Penalty limitation and revised return defence fail where proceedings begin in time and tax on omitted turnover remains unpaid.

Penalty under section 12(5) of the Tamil Nadu General Sales Tax Act was held not time-barred because the penalty notice was issued within the five-year limitation period, and timely initiation of proceedings was sufficient even though the final order was passed later. On merits, the assessee could not avoid penalty by filing a revised return, since the omitted turnover was not accompanied by payment of the corresponding tax and the liability arose when the goods were received. The explanation that invoices had not yet been received did not excuse nondisclosure of purchase turnover in the monthly returns. The challenge to the penalty therefore failed and the revision order sustaining it was upheld.

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Issues: (i) Whether penalty under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959 was barred by limitation. (ii) Whether the assessee was entitled to avoid penalty on the ground that the turnover was later included in a revised return and that there was no deliberate suppression.

Issue (i): Whether penalty under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959 was barred by limitation.

Analysis: The proviso to section 12(5) required that penalty not be imposed after five years from the expiry of the year to which the assessment related. The notice proposing penalty was issued within that period. The word used in the proviso is "imposed", but the governing principle is that initiation of penalty proceedings within limitation is sufficient where the statutory scheme contemplates later completion of the proceedings. The final order was therefore not treated as time-barred merely because it was passed after the five-year period, since the proceeding had been validly initiated in time.

Conclusion: The penalty was not barred by limitation.

Issue (ii): Whether the assessee was entitled to avoid penalty on the ground that the turnover was later included in a revised return and that there was no deliberate suppression.

Analysis: The revised return did not carry the tax payment corresponding to the omitted turnover, and the assessee had not discharged the tax liability when the turnover ought to have been disclosed. In such penalty proceedings, the relevant consideration is whether revenue due to the State was withheld or delayed. The explanation that invoices had not been received did not excuse the failure to disclose the purchase turnover in the monthly returns, as the liability arose when the goods were delivered and received.

Conclusion: The assessee was not entitled to escape penalty on merits.

Final Conclusion: The challenge to the penalty failed in full and the revision order sustaining the penalty was upheld.

Ratio Decidendi: For penalty provisions framed with a limitation period on imposition, commencement of proceedings within time is sufficient where the statute permits completion later, and a belated revised return without payment of the corresponding tax does not by itself negate liability to penalty for nondisclosure of taxable turnover.

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