Mutual mistake on taxable rate barred penalty for excess sales tax collection under the Tamil Nadu sales tax law.

Penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959 was held inapplicable where excess tax was collected because both the assessee and the assessing authority proceeded on the same mistaken taxable rate. The assessee had collected tax at 30% on the basis that the goods fell under item 135 of the First Schedule, and that basis was accepted in assessment until the correct rate was later settled in the assessee's own case. As the excess collection arose from a mutual mistake rather than conduct attributable to the assessee alone, the statutory penalty provision could not be invoked, and the Revenue's challenge failed.

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Issues: Whether penalty under section 22(2) of the Tamil Nadu General Sales Tax Act, 1959, was leviable for collection of excess sales tax when both the assessee and the assessing authority proceeded on a common mistaken basis as to the taxable rate.

Analysis: The assessee had collected tax at 30 per cent on the footing that the goods fell under item 135 of the First Schedule, and the assessing authority had also accepted that basis in assessment. The correct rate was settled only later by the Tribunal in the assessee's own case. On these facts, the excess collection was not attributable to the assessee alone but arose from a mutual mistake between the assessee and the assessing authority. In such circumstances, the statutory penalty provision could not properly be invoked.

Conclusion: Penalty under section 22(2) was not leviable, and the challenge by the Revenue failed.

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