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2017 (6) TMI 563 - HC - VAT and Sales TaxPenalty u/s 34(7) of the VAT Act as well as u/s 34(12) of the VAT Act - The dispute pertains to the period between 10.08.2006 to 31.03.2007 during which the assessee did not pay the Value Added Tax at the relevant time - Held that: - Sub-section 7 of Section 34 of the Act provides for a penalty in a case where the dealer in order to evade or avoid payment of tax commits certain defaults such as fails to furnish returns or furnishes incomplete or incorrect returns or avails of tax credit which he is not eligible to. Thus, the element of mens rea is of importance - Sub-section 12 of Section 34 though provides for penalty where the tax liability ultimately assessed exceeds a certain percentage of the tax paid by the assessee, it still gives discretion to the authority to impose penalty not exceeding one and one-half times the difference between the tax paid and the tax assessed. The legislature having set out an upper limit for imposition of tax without providing for any minimum mandatory tax, has left a wide discretion on the competent authority which discretion must be exercised taking into account relevant factors. The authority committed an error in imposing penalty on the assessee under sub-sections 7 and 12 of Section 34 and the Tribunal committed an error in confirming part of such penalty - appeal allowed - decided in favor of appellant.
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