TaxTMI 
TaxTMI 
2022 (7) TMI 607
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.... Rules) for the tax periods 1st April, 2006 to 31st March, 2010. 2. On 29th September, 2015 on the oral prayer of Revenue, the Collector, Mayurbhanj District was permitted to be impleaded as Opposite Party No.2. Notice was issued to the parties. The Court further required the Standing Counsel for the Revenue to obtain instructions as to whether the Indian Red Cross Society (IRCS) had made any application for refund in terms of the notification dated 4th April, 2005 and whether the said refund had been effected or not. 3. Admit. The following question of law is framed for consideration by this Court: "Whether on the facts and in the circumstances of the case, the Odisha Sales Tax Tribunal erred in law by deleting imposition of penalty under Section 42(5) of the OVAT Act, particularly when it has held that there is no illegality committed by the for a below in levying tax on the uncollected value added tax amount by the Opposite Party-dealer ? 4. The background facts are that the Assessee (dealer) is engaged in the business of purchase and sale of laboratory and scientific instruments, weighing scales, weights and measures. It also installs weigh bridges for different organizati....
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....able. Consequently, the claim of the dealer of Rs.19,77,382/- towards VAT exempted sales was disallowed and the disallowed turnover was added to the taxable turnover and taxed accordingly. 8. Turning to the issue of penalty, the STO noted that the dealer had not revised its returns after detection of the lapses, in terms of Section 42 (5) of the OVAT Act, an amount being twice the tax assessed i.e. Rs.5,95,823.32 was imposed as penalty. This together with the taxed worked out to Rs.8,93,736/-. 9. The appeal filed by the Assessee to the JCST was dismissed by an order dated 17th June, 2011. Thereafter, the Assessee went before the Tribunal. Relying on the decision of the Supreme Court in Sree Krishna Electricals v. State of Tamil Nadu (2009) 23 VST 249 (SC), the Tribunal while upholding the orders of the STO and the JCST as regards the tax uncollected VAT amount held as under: "6...Now coming to the penalty aspect u/s. 42(5) of the O.V.A.T. Act it is to be decided whether the act of the dealer was deliberate or not. Before this forum the learned counsel of the dealer revolved his argument towards the non-collection of VA amount and the penalty imposed u/s. 42(5) of the O.V.A.T Ac....
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....ntified on the basis of the tax assessed. No discretion is left with the Assessing Officer for levying any lesser amount of penalty. Therefore, even if further opportunity will be given to the assessee before imposing penalty that will be a futile exercise. Penalty is not independent of the tax assessed. If the tax is assessed, imposition of penalty under 42(5) is warranted. xx xx xx 35. In view of the above, we are of the considered view that Section 42(5) of the OVAT Act authorizing imposition of penalty equal to twice the amount of tax assessed under Section 42(3) or (4) of the OVAT Act is constitutionally valid. It is not arbitrary, unreasonable, oppressive, or hit by Article 14 or in any way ultra vires the Constitution of India." 12. The question is whether there is any discretion in the STO not to impose the penalty under Section 42 (5) of the OVAT Act? In this context, it may be noticed that this Court in M/s. National Aluminium Company Ltd. v. Deputy Commissioner of Commercial Taxes 2021 (1) OLR 828 noticed the distinction between the penalty imposable under Section 43(2) of the OVAT Act and the default penalty that stands attracted under Section 42(5) of the OVAT Act....
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....equired under sub-section (1), the assessing authority may proceed to complete the assessment to the best of his judgment basing on the materials available in the Audit Visit Report and such other materials as may be available and after causing such enquiry as he deems necessary. (4) Where the dealer to whom a notice is issued under sub-section (1), produces the books of account and other documents, the assessing authority may, after examining all the materials as available with him in the record and those produced by the dealer and after causing such other enquiry as he deems necessary, assess the tax due from that dealer accordingly. (5) Without prejudice to any penalty or interest that may have been levied under any provision of this Act, an amount equal to twice the amount of tax assessed under sub-section (3) or sub-section (4) shall be imposed by way of penalty in respect of any assessment completed under the said subsections. (6) Notwithstanding anything contained to the contrary in any provision under this Act, an assessment under this section shall be completed within a period of six months from the date for receipt of the Audit Visit Report: Provided that if, fo....