2011 (6) TMI 510

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....ages in the manufacturer and sale of paint. The appellant filed returns for assessment year 2006-07 and was under an obligation to get the accounts audited and to file an audit report within the prescribed period which was ten months from the end of the year to which the returns relate. The audit report for the assessment year 2006-07 had to be filed by January 31, 2008. It is not in dispute that the Commissioner of Sales Tax had extended the prescribed period until August 31, 2008. The appellant failed to file the audit report even by August 31, 2008. A notice was issued to the appellant on March 20, 2009 by the Deputy Commissioner of Sales Tax by which a penalty was proposed to be levied under section 61(2). As a matter of fact, the appel....

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....by the Tribunal. The Tribunal on the first issue relied on the judgment of the Supreme Court in Maya Rani Punj v. Commissioner of Income-tax [1987] 65 STC 416 (SC). The Tribunal held that a penalty is not a continuation of the assessment proceeding and the liability would be attracted as soon as the wrongful act was committed. The omission to file the audit report was completed on August 31, 2008 on which the liability to penalty arose. In this view of the matter, the Tribunal held that the amended provision would apply as on August 31, 2008 when the default was committed. Counsel appearing on behalf of the appellant has during the course of the hearing not challenged this finding of the Tribunal. In that view of the matter nothing further ....

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....iability to levy a penalty was automatic on the failure to file an audit report within the prescribed time. Section 61(2) clearly specifies that upon the failure of the dealer to get his accounts audited and to furnish a copy of the report within the time as prescribed, the Commissioner may after furnishing a reasonable opportunity of being heard, impose a penalty at the rate stipulated. The law provides that the penalty may be imposed and contemplates that a reasonable opportunity should be furnished to the dealer. Obviously there would be no occasion to furnish a reasonable opportunity of being heard if the liability to levy the penalty was automatic. Since the legislation has used the expression "may" , the imposition of a penalty is dis....