Bona fide mistake in return defeated penalty under sales tax law where tax was paid before assessment.

Penalty for filing an incorrect return under section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959 is attracted where the return contains incorrect or incomplete particulars, but bona fide error remains relevant. The assessee had not suppressed chemical sales turnover; it was entered in the wrong exempted turnover column. As the mistake was neither wilful nor intentional and the tax, surcharge, additional surcharge and additional tax had been paid before completion of assessment, the revenue suffered no prejudice. On these facts, penalty was not exigible and the levy was set aside.

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Issues: Whether penalty under section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959 was exigible for filing an incorrect return when the mistake was bona fide and the tax due had been paid before final assessment.

Analysis: Penalty under section 12(5)(iii) is attracted where a return contains incorrect or incomplete particulars, but the provision does not exclude consideration of the assessee's bona fides. The assessee had not suppressed the sales turnover of chemicals; it had been shown in the wrong column as exempted turnover. The mistake was found to be neither wilful nor intentional, and the entire tax, surcharge, additional surcharge and additional tax on the chemical sales had been paid before completion of assessment. In these circumstances, the revenue suffered no prejudice in collection of tax on that turnover, and the explanation of bona fide mistake was acceptable.

Conclusion: Penalty under section 12(5)(iii) was not exigible, and the levy confirmed by the authorities below was set aside in favour of the assessee.

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