Kerala Chlorates and Chemicals Limited vs State of Tamil Nadu

Thanikkachalam, J.—The assessee is the appellant herein. The assessment year involved in this appeal is 1981-82. The assessee was

assessed for the assessment year 1981-82 under the Tamil Nadu General Sales Tax Act, 1959. The assessee was assessed on a total and taxable

turnover of Rs. 14,84,682 and Rs. 14,77,980 respectively. The assessing officer found that a taxable turnover of Rs. 2,38,321 has not been

included in the book turnover and hence he came to the conclusion that the assessee submitted incorrect and incomplete return in violation of

section 12(4)(iii) of the Tamil Nadu General Sales Tax Act, warranting levy of penalty u/s 12(5)(iii) of the said Act. Accordingly he levied a penalty

of Rs. 9,530 being 50 per cent of the tax due on the turnover of Rs. 2,38,221. On appeal before the Appellate Assistant Commissioner (C.T.), the

assessee submitted that the mistake in the figure happened due to the negligence of the office men and the mistake was rectified by filing a revised

return before the completion of, the final assessment and therefore, no penalty is leviable u/s 12(5)(iii) of the Act. The Appellate, Assistant

Commissioner accepted the explanations offered by the petitioner and cancelled the penalty. Thereafter, the Joint Commissioner II, suo motu came

to the conclusion that the Appellate Assistant Commissioner was not correct in accepting the explanation offered by the assessee and according to

the Joint Commissioner, the original return as filed cannot be revised. Subsequently even if it is revised before completing the assessment, the

penalty is leviable u/s 12(5)(iii) of the Act. Accordingly, he set aside the order passed by the Appellate Assistant Commissioner and restored the

order passed by the assessing authority in the matter of levying the penalty. It is against that order, the present appeal has been preferred by the

assessee.

According to the learned counsel for the appellant, in the original return filed certain mistakes occurred in the matter of stating the correct figures.

But before the finalisation of the accounts and the completion of the assessment, the assessee came forward with a letter dated October 13, 1982,

expressing his intention to file a revised returns. Accordingly a revised return was filed rectifying the mistake occurred in the original return.

Therefore, according to the assessee, when the revised return was filed to rectify the mistake before the completion of the assessment, no penalty

is leviable u/s 12(5)(iii) of the Act. This explanation offered by the assessee is acceptable in the matter of cancelling the penalty levied u/s 12(5)(iii)

of the Act as per the decision of this Court in the case Bhavani Mills Limited v. State of Tamil Nadu [1994] 94 STC 120. The same view was

taken by a Division Bench of this Court in State of Tamil Nadu v. P. S. Srinivasa lyengar & Sons [1993] 89 STC 349; (1989) 10 SISTC 155

(T.C. No. 77 of 1989) and in Kalyani Agencies v. State of Tamil Nadu (1984) 10 STL (Mad.) 151. It was also brought to our notice that the

Supreme Court in [1994] 93 STC FRSC 7 under the caption ""Penalty"" has stated as under :

Their Lordships P. B. Sawant and N. Venkatachala, JJ., dismissed a SLP by the State to appeal against the judgment and order dated August

18, 1992 of the Madras High Court in T.C. No. 1036 of 1992 whereby the High Court held in revision that where the correct turnover by way of

a revised return had been disclosed before final assessment orders were passed, no penalty was imposable. State of Tamil Nadu v. Hassan

Leathers, SLP (Civil) No. 21234 of 1993.

However, the learned Additional Government Pleader (Taxes) while supporting the order passed by the Joint Commissioner, submitted that if

once the original return is filed with defects, thereafter it cannot be cured by filing a revised return in order to escape the penalty u/s 12(5)(iii) of the

Act.

We have heard the rival submissions. The fact remains that the assessee submitted a revised return rectifying the mistake which had occurred in

the original return before completing the original assessment. The explanation offered by the assessee was that by mistake the original return was

filed with defects due to the negligence committed by the staff of the office. The said ground appears to be acceptable. Considering the explanation

offered by the assessee that the revised return was filed for rectifying the mistake in the original return before the completion of the original

assessment, no penalty is leviable u/s 12(5)(iii) of the Act. This view we have taken on the basis of the decisions cited by us hereinabove.

Accordingly, the order passed by the Joint Commissioner is set aside and the order passed by the Appellate Assistant Commissioner (C.T.)

stands restored. In the result, this appeal is allowed. No costs.

Appeal allowed.