1979 (9) TMI 182 - HC - VAT and Sales Tax

Summary

Issues:
Imposition of penalty under section 15-A(1)(b) for furnishing inaccurate particulars in the fourth quarterly return.

Analysis:
The revision was filed against the penalty imposed under section 15-A(1)(b) for providing inaccurate particulars in the quarterly return. Although the gross turnover disclosed was accurate, there was a discrepancy in the amount of sales tax deposited compared to the amount shown in the account books. The assessee explained that no tax was collected on purchases made on their own account, leading to a shortfall in the tax deposited. The appellate authority accepted this explanation but only reduced the penalty by half. However, the revising authority upheld the penalty, stating that the assessee had realized the tax and had no justification for not depositing it, even if it was collected illegally.

The revising authority was criticized for misinterpreting the penal provision in section 15-A. It was clarified that the retention of tax, even if collected unlawfully, does not constitute a penal offense. The key question was whether the deliberate furnishing of inaccurate particulars extended to both gross and net turnover or was limited to gross turnover only. The argument was made that inaccuracies in net turnover should also be penalized, as they could result in tax evasion or delayed tax payments. However, it was argued that penalizing inaccuracies in net turnover may not be justified, especially in cases where the assessee was awaiting certificates from purchasers and thus could not deposit the tax.

The counsel for the assessee relied on a previous case to argue that penalties for incomplete or incorrect returns should only be imposed in cases of best judgment assessments. The principle was emphasized that if account books were accepted, it implied that the return based on those books contained correct particulars. Therefore, it would be challenging to prove deliberate inaccuracies in such cases. The judgment concluded by allowing the revision, stating that no penalty could be levied solely for inaccuracies, and awarded costs to the assessee and the standing counsel.