2024 (9) TMI 546 - SCH - VAT / Sales Tax

Requirement to issue SCN for imposition of penalty - requirement to provide opportunity of showing cause in writing against the imposition of a penalty - violation of principles of natural justice - HELD THAT - As per Section 72 (2) of the Karnataka Value Added Act, 2003, before a decision is taken for imposition of any penalty, show-cause notice has to be issued to the assessee and after being given an opportunity of showing cause in writing against the imposition of a penalty, the decision to impose or not to impose the penalty must be taken. No doubt, the quantum of penalty is prescribed under the said provision but the fact that the opportunity to show-cause in writing has been prescribed clearly indicates that the imposition of penalty is not automatic. It is by way of exercise of discretion given the facts and circumstances of the case, we thus find that in Section 45 (5) and (6) of the Gujarat Sales Tax Act, 1969, there is no such provision for giving an opportunity to the assessee to show-cause against the imposition of the penalty; therein the imposition of penalty is automatic. The suo moto revision undertaken under Section 64 of the Karnataka Value Added Tax Act, 2003, was wholly unnecessary. The High Court was therefore justified in setting aside the order of the Joint Commissioner of Commercial Taxes dated 31.03.2017 and restoring the order passed by the First Appellate Authority dated 27.11.2012. SLP dismissed.

Summary

The Supreme Court held that under Section 72(2) of the Karnataka Value Added Tax Act, 2003, a show-cause notice must be issued before imposing a penalty. The imposition of penalty is not automatic. The suo moto revision under Section 64 was deemed unnecessary, and the High Court's decision to set aside the Joint Commissioner's order was upheld. The Special Leave Petition was dismissed.