1997 (2) TMI 525 - HC - VAT and Sales Tax

Summary

Issues:
1. Levy of penalty under the CST Act for non-disclosure of turnover.
2. Consideration of mens rea in penalty imposition.
3. Bona fide mistake as a defense against penalty imposition.

Analysis:
1. The case involved a tax case revision against the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding the assessment year 1980-81. The assessee, a registered dealer, had reported a total turnover but failed to disclose certain sales of grams that were taxable under the CST Act. The assessing officer levied a penalty for the incorrect return, which was upheld by the Appellate Assistant Commissioner but later cancelled by the Appellate Tribunal due to a bona fide mistake made by the assessee.

2. The Additional Government Pleader contended that mens rea is not relevant for penalty imposition under the CST Act. Citing a previous judgment, it was argued that deliberateness or wilfulness is not necessary to invoke penalty provisions. On the other hand, the assessee relied on case laws to support the argument that the omission was due to a bona fide mistake and that the Appellate Tribunal correctly cancelled the penalty based on this defense.

3. The High Court analyzed the arguments and case laws presented by both sides. It noted that the assessee had voluntarily rectified the mistake before the assessing officer detected it, showing a bona fide belief in the error. The Court referred to previous judgments emphasizing that where there is a genuine mistake on the part of the assessee, penalty cannot be imposed. Based on the facts and findings of the Appellate Tribunal, the High Court concluded that the omission to disclose the turnover was indeed a bona fide mistake, leading to the dismissal of the tax case revision and upholding the cancellation of the penalty by the Tribunal.