2022 (7) TMI 607 - HC - CST, VAT & Sales Tax

Deletion of penalty levied under Section 42(5) of the OVAT Act - illegality committed by the fora below in levying tax on the uncollected value added tax amount by the Opposite Party-dealer or not - Section 42(5) of the OVAT Act - HELD THAT:- The question is whether there is any discretion in the STO not to impose the penalty under Section 42 (5) of the OVAT Act? In this context, it may be noticed that this Court in M/s. National Aluminium Company Ltd. v. Deputy Commissioner of Commercial Taxes [2021 (3) TMI 1024 - ORISSA HIGH COURT] noticed the distinction between the penalty imposable under Section 43(2) of the OVAT Act and the default penalty that stands attracted under Section 42(5) of the OVAT Act where it was 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.

In the present case, there is no manner of doubt that the assessment was as a result of the AVR and was made under Section 42(4) of the OVAT Act. The consequence of the penalty attracted under Section 42(5) of the OVAT Act was automatic - It will be straightway noticed that the very wording of Section 42 (5) indicates that once as assessment is completed under Section 42(4) of the OVAT Act, the penalty leviable under Section 42(5) automatically follows. There is no discretion in the STO unlike the penalty imposable under Section 43(2) of the OVAT Act.

The Court is of the view that in the present case the Tribunal erred in deleting the penalty imposable on the dealer under Section 42(5) of the OVAT Act, particularly since it came to the conclusion that the levy of tax on the uncollected VAT amount by the dealer was not excusable and upholding the orders of the STO and the JCST in that regard. Consequently, the question framed is answered in the affirmative i.e. in favour of the Department and against the Dealer.

The revision petition is allowed.