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1983 (7) TMI 293 - HC - VAT and Sales Tax
Issues:
Interpretation of section 43(1) of the M.P. General Sales Tax Act, 1958 regarding penalty for furnishing false returns based on a rejected claim for deduction in sales of cattle feed and poultry feed. Analysis: The case involved references under section 44(1) of the M.P. General Sales Tax Act, 1958, where the Board of M.P., Gwalior referred a question of law to the High Court. The question revolved around whether the dealer's claim for deduction in sales of cattle feed and poultry feed, previously rejected by the assessing authority, rendered the returns false, attracting penalty under section 43(1) of the Act. The assessing authority had imposed penalties for furnishing false returns based on the rejected deduction claim, which was upheld by the appellate authority but later set aside by the Tribunal. The Tribunal found that the assessee had correctly disclosed its sales and that claiming an exemption on certain sales did not make the returns false. The Department appealed to the High Court, leading to the current judgment. The Tribunal's decision was based on the principle that when facts are fully disclosed in a return and not misstated, raising a legal plea of exemption, even if known to be unsustainable, does not render the return false under section 43(1). Citing a previous Division Bench decision, the High Court agreed with this interpretation. The Court held that as the assessee had truthfully disclosed its sales and the exemption claim was based on a legal interpretation, the returns were not false. Consequently, the High Court upheld the Tribunal's decision, stating that no question of law arose in the references. In conclusion, the High Court found that the Tribunal's decision was justified, and the assessee's returns were not false as they accurately disclosed the sales. Therefore, the order imposing penalties under section 43(1) of the Act was set aside. The judgment answered the references accordingly, with each party bearing their own costs.
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