Mandatory penalty under amended VAT provision upheld where substituted text left no discretion in levy.

The substituted Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006, applicable from 29 January 2016, prescribed penalty at three hundred per cent of the tax due for the relevant claim, and the assessing authority had no discretion in its levy, subject to compliance with the statutory opportunity of hearing. The earlier version of the provision, which provided lower penalty rates for first and subsequent detections, was materially different and could not control the amended text. A decision dealing with the unamended provision was therefore inapplicable. On the amended wording, the penalty was mandatory and the challenge to its levy failed.

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Issues: Whether penalty under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006, as substituted from 29 January 2016, was mandatory so as to exclude discretion in the assessing authority and to sustain the penalty imposed on the petitioner.

Analysis: The period in dispute was 2016-2017, when Section 27(4) had been substituted to provide for penalty at three hundred per cent of the tax due in respect of such claim. The earlier version of the provision, which provided for penalty at fifty per cent for the first detection and one hundred per cent for subsequent detections, was materially different. The decision relied upon by the petitioner concerned the unamended provision and therefore did not govern the amended text applicable to the present case. On the substituted wording, the assessing authority had no scope for discretion in levy of penalty, subject to observance of the statutory opportunity of hearing.

Conclusion: The penalty under the amended Section 27(4) was mandatory and the challenge to its levy failed.

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