Penalty for incorrect return upheld where accounts were accepted and assessment proceeded on that basis under the sales tax statute.

Where a dealer's return is found incorrect, but the assessing authority accepts the accounts as correct and completes the assessment on that basis, section 12(4) of the Tamil Nadu General Sales Tax Act applies. The text further states that the proviso to section 12(5) permits penalty in an appropriate case even where the assessment proceeds under the relevant sub-sections, and that the non obstante clause in section 12(4) supports that construction. As section 12(5) had come into force before assessment, the minimum penalty under section 12(5)(iii) was treated as validly imposed, and the challenge to invocation of that provision was rejected.

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Issues: Whether penalty under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959 could be sustained where the return was found incorrect, the accounts were accepted as correct, and assessment was made on the basis of those accounts.

Analysis: The assessment was completed on the basis of the turnover reflected in the accounts after the return was rejected as incorrect. On those facts, section 12(4) was attracted because the assessing authority accepted the accounts as correct and proceeded on their basis notwithstanding the incorrect return. The proviso to section 12(5) showed that penalty could be imposed in an appropriate case under both sub-sections (3) and (5), and the non obstante clause in section 12(4) supported that construction. Since section 12(5) had come into force by the time the assessment was made, the minimum penalty under section 12(5)(iii) was properly imposed.

Conclusion: Section 12(5) was applicable and the penalty was rightly levied; the contention that the provision could not be invoked was rejected.

Final Conclusion: The revision failed and the penalty order was sustained.

Ratio Decidendi: Where a dealer's return is found incorrect but the accounts are accepted as correct and assessment is made on that basis, section 12(4) applies and, if the statute then in force so provides, penalty under section 12(5) can validly be imposed.

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