National Garage, Nagpur vs President, Board of Revenue, M.P. and others

B. Dayal, J.

The main point involved in this case is as to whether the Commissioner of Sales Tax, in exercise of revisional powers u/s 39 of the Madhya Pradesh General Sales Tax Act, was justified in imposing the penalty of Rs. 10,000 on the petitioner. The Commissioner held that u/s 43 of the Act the penalty should have been imposed by the Sales Tax Officer which he failed to do and thus caused toss of revenue to the State.

The undisputed facts are that the petitioner had filed a return for the period 26th April 1960 to 23rd July 1960; but before the assessment was completed, it filed a revised return on 31st July 1964 in which the taxable turnover was disclosed at approximately double the figure of what was shown in the first return. The petitioner also deposited, at the time of filing of the revised return, the balance of the sales tax dues as per the revised return. The Sales Tax Officer did not find any fault with the revised return and accepting it to be correct assessed the petitioner accordingly. He, however, imposed some penalty u/s 17 of the Act for late filing of the return. Later on, the Commissioner of Sales Tax, acting u/s 39 of the Act, started proceedings for imposing penalty u/s 43 of the Act after serving a notice on the petitioner, and imposed the penalty of Rs. 10,000 as indicated above. The ground was that the petitioner deliberately concealed its turnover or filed a false return and thereby exposed itself to the penalty u/s 43 of the Act. From the order of the Commissioner it is clear that he referred to the first return which the petitioner had filed and because it was defective that he imposed the penalty in question. In our opinion, the Commissioner was in error in basing his order on the first return. Section 43 of the Act reads as follows:

Power of Commissioner or Appellate Authority to impose penalty.--(1) If the Commissioner or the Appellate Authority in the course of any proceeding under this Act is satisfied that a dealer has deliberately concealed his turnover in respect of any goods or furnished a false return, the Commissioner or the Appellate Authority, as the case may be, may, after giving the dealer a reasonable opportunity of being heard direct that the dealer shall in addition to tax payable by him, pay by way of penalty a sum not exceeding the amount of the tax, which would have been avoided if the return, furnished by the dealer, had been accepted as correct.

It is clear from section 43 of the Act that penalty is imposed for filing a ''false return'' or ''deliberately concealing turnover in respect of goods''. If this happens, a penalty not exceeding the amount of the tax "which would have been avoided if the return furnished by the dealer had been accepted as correct" can be imposed. The latter part of section 43 clearly shows that the return must be such on which the taxing authorities are asked to act and but for their alertness in discovering the falsity of the return, tax would have been avoided. In this particular case, there was no chance of any tax having been avoided inasmuch as the petitioner had filed a fresh and revised return. It is no doubt true that the latter part of section 43 provides for the measure of penalty; bat that part also clearly indicates that the return to which it refers is the return on which the sales tax authorities are asked to act. As the first return was already withdrawn by the petitioner, there was no question of accepting or rejecting it. In such a case, it cannot be said that there was any attempt on the part of the assessee to conceal the turnover and thereby deprive the department of the proper tax. Similarly, it cannot be said that the first return, which the petitioner-assessee had filed, if accepted, would have resulted in avoidance of payment of any amount of tax inasmuch as the first return was already withdrawn. The very fact that an assessee is allowed to file a revised return is indicative of the fact that the return, which is no longer the basis of assessment, cannot be utilised for imposition of penalty u/s 43 of the Act. Its operation must, therefore, be confined to only that return on the basis of which the assessee desires to be assessed, and it is that return which should be found to be either ''false'' or ''such in which any turnover is concealed with idea of avoiding payment of appropriate tax''. The only result of filing a fresh return is that the assessee exposes himself to a penalty u/s 17 of the Act for filing the return late. That penalty was already imposed by the Sales Tax Officer. We are, therefore, of the opinion that section 43 of the Act does not apply in the present case and the Commissioner of Sales Tax had no jurisdiction to impose the penalty in question on the petitioner u/s 43 of the Act.

In the result, the petition is allowed and the order of the Commissioner of Sales Tax imposing the penalty (Annexure D to the petition) is quashed. The petitioner shall get its costs. Counsel''s fee is fixed at Rs. 100. The amount of security deposit shall be refunded to the petitioner.