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Issues: Whether penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 could be imposed when the dealers had disclosed the sales in their accounts and no concealment of turnover was found, and whether the pending proposal for waiver of tax justified the levy of penalty.
Analysis: The sales of rice were reflected in the accounts, and the assessment order did not record any finding of concealment of turnover. The assessment had proceeded on the turnover disclosed, and the record showed that the Commissioner had directed the assessing authorities to complete the assessment and simultaneously forward a proposal for waiver. In that situation, the basis for invoking penalty was absent, and the pendency of the waiver proposal reinforced that penalty was not warranted at that stage.
Conclusion: The imposition of penalty was not sustainable and was quashed in favour of the assessee. The question of waiver of tax was left open for consideration by the Government on its own merits.
Final Conclusion: The writ petitions succeeded to the extent of setting aside the penalty demand, while the issue of tax waiver remained to be decided independently by the Government.
Ratio Decidendi: Penalty cannot be levied under the sales tax assessment provision in the absence of concealment of turnover, especially where the authorities themselves contemplate a separate waiver consideration.
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