Revisional penalty enhancement cannot stand where the original tax order is a possible view and not prejudicial to revenue.

Revisional interference under Section 64(1) of the Karnataka Value Added Tax Act is not justified where the original authority has taken a possible view and the order is neither erroneous nor prejudicial to the interests of revenue. On the facts stated, the High Court noted that the goods vehicles were stationed for weighment and further transport, that Section 53(2)(d) did not apply, and that the limited penalty already imposed for six vehicles was supported by the record; the enhanced penalty under Section 53(2)(b) and the revisional enhancement were therefore unsustainable.

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Issues: (i) Whether the second Appellate Authority was justified in invoking revisional power under Section 64(1) of the Karnataka Value Added Tax Act, 2003 to enhance the penalty under Section 53(2)(b), (c) and (d) of the Act. (ii) Whether penalty under Section 53(2)(d) and the enhanced penalty under Section 53(2)(b) could be sustained on the facts of the case.

Issue (i): Whether the second Appellate Authority was justified in invoking revisional power under Section 64(1) of the Karnataka Value Added Tax Act, 2003 to enhance the penalty under Section 53(2)(b), (c) and (d) of the Act.

Analysis: The order of the Commercial Tax Officers had accepted that the goods vehicles were stationed for weighment and further transportation, and had levied penalty only for the violation found in respect of six vehicles. On these facts, the Court held that the view taken by the assessing authority on applicability of Section 53(2)(b) was a possible view. Where two views are possible, the revisional authority cannot invoke Section 64(1) unless the original order is shown to be both erroneous and prejudicial to the interests of the revenue.

Conclusion: The invocation of Section 64(1) was not justified and the enhanced revisional penalty could not be sustained.

Issue (ii): Whether penalty under Section 53(2)(d) and the enhanced penalty under Section 53(2)(b) could be sustained on the facts of the case.

Analysis: Section 53(2)(d) was held inapplicable because the movement of goods was not a case attracting that clause on the facts found. The Court also noted that the assessee had accepted the order imposing penalty in respect of six vehicles under Section 53(2)(c), and that the factual findings of the Commercial Tax Officers did not justify interference with the limited penalty already imposed. The appellate authority's enhancement was therefore unsupported by the statutory scheme and the record.

Conclusion: The penalty enhancement under Section 53(2)(b) and the levy under Section 53(2)(d) were not sustainable.

Final Conclusion: The questions of law were answered against the revenue, the revisional order was set aside, and the assessee obtained relief.

Ratio Decidendi: Revisional interference is impermissible where the original order is a possible view and is neither erroneous nor prejudicial to the interests of the revenue.

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