2024-VIL-38-SC
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VAT Supreme Court Cases

Karnataka Value Added Tax Act, 2003 - Levy of penalty under Section 72(2) of the KVAT Act for mis-classification of aluminum castings - bonafide belief – High Court order holding that the levy of penalty under Section 72(2) of the KVAT Act is neither automatic nor mandatory penalty whether mandatory – Revenue in appeal – HELD – the reliance placed by Ld. counsel for the Revenue on the provisions of Section 45 (5) and (6) of the Gujarat Sales Tax Act, 1969 is not apposite in the present case, as the provision under consideration is Section 72(2) of the KAT Act, 2003 would squarely indicate that before a decision is taken for imposition of any penalty, show-cause notice has to be issued to the assessee and after being given an opportunity of showing cause in writing against the imposition of a penalty, the decision to impose or not to impose the penalty must be taken – though the quantum of penalty is prescribed under the said provision but the fact that the opportunity to show-cause in writing has been prescribed clearly indicates that the imposition of penalty is not automatic – whereas under Section 45 (5) and (6) of the Gujarat Sales Tax Act, 1969, there is no such provision for giving an opportunity to the assessee to show-cause against the imposition of the penalty; therein the imposition of penalty is automatic - the suo moto revision undertaken under Section 64 of the KVAT Act, 2003, was wholly unnecessary. The High Court was justified in setting aside the order of the Revisional Authority and restoring the order passed by the First Appellate Authority - The Special Leave Petition filed by the Revenue is dismissed
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