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The State of Tamil Nadu Vs. V.P.S. Narayana Nadar and Co. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case No. 362 of 1983 (Revision No. 133)
Judge
Reported in[1984]56STC267(Mad)
ActsTamil Nadu General Sales Tax Act, 1959 - Sections 7A
AppellantThe State of Tamil Nadu
RespondentV.P.S. Narayana Nadar and Co.
Advocates:K.S. Bakthavatsalam, Additional Government Pleader
Cases ReferredState of Tamil Nadu v. Manakchand
Excerpt:
- .....it took note of the fact that rule 5(1) was amended only on 16th april, 1981, providing that the total turnover shall also include the turnover of purchases liable to tax under section 7a of the act, that the form a-2 return did not contain a specific column for the purchase turnover liable to tax under section 7a, that a separate column for the turnover under section 7a was introduced in the form of return aa-1 subsequently and that the entire purchase turnover liable to tax under section 7a has been shown in the accounts and tax has also been remitted. taking note of these facts, the tribunal took the view that the non-inclusion of the purchase turnover taxable under section 7a in the return by the assessee is not deliberate, that the non-inclusion is mainly due to the bona fide.....
Judgment:

Ramanujam, J.

1. The assessees in this case have disputed before the Tribunal the turnover assessed under section 7A and additional tax thereon and levy of penalty of Rs. 55,984.00 under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959, which were sustained by the Appellate Assistant Commissioner on first appeal. The Tribunal, after examining the records, confirmed the assessment under section 7A and also the additional tax due thereon. However, in respect of penalty, the Tribunal held that the assessees are not liable to pay penalty under section 12(5) and set aside the same. Aggrieved by the order of the Tribunal, in so far as it set aside the levy of penalty, the State has chosen to file this tax case.

2. It is seen that originally the assessing authority levied a penalty of Rs. 53,976 under section 12(5) at 1 1/2 times the tax due on the turnover not disclosed in the return. The Appellate Assistant Commissioner on appeal had reduced the penalty equal to the tax due at 4 per cent on Rs. 8,99,607.00, which is the turnover not disclosed in the return. When the matter reached the Tribunal, it took note of the fact that rule 5(1) was amended only on 16th April, 1981, providing that the total turnover shall also include the turnover of purchases liable to tax under section 7A of the Act, that the form A-2 return did not contain a specific column for the purchase turnover liable to tax under section 7A, that a separate column for the turnover under section 7A was introduced in the form of return AA-1 subsequently and that the entire purchase turnover liable to tax under section 7A has been shown in the accounts and tax has also been remitted. Taking note of these facts, the Tribunal took the view that the non-inclusion of the purchase turnover taxable under section 7A in the return by the assessee is not deliberate, that the non-inclusion is mainly due to the bona fide doubt whether the total turnover will include the purchase turnover liable to be taxed under section 7A, that the said question was ultimately decided by a Full Bench of this Court recently and that, therefore, the penalty cannot be levied under section 12(5).

3. The learned Government Pleader contends that in this case having regard to the fact that the return submitted by the assessee did not include the purchase turnover liable to be taxed under section 7A, the return cannot be said to be correct and complete and that once the return is found to be incorrect and incomplete the penalty under section 12(5) could be levied without reference to the bona fides of the assessees. According to him, the question whether the assessees have acted deliberately or not in submitting an incorrect and incomplete return is not material for the application of section 12(5), and that once it is found that the return submitted is incorrect and incomplete, the penalty could be levied.

4. The assessment year in this case is 1980-81. It is only in the subsequent year, that rule 5(1) was amended by G O.P. No. 391/Commercial Taxes and Religious Endowments dated 16th April, 1981, introducing the proviso as follows :

'Provided that the total turnover shall also, include the turnover of purchases liable to tax under section 7A of the Act.'

5. Since rule 5(1) was amended requiring the inclusion of the purchase turnover taxable under section 7A in the total turnover of the assessee only on 16th April, 1981, in the assessment year 1981-82, the assessee cannot be found fault with for not including the turnover of purchases liable to be taxed under section 7A in the total turnover. In the assessment year 1980-81 the monthly returns are to be submitted in form A-2. Admittedly, form A-2 does not require the purchase turnover liable to be taxed under section 7A to be included in the total turnover. As a matter of fact, there is no column in form A-2 relating to the purchase turnover taxable under section 7A. It is only in the subsequent year, after the amendment of rule 5(1) that the new return in form AA-1 was prescribed and only in that form there is a separate column showing the purchase turnover under section 7A which has to be ultimately aggregated as part of the total turnover. Having regard to these facts, the Tribunal has taken the view that in this case the return filed by the assessees cannot be taken to be incorrect, notwithstanding the fact that the return did not show the actual purchase turnover taxable in the hands of the assessee under section 7A. We are also inclined to agree with the view of the Tribunal on the said facts of this case. The position whether the purchase turnover taxable under section 7A is includible in the total turnover of the assessee was not clear and the matter came to be clarified by the Full Bench of this Court only recently in State of Tamil Nadu v. Manakchand (T.C. No. 731 of 1977 dated 3rd February, [1984] 56 STC 237 (FB). Till then the assessees have been taking the view that the purchase turnover taxable under section 7A is not includible in the total turnover. Recently the position has been made clear. Having regard to the fact that form A-2, did not require the purchase turnover under section 7A being included in the total turnover, the return filed by the assessees cannot be said to be incorrect or incomplete. Therefore, in this case the Tribunal appears to be right in holding that section 12(5) cannot be invoked in this case. The tax case is, therefore, dismissed.


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