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TMI Blog2010 (12) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... ovember 19, 2004, the assessee filed revised return declaring total and taxable sales turnover within the State at Rs. 79,19,591 and Rs. 76,87,423 and exemption was claimed on a turnover of Rs. 2,32,168 as representing the turnover on sale of goods as second seller. The assessee admitted the tax liability of Rs. 10,81,978 under the KST Act. However, export sales turnover of Rs. 38,59,180 was declared and exemption was sought on the same. One more revised return came to be filed on September 15, 2005, for the year in question declaring the total and taxable sales turnover as follows: (Rs.) (i) Total and taxable sales turnover 1,32,46,538 (ii) Second and subsequent sales turnover 2,32,168 (iii) Declaring total and taxable turnover 76,87,423 (iv) Admitted tax liability 10,79,401 In the returns filed under the CST Act a turnover of Rs. 38,59,180 was declared as representing the sales in the course of export. The Assistant Commissioner of Commercial Taxes rejected the declared turnover and passed orders determining the total turnover as under: (Rs.) (Rs.) (i) Total turnover 1,32,46,538.40 Addition of purchased turnover of consumables like hardw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 12(3) of the KST Act and therefore, the Tribunal was not justified in holding that there was no best judgment and penalty under section 12(3) of the KST Act, could not have been levied. She relies upon the following judgments to substantiate the contentions raised by the Revenue and seeks for setting aside the orders of the Tribunal which had set aside the levy of penalty of Rs. 6,00,000 on the assessee: (a) Konatham Bhaskar Rao v. State of Andhra Pradesh [1986] 63 STC 297 (AP); (b) M.V. Pavadai Chettiar Sons v. State of Madras [1968] 21 STC 67 (Mad). The learned counsel for the respondent/assessee contends that there was no suppression or omission of any amounts on the part of the respondent/assessee as there was no suppression of figures in the returns filed which was found in the books of accounts. According to him, misclassification of certain items or shown as second sales of certain other items is only under misconception by the assessee. Therefore, there was no intention to evade payment of any tax. Hence, there could not have been any best judgment assessment by the assessing officer and in the absence of best judgment assessment under section 12(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated March 25, 2008 passed by the Karnataka Appellate Tribunal in STA No. 226/2006 is correct and in accordance with law? (b) Whether, on the facts and in circumstances of the case, can it be held that the Appellate Tribunal was right in law in applying the decision of S.G. Jayaraj Nadar reported in [1971] 28 STC 700 (SC) to the facts of the case? (c) Whether, on the facts and in circumstances of the case, can it be held that the Appellate Tribunal erred in misinterpreting section 12(3) and 12(4) of the Act and the power to levy penalty under section 12(4) of the KST Act?" The first decision relied upon by the learned Government Advocate is the case of Konatham Bhaskar Rao v. State of Andhra Pradesh [1986] 63 STC 297 (AP). In this case, their Lordships of the Andhra Pradesh High Court after referring to the facts pertaining to S.G. Jayaraj Nadar & Sons case [1971] 28 STC 700 (SC) and facts of Pusuluri Satyanarayana Murthy's case [1978] 42 STC 103 (AP) held that there was no justifications on the part of the assessee to rely upon the decision of the Supreme Court in S.G. Jayaraj Nadar's case [1971] 28 STC 700 (SC) as facts were different. At para 9 of the Konatham B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on the part of the assessee that he committed an offence. On the contrary, he claims protection of law for the offence that he had admittedly committed." Another judgment relied upon by Smt. Sujatha is M.V. Pavadai Chettiar Sons v. State of Madras [1968] 21 STC 67 (SC). In the said case, there was suppression of turnover disclosed in pocket note-book when compared with the books of accounts maintained by the assessee. Therefore inclusion of suppressed turnover in supplementary return and filing of such return before final assessment and imposition of penalty under such circumstances was upheld. It would be necessary to extract relevant paragraph, which reads as under (page 70 in 21 STC): "It appears to us that when once the assessee elects to be assessed on the basis of his monthly returns, he is obliged to submit correct returns so far as the turnover covered by the monthly returns is concerned. In this case, admittedly at the time when the assessee. . ." The learned Government Advocate has also referred to the case of State of Madras v. S.G. Jayaraj Nadar & Sons [1971] 28 STC 700 (SC) which was relied upon by the KAT to contend that the facts in the said case were entirely d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prescribed or specified in that behalf, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall assess the dealer to the best of his judgment, recording the reasons for such assessment: Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of proving the correctness and completeness of the return submitted by him. (4) When making an assessment under sub-section (3), the assessing authority may also direct the dealer to pay in addition to the tax assessed, a penalty,- (a) not exceeding an amount equivalent to the tax due but not less than one half of the amount of tax due on the turnover that was not disclosed by the dealer in his return; or (b) not exceeding an amount equivalent to tax but not less than one half of the tax assessed in the case of failure to submit a return; or (c) not exceeding an amount equivalent to the tax due but not less than one half of the amount of tax due on the turnover which in the opinion of the assessing authority would not have been disclosed voluntarily by the dealer in his return if such turnover was not noticed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a matter of fact, in the grounds of appeal urged before the first appellate authority by the assessee at ground G, it is urged as under: "(G) Due to mis-guidance that credit card sales do not attract tax, they have not paid tax thereon and expecting purchase bills from the dealers, they claimed exemption as second sales. But the selling dealers did not issue bills ultimately the appellant was held as first dealer. There is no non-disclosure of turnover, penalty under section 12(4) levied is illegal and unwarranted." In the present case but for the inspection and gathering intelligence report, actual suppression of details of this credit card sales would not have come to light but for the lifting of the veil and actual taxable turnover would not have come to light. Therefore, it is a case of incorrect returns by giving wrong description of the sales and claiming exemption disclosing wrong information. Therefore, it is a case of definitely incorrect returns as there is suppression of details of the actual credit card sales, which came to light only after verification of the account books. Hence, none of the decisions relied upon by the respondent/assessee would come to its rescue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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