TMI Blog2022 (7) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - STREV No. 69 of 2012 - - - Dated:- 5-7-2022 - S. MURALIDHAR CHIEF JUSTICE AND R.K. PATTANAIK, JUDGE Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules on 30th October, 2010 before the Joint Commissioner of Sales Tax (JCST), Cuttack I Range. This was thereafter transferred to the Office of the Assistant Commissioner of Sales Tax, Cuttack I Circle for completion of the audit assessment. 5. Notice in Form VAT- 306 was issued to the dealer on 8 th November, 2010 under Section 42(1) of the OVAT Act read with Rule 49(1) of the OVAT Rules. The dealer on 4th December, 2010 sought one month s time to produce the books of account. On 5 th April, 2011 he again sought one month s time. On 20th April, 2011 the dealer produced relevant books of account for the said period for completion of the audit assessment. The AVR indicated that the dealer had not collected VAT on sales i.e. Rs.19,77,382/- to the IRCS by resorting to the Finance Department notification dated 4 th April, 2005. 6. The dealer had claimed a sum of Rs.19,77,382/- towards VAT exempted sale pertaining to supply of weigh bridge spare parts to the IRCS during the period in question. A letter issued by the District Emergency Officer-cum-Secretary, IRCS, District Branch, Mayurbhanj was produced, which stated that the VAT amount had been excluded from the bill in term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to be remanded back to the learned ACST to make fresh assessment by levying tax on the uncollected VAT amount and not to impose penalty u/s. 42(5) of the O.V.A.T. Act. 10. This Court has heard the submissions of Mr. Sunil Mishra, learned Additional Standing Counsel appearing for the Petitioner (Revenue) and Mr. P.K. Jena, learned counsel appearing for the Opposite Party (dealer). 11. At the outset, it requires to be noticed that this Court in Jindal Stainless Limited v. State of Odisha (2012) 54 VST 1 (Orissa) upheld the constitutional validity of Section 42(5) of the OVAT Act. The observations of this Court in the said decision, which are relevant in the present context, were as under: 31. VAT is indirect tax on consumption of goods. It is the form of collecting sales tax under which tax is collected in each stage on the value added to the goods. The basic object of VAT Scheme is to provide voluntary and self compliance. It goes without saying that to plug the leakage of revenue, the Legislature enacted law authorizing imposition of penalty for infraction of any statutory provision. We are conscious that generally penalty proceedings are quasi judicial in natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It reads thus: 43 (2) If the assessing authority is satisfied that the escapement or under assessment of tax on account of any reason(s) mentioned in sub-section (1) above is without any reasonable cause, he may direct the dealer to pay, bay way of penalty, a sum equal to twice the amount of tax additionally assessed under this section. 13. 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. For ready reference, Section 42 of the OVAT Act reads as under: 42. Audit assessment. - (1) Where the tax audit conducted under sub-section (3) of section 41 results in the detection of suppression of purchases or sales or both, erroneous claims of deductions including input tax credit evasion of tax or contravention of any provision of this Act affecting the tax liability of the dealer, the assessing auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessment shall be made under sub-section (3) or sub-section (4) after the expiry of one year from the date of receipt of the Audit Visit Report. 14. 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. This was what explained by this Court in M/s. National Aluminium Company Limited (supra). 15. Turning to the decision in Sree Krishna Electricals (supra) it must be noticed that in the first place it was a case arising under the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) and there was no occasion for the Supreme Court to discuss, in the context of the facts of that case, any corresponding provison of the TNGST Act pertaining to tax audit assessment. Therefore, the observations in that case which justified the deletion of the penalty may not be relevant in the present context. In other words, in an assessment which is not a tax audit assessment while it may be possible to entertain an element of discr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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