Penalty under Odisha VAT law requires recorded satisfaction of no reasonable cause before levy; omission makes the penalty unsustainable.

Penalty under Section 43(2) of the Odisha Value Added Tax Act, 2004 requires a recorded satisfaction that the underassessment or escapement of tax occurred without reasonable cause. Where the assessment order imposed penalty for wrongful availment of input tax credit but did not make that finding, the jurisdictional condition for penalty was not met. The omission was treated as fatal to the levy, and the penalty was set aside in favour of the assessee.

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Issues: Whether penalty under Section 43(2) of the Odisha Value Added Tax Act, 2004 could be sustained without a recorded finding that the escapement of tax was without reasonable cause.

Analysis: The provision confers discretion on the Assessing Officer to impose penalty only when the authority is satisfied that the underassessment or escapement of tax occurred without reasonable cause. The assessment order in the present case levied penalty for erroneous availment of input tax credit but did not record the necessary satisfaction that the wrongful availment was without reasonable cause. That omission goes to the root of the penalty jurisdiction under Section 43(2).

Conclusion: The penalty was unsustainable and was set aside, with the issue answered in favour of the assessee.

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