Sales tax penalty may survive remand where concealment is deliberate and a revised return does not cure false reporting.

Penalty under sections 17(3) and 43(1) of the Madhya Pradesh General Sales Tax Act could be sustained even after the assessment was set aside and remanded, because the penalty remained linked to the assessed tax and the appellate power allowed the penalty to be left intact where the reassessment would not alter the concealed turnover or tax avoided. The Tribunal's finding of substantial suppression supported deliberate concealment and the presence of mens rea. A revised return filed after inspection did not cure a knowingly false original return or displace penalty where no bona fide mistake was shown.

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Issues: (i) Whether penalty under sections 17(3) and 43(1) of the Madhya Pradesh General Sales Tax Act, 1958 could be maintained after the assessment was set aside and the matter was remanded for fresh assessment; (ii) Whether the concealment of turnover was deliberate and the revised return displaced the levy of penalty.

Issue (i): Whether penalty under sections 17(3) and 43(1) of the Madhya Pradesh General Sales Tax Act, 1958 could be maintained after the assessment was set aside and the matter was remanded for fresh assessment.

Analysis: The penalty under section 17(3) is linked to the tax assessed, and the penalty under section 43(1) is also referable to the tax payable on assessment. The power under section 38(5) enables the appellate authority to confirm, reduce, enhance or annul the assessment or the penalty, or to set aside either of them or both. That language does not make the setting aside of the assessment automatically entail setting aside the penalty. Where the reassessment could not realistically reduce the concealed turnover or the tax avoided, the appellate authority could leave the penalty intact.

Conclusion: The penalty could be maintained notwithstanding remand of the assessment, and this was in favour of the Revenue.

Issue (ii): Whether the concealment of turnover was deliberate and the revised return displaced the levy of penalty.

Analysis: The Tribunal had found that the suppression was substantial and that the low return was not a bona fide error. Such a finding implied the necessary element of mens rea. A revised return does not erase liability for a knowingly false original return, especially when it was filed only after inspection had exposed the suppression. The assessee did not establish a bona fide mistake, and the magnitude of concealment supported the inference of deliberate concealment.

Conclusion: The concealment was deliberate, the revised return did not absolve the assessee, and the penalty was justified in favour of the Revenue.

Final Conclusion: The reference was answered against the assessee, and the orders maintaining the penalties were sustained.

Ratio Decidendi: A penalty provision linked to assessed tax may be sustained after remand of the assessment where the reopening does not affect the basis or quantum of the concealment, and a later revised return does not neutralize penalty for an intentionally false original return.

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