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2021 (3) TMI 1024 - HC - VAT and Sales TaxInput Tax Credit - coal alum caustic soda and other consumables used for generation of electricity - credit of tax paid on purchase of coal alum caustic soda and other consumables etc. against the tax payable on sale of finished product i.e. aluminum aluminum ingots and sheets etc. - reasonable cause of escapement present or not - penalty under Section 43(2) of the OVAT Act. Input Tax Credit - HELD THAT - Coal alum caustic soda and other consumables purchased from market on payment of tax and used for generation of electrical energy in the Captive Thermal Plant of the petitioner which is used in the process of manufacture of finished product viz. aluminum aluminum ingots and sheets etc. taxable under the OVAT Act are input as defined under Section 2(25) of the OVAT Act and the tax which has been paid on such purchases can be claimed as input tax credit under Section 2(27) of the OVAT Act against the tax payable on sale of finished products i.e. aluminum aluminum ingots and sheets etc. - demand raised in the assessment orders disallowing the input tax credit in respect of tax paid on coal alum soda and other consumables used for generation of electrical energy is quashed. Whether imposition of penalty under Section 43(2) of the Orissa Value Added Tax Act 2004 (OVAT Act) can only be levied if the escapement is without any reasonable cause ? - HELD THAT - The Court notes that under Section 42 (5) of the OVAT Act the penalty levied is equal to twice the amount of tax assessed under Section 42(3) or 42(4) pursuant to an audit assessment - There is no discretion with the Assessment Officer (AO) to reduce this amount of penalty. On the other hand Section 43(2) of the OVAT Act is under the heading Turnover escaping assessment and is differently worded - The Court therefore finds merit in the contention of the learned counsel for the Petitioner that the observation in the judgment dated 9th October 2012 on the aspect of penalty under Section 42 (5) of the OVAT Act was not warranted. All that was required to be observed was that since the question had been rendered academic in view of the finding on issue No.1 the imposition of penalty under Section 43 (2) of the OVAT Act was not automatic and that there is a discretion in the AO in this regard upon finding that there has been an escapement or under assessment of tax. Review petitions are allowed.
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