9911796707
TMI Blog1998 (4) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter, the Board of Revenue passed exhibit P5 order cancelling exhibit P3 revisional order and restoring exhibit P2 penalty order passed by the first respondent. 2.. The brief facts necessary for adjudication of the question involved in this case are as follows: As already stated, the petitioner is an oil miller. The petitioner purchases coconut/copra locally for the manufacture of coconut oil and coconut oil cake. For the assessment year 1990-91 the petitioner purchased 2,220.80 quintals of copra locally for Rs. 43,96,403.86 for the oil mill section and 2,134 quintals of copra valued at Rs. 42,24,525 was used for manufacture of coconut oil. Out of the 1368.11.950 quintals of coconut oil produced, 1,296.32 quintals of coconut oil was sold locally and the balance on inter-State trade. For the assessment year 1990-91 the petitioner filed return where it had declared only an amount of Rs. 2,40,302.50 and claimed exemption on the taxable turnover in copra amounting to Rs. 39,84,222.50. The petitioner had paid the tax due on the taxable turnover of copra returned and also collected and remitted tax on the taxable turnover of coconut oil and cake at 5 per cent. According to the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner in reply to the notice under section 45A of the Act, had admitted that it had wrongly claimed exemption from tax on the turnover of copra crushed, but in spite of request, it did not remit the tax due on the purchase turnover of copra used for production of coconut oil and coconut oil cake. It is in these circumstances the first respondent took the view that the assessee sought to evade tax on the purchase turnover of copra by submitting untrue returns. The first respondent also imposed the maximum penalty stating that considering the conduct of continuing and wilful default it is necessary to impose the maximum penalty. The second respondent in revision cancelled the penalty stating that as per the explanation if the petitioner remits tax at the rate of 5 per cent on the sales tax on coconut oil and cake, he is not liable to pay tax on the purchase turnover of copra or if the petitioner remits tax on the purchase turnover of copra, he is liable to pay tax on the sale of coconut oil and cake only at 3 per cent and that in the instant case, the petitioner had opted the former method and the entire tax due as per law has been remitted. The Board of Revenue, on the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent on the sales of coconut oil which they have collected on their sales and stated that it will not give an exemption from payment of tax due on the purchase turnover of copra crushed. It is also stated that the explanation to entry 50/51 of the First Schedule to the Act cannot be construed as an exemption from tax on the copra used for producing oil. It is also stated that the question that arises in the instant case is whether the petitioner has violated the statutory obligations or not and that it can be seen from the facts already stated that the petitioner has filed untrue and incorrect return for the year 1990-91 and the tax due thereon has not been paid in time which is a violation of the provisions of the Act which attracts penal liability. It is stated that the contention of the petitioner that the Government has not lost any revenue as the prescribed rate of 5 per cent has been collected and paid over to Government is not sustainable. It is also stated that the petitioner failed to remit 2 per cent tax on the purchase turnover of copra crushed and that the petitioner ought to have collected only 3 per cent on the sales of coconut oil and coconut oil cake. 5.. I h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le reason that the petitioner did not remit the tax due on the purchase turnover of copra inspite of demand. The learned Government Pleader appearing for the respondents, on the other hand, submitted that the failure to show the taxable turnover of copra in the return filed for the assessment year 1990-91 is wilful and that the attempt of the petitioner was to evade the payment of tax due on the said turnover. The learned Government Pleader further submitted that the petitioner had illegally collected tax at the rate of 5 per cent on the sales turnover of coconut oil and coconut oil cake. The learned Government Pleader submitted that the fact that the petitioner had remitted the tax collected at the rate of 5 per cent, will not exonerate the petitioner from remitting the tax due on the purchase turnover of copra. The learned Government Pleader further submitted that the Board of Revenue was perfectly justified in cancelling the appellate order, exhibit P3 and in restoring the penalty order by exhibit P5. 6.. I have considered the rival submissions. The question that arises for consideration in this case is as to whether the Board of Revenue was justified in cancelling the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to evade tax due on copra by submitting untrue returns. The tax sought to be evaded is quantified at Rs. 1,05,980.32. Considering the conduct of continuing and wilful default, this authority considers it necessary in this case, the imposition of maximum penalty. The first appellate authority in exhibit P3 order considered the matter with reference to the explanation to entry Nos. 50 and 51 of the First Schedule and observed as follows: As per the above explanation, if the petitioner remits tax at the rate of 5 per cent on the sales of coconut oil and cake, he is not liable to pay tax on the purchase turnover of copra. Similarly, if the petitioner remits tax on the purchase turnover of copra, he is liable to pay tax on the sale of coconut oil and cake only at 3 per cent. Here, the petitioner has opted the former method and the entire tax due as per law has been remitted. Under the circumstances, the imposition of penalty is not warranted. Hence the following orders are passed. The Board of Revenue in exhibit P5 order held that the order passed by the Deputy Commissioner is erroneous, against law and prejudicial to revenue. It is stated that the purchase value of copra u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty in the following manner: An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. The Supreme Court in the subsequent decision in Shiv Dutt Rai Fateh Chand v. Union of India [1983] 53 STC 289 held that the considerations which should weigh with the authorities while imposing penalty are w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a proper construction of the definition of sale price in section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958, and section 2(h) of the Central Sales Tax Act, 1956, the amount of freight did not fall within the definition and was not liable to be included in the taxable turnover. This was the reason why the assessee did not include the amount of freight in the taxable turnover in the returns filed by it. Now, it cannot be said that this was a frivolous contention taken up merely for the purpose of avoiding liability to pay tax. It was a highly arguable contention which required serious consideration by the court and the belief entertained by the assessee that it was not liable to include the amount of freight in the taxable turnover could not be said to be mala fide or unreasonable. What section 43 of the Madhya Pradesh General Sales Tax Act, 1958, requires is that the assessee should have filed a false return and a return cannot be said to be false unless there is an element of deliberateness in it. It is possible that even where the incorrectness of the return is claimed to be due to want of care on the part of the assessee and there is no reasonable explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier and held that the use of the words evasion and the expression sought to be evaded in section 45A(1) of the Kerala General Sales Tax Act, 1963, makes it clear that it is not the mere default that is made the foundation for the liability to penalty, but it is the contumacious or fraudulent or other blame worthy or objectionable conduct of an assessee in fulfilling his obligations mentioned in section 45A of the Act, that will attract the levy of penalty. It was held that the concept of mens rea is embedded in the expressions evaded or sought to be evaded occurring in section 45A(1) of the Act. 8.. In the instant case, as already stated, the petitioner claimed exemption on the purchase turnover of copra on the bona fide belief that it is not liable to pay tax on the same in view of the explanation to items 50 and 51 of the First Schedule to the KGST Act since the petitioner had remitted tax at the rate of 5 per cent on the sales of coconut oil and cake. It is also relevant to note that the petitioner had remitted the tax due on the taxable turnover. The liability to pay balance tax arose under exhibit P1 only because of exhibit P6 order forfeiting the excess collectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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