TaxTMI 
TaxTMI 
2018 (5) TMI 1333
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Tax Act. The Gujarat Value Added Tax Act ("the Act", for short) was enacted and brought into force with effect from 01.04.2006. A transitional provision was, therefore, made in the Act u/s. 12 enabling the dealers to take tax credit of the stock as on 31.03.2006. Sub-section 7 of Section 12 was a penal provision providing penalty in case of a dealer claiming tax credit for the stock for which he is not entitled to claim such tax credit. This provision was invoked by the competent authority by order dated 01.03.2011 whereby, in addition to denying the tax credit, he levied penalty u/s. 12(7) of the Act, which was computed at 20% of the excess claim of the input tax credit. 3. The Commissioner took the order of assessment in suo motu revi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Act, as noted above, makes special provisions for transitory situations arising on account of introduction of the VAT Act. Section 12 itself carries a catch-note "Tax Credit for Stock on [31st March, 2006]". Sub-section 1 of Section 12 would enable a dealer to furnish a statement of taxable goods held by him in stock as on 31.03.2006 for which he intends to claim tax credit. Sub-section 3 of Section 12 provides a formula under which such tax credit would be made available to him. Sub-section 4 of Section 12 provides circumstances under which such tax credit will not be available. Sub-section 7 of Section 12, which is relevant for our purpose, reads as under; "7. If the Commissioner is satisfied that a dealer- (a) has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er by citing reasons. The question, then is, when the Commissioner has been vested with such wide discretion, would such discretion cease when it comes to the question of choosing the level of penalty. Accepting the argument of the Government would amount to a situation where it may be discretionary for the Commissioner to impose or not to impose a penalty all together but, once he decides to impose such penalty, he would have no choice but to fix the penalty at twice the amount of wrongly claimed tax credit. We do not think that the Legislature desired to bring about such a harsh and incongruent result. The discretion of the Commissioner in the matter of imposing penalty would extend even on the choice of the penalty to be imposed, of cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der; "The imposition of a penalty in sub-section (2) of section 61 is not mandatory. The Commissioner has been conferred with the discretion to determine as to whether a penalty should or should not be imposed, if a dealer who is liable to get his accounts audited under sub-section (1), fails to furnish a copy of the report within the time prescribed. The Legislature has provided that the Commissioner "may" impose a penalty after giving the dealer a reasonable opportunity of being heard. The use of the word "may" is clearly suggestive of the fact that imposition of a penalty is not mandatory. The legislative intent has been emphasized in the requirement of furnishing to the dealer a reasonable opportunity of being heard before a pe....