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2015 (3) TMI 177 - HC - VAT and Sales TaxImposition of penalty under Kerala General Sales Tax Act, 1963 - Suppression of turnover - Intention to evade tax - Held that:- Returns filed for the assessment years 2003-04, the petitioner had declared the entire turnover relating to sales of moulded plastic furniture effected by it and had only claimed exemption of the said turnover in the return by stating it to be second sales effected within the State. In other words, this is not a case where the petitioner had chosen to suppress any part of the sales turnover in the returns filed by it for the purposes of attracting the penal provisions under the KGST Act. It is also relevant to note that the issue as to who, among two dealers permitted to use the brand name, is to be the brand name holder for the purposes of Section 5(2) of the KGST Act, and on whom the liability to pay tax on the goods sold under the brand name will rest, has been the subject matter of litigation ever since the introduction of Section 5(2) in the KGST Act with effect from 1998. Petitioner was justified in harbouring a bona fide belief that he would not be treated as the brand name holder in a transaction where he had purchased branded goods from another person, who could also have claimed to be a brand name holder for the purposes of Section 5(2) of the KGST Act. That apart, it is not in dispute that in the returns filed by the petitioner for the assessment year in question, he had declared the entire sales turnover in respect of the sales of moulded plastic furniture effected by him and had also claimed exemption by treating the entire sales as second sales for the purposes of the KGST Act. A mere claim for exemption by an assessee, cannot, in my opinion, be treated at par with a suppression of turnover, for the purposes of attracting the penal provisions under the KGST Act. Neither will the mere claim for exemption make the return an incorrect or untrue return for the purposes of attracting the penal provisions under the KGST Act. In an assessment proceedings that has to follow the filing of a return by an assessee, it is always open to the Assessing authority to consider the claim for exemption made by an assessee and either accept it or reject it for valid reasons. While the petitioner had disclosed the entire turnover of sales of moulded plastic furniture in its returns, he was also justified in claiming an exemption taking into account the position in law which, at the time of filing of the return, was in a state of flux. The findings of the respondent in Ext.P6 order that, by claiming exemption, the assessee had tried to evade payment of tax and had also failed to keep true and complete accounts, does not appeal to me as reasonable on the facts of the instant case. - petitioner is not liable to any amount by way of penalty under Section 45A of the KGST Act for the assessment year 2003-04. - Decided in favour of assessee.
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