Exemption for reading books denied on printed materials, but penalty avoided where transactions were disclosed in the return.

Sales of printed material prepared to publishers' specifications were not treated as exempt sales of reading books under the Tamil Nadu General Sales Tax notification, because the assessee supplied printing materials on a paper-and-printing charge basis rather than compiling or selling reading books as such; the turnover was therefore taxable and assessment on that amount stood restored. Penalty under section 12(5)(iii) read with section 9(2-A) of the Central Sales Tax Act was not attracted, since the assessee had disclosed the transactions in the return and merely claimed part of the turnover as exempt, so the return was not incorrect or incomplete in the statutory sense.

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Issues: (i) Whether the turnover of Rs. 2,59,135 was exempt as sales of reading books under the notification issued under the Tamil Nadu General Sales Tax Act, 1959. (ii) Whether penalty under section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959 read with section 9(2-A) of the Central Sales Tax Act, 1956 was leviable for the return filed by the assessee.

Issue (i): Whether the turnover of Rs. 2,59,135 was exempt as sales of reading books under the notification issued under the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The exemption covered sales of reading books, including text books, by any dealer. The turnover in question represented amounts received for printing materials to the specifications of publishers on the basis of paper and printing charges. The assessee did not compile or sell reading books as such. The turnover therefore could not be treated as sales of reading books within the exemption entry.

Conclusion: The turnover was not exempt, and the assessment on that amount was rightly liable to be restored in favour of Revenue.

Issue (ii): Whether penalty under section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959 read with section 9(2-A) of the Central Sales Tax Act, 1956 was leviable for the return filed by the assessee.

Analysis: The assessee had disclosed the transactions in the return but claimed part of the turnover as exempt. On that footing, the return could not be treated as incorrect or incomplete in the sense contemplated by section 12(5)(iii). The penalty provision was therefore not attracted.

Conclusion: The setting aside of penalty was sustained in favour of the assessee.

Final Conclusion: The revision succeeded on the exemption and assessment issue, but failed on the penalty issue, leaving the result only partly in favour of Revenue.

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