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2022 (12) TMI 1393 - HC - VAT and Sales TaxLevy of penalty equal to two times of tax assessed under Section 43-(2) of the OVAT Act - absence of observation by the Assessing authority that the underassessment tax is without any reasonable cause - Whether, the facts and circumstances of the case, the Division Bench-II, Odisha Sales Tax Tribunal, Cuttack, is right in law to hold Section-43 provides for best judgment assessment, whose part and parcel is imposition of penalty. If the use of word “may” is liberally used then the purpose of escape assessment under VAT regime would disappear? - HELD THAT:- It is seen that in the assessment order dated 5th February, 2013 while raising a demand on the basis ‘erroneous claim of Input Tax Credit (ITC)’, the Sales Tax Officer (STO), Ganjam-I Circle, Berhampur proceeded to impose penalty under Section 43(2) of the Odisha Value Added Tax Act, 2004 (OVAT Act) without actually coming to any conclusion that ITC with differential tax wrongly availed by the Petitioner-Assessee was “without reasonable cause”. As far as present case is concerned, the assessment order of the Assessing Officer does not record the satisfaction of the Assessing Officer that wrongful availment of ITC by the Petitioner was “without reasonable cause”. Thus, the essential component of Section 43(2) of the OVAT Act for attracting the penalty, viz., the satisfaction of the Assessing Officer that the escapement of tax was without reasonable cause, is absent in the present case. The issue is answered in the negative, i.e., in favour of the Petitioner and against the Department and the impugned order of the Tribunal and the corresponding orders of the First Appellate Authority and the Assessing Officer levying penalty on the Petitioner under Section 43 (2) of the OVAT Act are hereby set aside - application disposed off.
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