Penalty — For not furnishing Vat Audit Report within prescribed time — Discretionary and not automatic — Failure to consider dealer’s explanation — Order set aside — Section 61(2) of The Maharashtra Value Added tax Act, 2002.

The dealer could not file Vat Audit Report in time as such the penalty u/s.61(2) of the Act was levied by the Deputy Commissioner of Sales Tax without considering the explanation offered by the dealer for delay in filing the report and held that the penalty u/s.61 of the Act is automatic. Both the Tribunal and the Joint Commissioner of Sales Tax upheld the penalty order. The dealer filed appeal before the Bombay High Court against the order of the Tribunal.

Held

The Deputy Commissioner of Sales Tax had not furnished any reasons for rejecting explanation offered by the dealer while levying penalty and the Joint Commissioner of Sales Tax in appeals had proceeded on the wrong premise that the levy of penalty is automatic and that the reasons furnished by the dealer need not be considered at all. The Tribunal also seems to proceed on that basis. U/s.61(2) of the act penalty is attracted as soon as the wrongful act was committed, but that does not conclude the exercise of the discretion by the assessing authority. The levy of penalty is not automatic. The assessing authority is duty bound to consider the reasons which are furnished by the dealer and to inquire in to whether those reasons are genuine and bona fide. The Tribunal also dealt with reasons, but its order is based on conjecture. The High Court accordingly set aside the order of the Tribunal and remanded back to the assessing authority to pass fresh order and to consider the reasons furnished by the dealer while passing the order.