Penalty for late sales tax returns applies on admitted tax shown in the return, even before final assessment.

Under section 11(3) of the Orissa Sales Tax Act, 1947, "tax due" was construed as the admitted tax payable on the basis of the dealer's return, and a return not accompanied by payment of that admitted tax was not a valid return. Penalty for default in filing a valid return could be levied before completion of assessment under section 12, because the penalty mechanism operated independently of final assessment. The provision also did not confine default penalty to Rs. 5 per day; it required application of the higher of the two prescribed rates, namely one-tenth per centum of the tax due or five rupees, for each day of default.

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Issues: (i) Whether the expression "tax due" in section 11(3) of the Orissa Sales Tax Act, 1947 refers to the admitted tax payable by the dealer on the basis of the return. (ii) Whether penalty under section 11(3) at the rate of one-tenth per centum of the tax due can be levied before completion of assessment under section 12. (iii) Whether the maximum penalty leviable for default in filing the return is confined to Rs. 5 per day.

Issue (i): Whether the expression "tax due" in section 11(3) of the Orissa Sales Tax Act, 1947 refers to the admitted tax payable by the dealer on the basis of the return.

Analysis: The statutory scheme required every registered dealer to furnish returns within the prescribed time and to accompany the return with payment of the admitted tax. A return unsupported by proof of such payment was not treated as a valid return. The expression "tax due" in section 11(3) had therefore to be read in the setting of the return-filing obligation and the admitted tax declared by the dealer. The distinction between "tax due" and "tax payable" could not defeat the operation of the penalty provision in this scheme.

Conclusion: The expression "tax due" refers to the admitted tax payable by the dealer on the basis of the return, and the Tribunal's contrary view was incorrect.

Issue (ii): Whether penalty under section 11(3) at the rate of one-tenth per centum of the tax due can be levied before completion of assessment under section 12.

Analysis: Section 11(3) and the connected rules provided a complete mechanism for filing returns, payment of admitted tax, notice of default, and levy of penalty for continued failure. The penalty was attracted by default in furnishing a valid return after the statutory grace period, and its working was not dependent on completion of assessment or final quantification under section 12. The statutory form and the rules contemplated levy and demand of penalty independently of assessment proceedings.

Conclusion: Penalty at the rate of one-tenth per centum of the tax due can be imposed even before assessment under section 12 is completed, and the Tribunal's view was wrong.

Issue (iii): Whether the maximum penalty leviable for default in filing the return is confined to Rs. 5 per day.

Analysis: Section 11(3) prescribed two alternative rates, namely one-tenth per centum of the tax due or five rupees, whichever was higher, for every day of default. The provision did not create a separate ceiling of Rs. 5 per day merely because assessment had not yet been completed. The higher of the two alternatives had to be applied according to the statutory mandate, and the Tribunal's restriction of the penalty to the five-rupee figure had no support in the text.

Conclusion: The maximum penalty was not confined to Rs. 5 per day, and the Tribunal was not justified in limiting the penalty to that amount.

Final Conclusion: The reference was answered in favour of the revenue, with the Tribunal's interpretation of section 11(3) rejected and the penalty provisions held applicable on the basis of the admitted tax shown in the return.

Ratio Decidendi: Where a sales tax statute makes the filing of a return conditional on payment of the admitted tax and prescribes penalty for default by reference to the tax due, the penalty is attracted on the dealer's admitted liability under the return and is not postponed until final assessment.

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