Penalty under Haryana VAT law sustained where show cause notice under Section 38 followed inspection and sales suppression was recorded.

Penalty proceedings under Section 38 of the Haryana Value Added Tax Act, 2003, read with Section 9(2) of the Central Sales Tax Act, 1956, were not invalid merely because the inspection began under Section 29. A subsequent show cause notice was issued in Form VAT-N3 under Rule 31, calling the assessee to explain the proposed penalty, but no response was filed. The record also showed use of tracing paper and suppression of sales with stock discrepancy. On these facts, the objection that the matter remained confined to Section 29 was rejected, and the penalty was upheld.

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Issues: Whether the penalty imposed under Section 38 of the Haryana Value Added Tax Act, 2003, read with Section 9(2) of the Central Sales Tax Act, 1956, was vitiated on the ground that the proceedings were only under Section 29 of the Haryana Value Added Tax Act, 2003.

Analysis: The inspection initially took place under Section 29 of the Haryana Value Added Tax Act, 2003, but the subsequent show cause notice was issued under Section 38 of that Act in the prescribed Form VAT-N3 under Rule 31 of the Haryana Value Added Tax Rules, 2003. The notice called upon the assessee to explain the proposed penalty, and the record showed that the assessee did not file any response. The Tribunal also found material indicating use of tracing paper and suppression of sales and stock discrepancy, and upheld the penalty after correcting the quantified amount. On these facts, the objection that the entire proceedings were confined to Section 29 was held to be without merit.

Conclusion: The challenge to the penalty failed, and the penalty under Section 38 of the Haryana Value Added Tax Act, 2003, was upheld.

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