1990 (6) TMI 211 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to penalty under section 45A(1)(d) of the Kerala General Sales Tax Act, 1963 for non-disclosure of taxable turnover.
2. Interpretation of whether the return submitted was untrue or incorrect.
3. Assessment of penalty by the assessing authority and subsequent revisional orders.

Analysis:
The judgment concerns a challenge to a penalty levied under section 45A(1)(d) of the Kerala General Sales Tax Act, 1963 for the non-disclosure of taxable turnover by the assessee. The assessing authority had imposed a penalty double the tax amount for the alleged deliberate non-disclosure. However, the Deputy Commissioner set aside the order and remanded the penalty proceedings for further consideration. The assessing authority then re-evaluated the case and imposed a penalty of Rs. 40,000, which was challenged through revisions. The Commissioner subsequently modified the order, reducing the penalty to an amount equal to the tax due.

The main issue for consideration was whether the return submitted by the assessee could be deemed untrue or incorrect. The taxable turnover had not been disclosed in the statutory return but was shown in the trading accounts. The assessee explained that the delay in settling disputes with the buyer led to the non-inclusion of the turnover in the return. The court analyzed whether the assessing authority was justified in levying a penalty, considering that the turnover was reflected in the trading accounts, indicating no intention to submit an incorrect return.

The court referred to relevant provisions of the Act, highlighting that penalty could be imposed for an incorrect or incomplete return only if a best judgment assessment was necessary. Citing a Supreme Court decision, it emphasized that if items not included in the turnover were discovered from the dealer's account books and subsequently included, penalty could not be levied. In this case, as the trading accounts were accepted and did not misrepresent the actual turnover, the court held that the assessing authority lacked the power to levy a penalty. The penalty orders were quashed, and a direction was given for the refund of the penalty amount already paid by the petitioner.

In conclusion, the court allowed the petition, emphasizing that the penalty imposition was unjustified due to the presence of the turnover details in the trading accounts and the lack of grounds for a best judgment assessment. The judgment serves as a precedent for cases involving penalties for non-disclosure of turnover and underscores the importance of assessing the intention behind alleged discrepancies in tax returns.