Excess stock penalty upheld where contemporaneous admission and payment defeated later challenge to inspection findings.

Excess stock of semi-finished gutkha found during inspection justified penalty under the Karnataka Value Added Tax Act, 2003 because the assessee contemporaneously admitted the stock discrepancy, accepted the notice, expressed willingness to pay, and in fact paid the penalty by cheque. On that record, the Court held that the assessee could not later challenge the penalty for alleged want of opportunity or improper stock verification. The Appellate Authority was found to have ignored material evidence, while the Revisional Authority validly exercised suo motu jurisdiction and restored the original penalty order.

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Issues: Whether the Inspecting Authority was justified in invoking Section 77(2) of the Karnataka Value Added Tax Act, 2003 and Section 52(1)(j) of the Karnataka Value Added Tax Act, 2003 for the excess stock found during inspection, and whether the revisional order restoring the penalty could be interfered with.

Analysis: The appellant's premises were inspected and excess stock of semi-finished gutkha was found and valued. The record showed a contemporaneous written statement by the appellant admitting the excess stock, acknowledging the notice, and stating willingness to pay the penalty, followed by payment of the penalty amount by cheque. On these facts, the Court held that the appellant had not disputed the inspection findings at the relevant time and could not later assail the penalty on the ground of absence of opportunity or improper stock verification. The Appellate Authority had ignored the material on record, while the Revisional Authority correctly exercised suo motu jurisdiction and restored the original penalty order.

Conclusion: The invocation of Section 77(2) and Section 52(1)(j) of the Karnataka Value Added Tax Act, 2003 was upheld, and the penalty order as restored in revision was sustained.

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