty of Rs. 1,00,000/- being imposed by the impugned order would be required to be accepted being ex facie contrary to the provisions of the Act. Even assuming as to what has been stated on behalf of the Revenue that a penalty of Rs. 25,000/- would be maximum penalty under Section 44 of the Act or even if the petitioner is right in his contention that the maximum amount of penalty would be Rs. 10,000/- under notification dated 2 February, 2012 issued by the State Government on either of the Counts, the impugned order which orders a penalty of Rs. 1,00,000/- cannot be sustained. Insofar as the petitioner s grievance with regard to the wording of the operative part of the order as noted above, the grievance raised by the petitioner is quite correct, although such observation may be clarificatory in nature, it has some consequence, more particularly when the substantive appeal itself is pending before the Appellate Authority assailing the Assessment Order. It would be in the interest of justice that the impugned order dated 30 July, 2021 is required to be set aside. It is accordingly set aside directing the Commissioner of State Tax to hear the petitioner afresh on the issue of penalty and de hors pass a fresh order in accordance with law - Petition disposed off.

Summary

Issues:
1. Penalty amount for compounding the offense under Section 53 of the Goa Value Added Tax Act, 2005.
2. Impact of the condition in the order on the petitioner's rights as a registered dealer eligible to claim input tax credit and collect tax on sales.

Analysis:
1. The petitioner challenged an order imposing a penalty of Rs. 1,00,000/- under Section 53 of the Act, contending that the maximum penalty should be Rs. 10,000/- or Rs. 25,000/- under different provisions. The court found the penalty amount of Rs. 1,00,000/- to be contrary to the Act and unsustainable, directing a fresh consideration of the penalty issue by the Commissioner of State Tax.

2. The petitioner raised concerns about the condition in the order stating that paying the penalty would not grant any right to be treated as a registered dealer eligible for input tax credit or tax collection. Despite the Revenue's argument that it was clarificatory, the court acknowledged the potential impact on the pending appeal against an Assessment Order. The court held that while the observation may be clarificatory, it could have consequences, especially with the appeal pending, and set aside the order for reconsideration.

3. Consequently, the court set aside the impugned order dated 30 July, 2021, directing the Commissioner of State Tax to re-examine the penalty issue and issue a fresh order in accordance with the law. The parties were instructed to appear before the Commissioner on a specified date for further proceedings, emphasizing the need for justice and proper consideration of the penalty issue. The petition was disposed of without costs, with parties instructed to act on the authenticated copy of the order for further compliance.