False return penalty fails where full disclosure is made and only the tax classification claim is disputed.

A return is not false where the assessee fully discloses the material facts, including turnover and the basis for claiming exemption, even if the legal position on taxability is later found to be incorrect. The dispute concerned whether kutti machines were taxable, which was a question of legal classification and exemption rather than concealment of facts. On that basis, a mere unsustainable legal claim did not amount to furnishing a false return or concealment under section 43(1) of the Madhya Pradesh General Sales Tax Act. The penalty condition was therefore not met, and the penalty was held to be invalid.

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Issues: Whether the assessee furnished a false return within the meaning of section 43(1) of the Madhya Pradesh General Sales Tax Act, and whether the penalty imposed under that provision was lawful.

Analysis: The return disclosed all material facts, including the turnover and the basis on which exemption was claimed. The dispute was only whether kutti machines were taxable, which involved a legal contention on classification and exemption. A mere incorrect legal claim, when supported by full disclosure of facts, does not amount to concealment or to furnishing a false return. The statutory condition for penalty under section 43(1) was therefore not satisfied.

Conclusion: The assessee cannot be said to have furnished a false return, and the penalty imposed under section 43(1) was not justified and was invalid.

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