Case Law Details
National Alumini Vs Dy. Commissioner (Orissa High Court)
It is seen under Section 43 (2) of the OVAT Act the levy of penalty in the event of turnover escaping assessment, or under assessement, is not automatic. The AO has to be satisfied that escapement or under assessment of tax “is without reasonable cause”. Further upon arriving at such conclusion,, the AO “may direct the dealer to pay, by way of penalty, a sum equal to twice the amount of tax additionally assessed under the Section.” The word ‘may’, in this context gives the AO a discretion, which is unavailable to him under Section 42 (5) of the OVAT Act.
The Court, therefore, finds merit in the contention of the learned counsel for the Petitioner that the observation in the judgment dated 9th October 2012, on the aspect of penalty under Section 42 (5) of the OVAT Act was not warranted. All that was required to be observed was that since the question had been rendered academic in view of the finding on issue No.1, the imposition of penalty under Section 43 (2) of the OVAT Act, was not automatic and that there is a discretion in the AO in this regard upon finding that there has been an escapement or under assessment of tax.
In that view of the matter, the judgment dated 9th October 2012, passed by this Court in W.P.(C) Nos.1597 and 1686 of 2012 is reviewed to the extent of recalling the observation, that the imposition of penalty would be automatic under Section 42 (5) of the OVAT Act, when in fact the provision that is relevant to the context, is Section 43 (2) of the OVAT Act. The Court clarifies that even this question would relevant only if the Department succeeds in the appeal in the Supreme Court, and it is held that the NALCO is liable to pay tax. As a corollary, if the judgment of this Court on question No.1 is affirmed, the question of any penalty being levied on NALCO would not arise.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
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