Penalty for late audit report filing is discretionary where the dealer's explanation must be considered before imposing any levy.

Penalty for failure to file an audit report within the prescribed time under section 61(2) of the Maharashtra Value Added Tax Act, 2002 is discretionary, because the provision uses "may" and requires a reasonable opportunity of hearing before penalty is imposed. The assessing authority must consider the dealer's explanation and decide whether it is genuine and bona fide; penalty cannot follow automatically from default alone. Where the original authority gives no reasons for rejecting the explanation and the appellate authority proceeds on the mistaken view that consideration of the explanation is unnecessary, fresh consideration is required. The matter was remanded for reconsideration after examining the assessee's explanation.

---

---

Issues: Whether penalty for failure to file the audit report within the prescribed time under section 61(2) of the Maharashtra Value Added Tax Act, 2002 was automatic, and whether the authority was bound to consider the dealer's explanation before imposing penalty.

Analysis: Section 61(2) uses the expression "may" and requires a reasonable opportunity of being heard before penalty is imposed. The provision, therefore, confers discretion and does not create an automatic liability on mere default. The assessing authority must consider the reasons furnished by the dealer and determine whether the explanation is genuine and bona fide. In the present case, the initial authority recorded no reasons for rejecting the explanation, and the appellate authority proceeded on the erroneous premise that the penalty was automatic and that the explanation need not be considered.

Conclusion: The penalty could not be treated as automatic, and the matter required fresh consideration by the assessing authority after considering the assessee's explanation; the proceedings were remanded.

---