1983 (6) TMI 170 - HC - VAT and Sales Tax

Summary

Issues:
1. Dispute over turnover assessed under section 7-A, additional tax, and penalty under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959.
2. Tribunal's confirmation of assessment under section 7-A and additional tax, but setting aside the penalty.
3. Applicability of penalty under section 12(5) for non-inclusion of purchase turnover taxable under section 7-A in the return.
4. Interpretation of rule 5(1) and its impact on the assessment year.
5. Tribunal's decision based on the timing of the rule amendment and the absence of specific columns in the return forms.
6. Argument regarding the correctness and completeness of the return for penalty imposition.
7. Tribunal's decision upheld based on the lack of clarity regarding the inclusion of purchase turnover under section 7-A in the total turnover.

Analysis:
The High Court of Madras addressed a case where the assessees disputed the turnover assessment, additional tax, and penalty under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959. The Tribunal confirmed the assessment under section 7-A and the additional tax but set aside the penalty, leading to the State filing a tax case. The issue revolved around the non-inclusion of purchase turnover taxable under section 7-A in the return, impacting the penalty imposition under section 12(5. The assessing authority initially levied a penalty, which was later reduced by the Appellate Assistant Commissioner. However, the Tribunal considered the timing of rule 5(1) amendment, noting that the return forms did not specify the inclusion of purchase turnover under section 7-A. The Tribunal concluded that the non-inclusion was not deliberate but due to a lack of clarity, especially before a Full Bench clarified the matter recently.

The Government Pleader argued that the correctness and completeness of the return should determine penalty imposition under section 12(5), irrespective of the assessees' intentions. However, the Court highlighted the amendment to rule 5(1) and the absence of specific columns for purchase turnover under section 7-A in the return forms during the assessment year. The Tribunal's decision was supported based on the lack of clarity regarding the inclusion of purchase turnover under section 7-A in the total turnover. The Court agreed with the Tribunal's reasoning, emphasizing that the return filed by the assessees could not be deemed incorrect or incomplete given the circumstances and the recent clarification by a Full Bench on the matter. Consequently, the Court dismissed the tax case, affirming that section 12(5) could not be invoked in this scenario.