IS PENALTY A REVENUE DUE TO THE STATE?

[Sadanand Bulbule]

Dear Experts.

Navarathri Greetings.

Under VAT statute, there was an ambiguity regarding the levy of penalty even for petty violation of provisions of the Act particularly in respect of documents being accompanied with the goods under transportation, some times without the knowledge of another State law, despite binding rulings on the subject. Subsequently the provisions were challenged before the Karnataka High Court.The revision order levying penalty in respect of interstate transaction was set aside by the State High Court on the ground that those provisions apply only to the State of Karnataka and not in respect State interstate transactions. since the State did not enjoy such jurisdiction.

Some are facing charges of purported loss of revenue on the ground of incorrect adjudication of penalty proceedings which were initiated despite the said State High Court judgement. Therefore in terms of the said State High Court judgement when the provisions to levy penalty did not apply to interstate transactions, the question of revenue due to the State does not arise at all. Factual and legal position being so, the question of loss of revenue naturally shall not come into existence.

Therefore it is requested to clarify what is revenue due to the State? In other words, is penalty a revenue due to the State? Relevant rulings, if any, are solicited.

AI Summary

Debate on Whether Penalties Count as State Revenue Under VAT Laws; Jurisdiction Limits Discussed with Legal Precedents A discussion on a forum addresses whether a penalty constitutes revenue due to the state under VAT laws. The issue arose from ambiguity in penalty levies for interstate transactions, which the Karnataka High Court ruled were not applicable due to jurisdiction limits. Despite this ruling, some face charges for purported revenue loss. Participants discuss relevant legal precedents, including a 2005 Gujarat High Court judgment, and seek further clarification on whether penalties equate to state revenue. Contributors express gratitude and share resources to resolve the query, highlighting collaborative efforts during the COVID-19 lockdown.