Mandatory penalty under Gujarat VAT law applies once assessed tax exceeds tax already paid by the statutory threshold.

Section 34(12) of the Gujarat Value Added Tax Act, 2003 was construed as mandating penalty where the assessed or reassessed tax exceeds tax already paid under Section 30 by more than 25%. The provision requires levy of penalty up to one and one-half times the difference once that statutory threshold is met, and the Tribunal's deletion of penalty was treated as inconsistent with that mandate. The stated principle is that, on satisfaction of the excess-tax condition, penalty is not discretionary and cannot be removed on equity alone.

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Issues: Whether penalty under Section 34(12) of the Gujarat Value Added Tax Act, 2003 was mandatory once the tax assessed or reassessed exceeded the tax already paid by more than twenty-five per cent, and whether the Tribunal was justified in deleting the penalty.

Analysis: Section 34(12) provides that where the assessed or reassessed tax exceeds the tax already paid under Section 30 by more than twenty-five per cent, penalty shall be levied on the dealer up to one and one-half times the difference. The provision was treated as mandatory in light of prior Division Bench decisions construing similar penalty provisions, and the Tribunal's deletion of penalty was found to be contrary to that statutory mandate.

Conclusion: The deletion of penalty under Section 34(12) was not justified and the penalty was held to be mandatory in the stated circumstances, in favour of the Revenue.

Ratio Decidendi: Where Section 34(12) of the Gujarat Value Added Tax Act, 2003 is attracted by the statutory threshold of excess tax exceeding twenty-five per cent of tax already paid, the levy of penalty is mandatory and cannot be deleted on discretion alone.

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