2002 (2) TMI 1295 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of exhibit P6 order passed by the Member, Board of Revenue setting aside the first revisional authority's order and confirming the penalty imposed by the assessing authority.

Analysis:

1. The petitioner, engaged in the business of roller flour mills, claimed exemption for the entire turnover of wheat products based on decisions of various High Courts. The assessing authority imposed a penalty for filing incorrect returns under section 45A of the Kerala General Sales Tax Act, 1963. The Supreme Court clarified that wheat and wheat products are different commodities, leading the petitioner to file correct returns for subsequent years and pay the tax due. The penalty was imposed for the year 1991-92, alleging the petitioner filed incorrect returns to evade tax. However, the assessing authority's order imposing the penalty was later cancelled in a revision petition for the years 1991-92 and 1992-93.

2. Subsequently, suo motu proceedings were initiated, and the impugned order was restored, justifying the penalty on the grounds that the Supreme Court set aside the previous decisions of the High Courts. The petitioner argued that they paid the entire amount due in instalments after the stay order was vacated, with no mens rea or suppression of turnover. The department contended that the petitioner could have filed a revised return, but the Act did not allow revised returns before a certain date. The Supreme Court precedent establishes that when an assessee files a true return disclosing the entire turnover and claims exemption, no penalty should be imposed.

3. The assessing authority's justification for the penalty was based on the failure to file a revised return after the Supreme Court decision. However, the petitioner disclosed the entire turnover in the original return and claimed exemption in good faith. The assessing authority failed to make a timely assessment despite the Supreme Court's decision, and the tax was paid before the assessment and penalty notice. The court found that the petitioner did not file an untrue or incorrect return and that the penal provision could not be invoked against them.

4. The court also addressed the procedural aspect of the case, noting that since it was a suo motu revision, the proper course of action would have been to file an appeal before the High Court instead of an original petition. Despite the delay in the proceedings, the court held that the original petition could not be dismissed in light of the alternate remedy available. Ultimately, the court found that the minimal requirements to attract the penal provision under section 45A(1)(d) were not satisfied, leading to the setting aside of the impugned order and restoration of the second respondent's order.

In conclusion, the court allowed the original petition, dismissed the order on C.M.P. No. 17996 of 1998 in O.P. No. 10482 of 1998, and set aside the exhibit P6 order, restoring the order of the second respondent.