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TMI Blog2009 (6) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the order of the Tribunal in having setting aside the penalty imposed on the respondent under Section 12 (5) (iii) of the Tamil Nadu General Sales Tax Act, 1959. The sale value of the cement bags manufactured by the respondent was determined by the cement control order. It is not in dispute that the said sale value is determined in the cement control order by including the freight and packing charges. Nevertheless, the respondent in the course of its sale also charged a further sum by way of freight and packing charges over and above the price fixed in the cement control order. 3. While submitting its returns, the respondent disclosed such freight and packing charges in the total turnover and thereby the same were not included in the taxable turnover. In support of its claim for its non-inclusion in the taxable turnover, the respondent places reliance upon the decision of this Court reported in (1982) 51 STC 171 (Ramco Cement Distribution Co.(P.) Ltd. Vs. The State of Tamil Nadu). The said decision came to be reversed by the Hon'ble Supreme Court in the decision reported in (1993) 88 STC 151 (Ramco Cement Distribution Co.(P.) Ltd. Vs. The State of Tamil Nadu). 4. It is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y per cent but which shall not be more than one hundred and fifty per cent of the amount of tax payable; (ii) which, in the case referred to in clause (ii) of sub-section (4) shall be equal to two per cent of the tax payable for every month or part thereof during which the default in the submission of the return continued subject to a maximum of fifty per cent of the tax; and (iii) which, in the case referred to in clause (iii) of sub-section (4), shall not be less than fifty per cent but which shall not be more than one hundred and fifty per cent of the difference in tax payable on the turnover disclosed in the return and that determined by the assessing authority; Provided that no penalty under sub-sections (3) and (5) shall be imposed after a period of five years from the expiry of the year to which the assessment relates and unless the dealer affected has a reasonable opportunity of showing cause against such imposition." 8. Under Section 12 (4) the circumstances which has warranted the imposition of penalty are: (i) non filing of the returns (ii) belated filing of the returns (iii) submission of incorrect or incomplete returns. In the case on hand, it is not in dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der rule 6(c). We are therefore of the view that this decision does not in any way help the learned counsel for the department." (Emphasis added) That was also the case where the issue related to the price of cement bags as determined in the cement control order where freight and packing charges were independently charged and collected from the customers. 10. In fact the respondent assessee was fortified by the declaration of law made in the said decision. The respondent assessee in its return though declared freight charges and packing charges in the total turnover, excluded the same for arriving at the taxable turnover. The said decision as stated earlier came to be subsequently reversed by the Hon'ble Supreme Court in (1993) 88 STC 151 (Ramco Cement Distribution Co.(P.) Ltd. Vs. The State of Tamil Nadu) wherein the Hon'ble Supreme Court while reversing the said decision declared the legal position as under in page 164: "....In our view, this position has been correctly set out, applying the decision in the case of Rai Bharat Das & Bros. (1988) 71 STC 277 (SC) in State of Tamil Nadu Vs. Vanniaerumal & Co. (1990) 76 STC 203 (Mad.) (FB), Dalmia Cement (Bharat) Ltd. Vs. State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , section 7-A providing for levy of purchase tax was not attracted." 12. Useful reference can also be had from the decision reported in (2000) 117 STC 457 (E.I.D. Parry (I) Ltd., Vs. Assistant Commissioner of Commercial Taxes and Another), wherein the Hon'ble Supreme Court while substituting the imposition of penalty under Section 12(5) of the Act held as under in paragraph 23: "23. But so far as levy of penalty is concerned, we do not think that the sales tax authorities were justified in levying it. Till the judgment of the Madras High Court, on July 15, 1991, in Perambalur Sugar Mills Ltd. Vs. State of Tamil Nadu (1992) 86 STC 17, the correct position of law within the State of Tamil Nadu was not free from doubt. Even thereafter, the Sales Tax Tribunal had in subsequent orders held that transport subsidy was not includible in the taxable turnover. Such a view was held by the Tribunal till March 19, 1993. It appears that on bona fide belief that planting and transport subsidies were not includible in the taxable turnover, the appellants had not included those amounts in their turnover and for that reason non-inclusion of these two items in the turnover do not seem to be intenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal with a view to defeat its tax liability. The invocation of Section 12(4) in such circumstances cannot be mechanically made and the Assessing Authority should apply its mind to the facts and circumstances of each case and only when the Authority finds that the assessee with a view to evade the payment of tax deliberately and intentionally submitted incorrect or incomplete return then and then only the imposition of penalty as prescribed under Section 12(5) of the Act can be imposed. 14. We are also fortified by our conclusion in the light of the proposition of law as laid down by the Hon'ble Supreme Court in the decision reported in (2000) 117 STC 457 (E.I.D. Parry (I) Ltd., Vs. Assistant Commissioner of Commercial Taxes and Another) wherein the Hon'ble Supreme Court in identical circumstances held that when a party acted based on the law declared by the decisions of the High Court bona fide that certain components would not fall within the taxable turnover and which decision came to be later reversed and thereby liability came to be fastened on a later date, the imposition of penalty would not be automatic. 15. Having regard to our above conclusion, we are convinced that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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