Penalty for omission of later-taxable turnover was not justified where section 7-A liability arose only on subsequent disposal.

Penalty under section 12(5) of the Tamil Nadu General Sales Tax Act was held not leviable for omitting turnover later taxable under section 7-A from the return for the 1980-81 assessment year. Liability under section 7-A arose only when goods purchased from non-assessees were ultimately disposed of otherwise than by sale in the State or in inter-State trade, so the assessee could not know at the time of filing that the purchase turnover would attract tax. Rule 5(1) was amended only from 16 April 1981 and applied from 1981-82, making the omission neither wilful nor a proper basis for penalty.

---

---

Issues: Whether penalty was leviable under section 12(5) of the Tamil Nadu General Sales Tax Act for non-inclusion of turnover taxable under section 7-A in the return for the assessment year 1980-81.

Analysis: Liability under section 7-A arose only when the goods purchased from non-assessees were ultimately disposed of otherwise than by sale in the State or in the course of inter-State trade, and not at the moment of purchase. On the facts, the assessee could not be expected to know, when the return for the assessment year 1980-81 was filed, that the purchase turnover would ultimately attract tax under section 7-A. Rule 5(1) of the Tamil Nadu General Sales Tax Rules requiring inclusion of such turnover in the return was amended only on 16 April 1981 and was applicable from the assessment year 1981-82. In that setting, the omission could not be treated as wilful or as warranting penalty.

Conclusion: Penalty was not leviable and the assessee succeeded on this issue.

---