False exemption declaration on expired purchaser certificates justified tax and penalty under commercial tax law.

Tax and penalty were upheld where exemption on sales was claimed on the basis of purchasers' exemption certificates, but those exemption periods had already expired. The declaration supporting exemption was therefore false, and the transaction was treated as a taxable sale not covered by valid exemption. Section 28 of the Madhya Pradesh Commercial Tax Act, 1994 authorises levy of tax and penalty where a sale or purchase has escaped assessment or been under-assessed. On the admitted factual basis that exemption had been wrongly obtained, the authority was justified in assessing tax and imposing penalty.

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Issues: Whether tax and penalty could be imposed under section 28 of the Madhya Pradesh Commercial Tax Act, 1994 where the assessee obtained exemption on the basis of sales to purchasers whose exemption periods had already expired.

Analysis: The assessee had claimed exemption from tax on sales made to two purchasers by relying on their exemption certificates. The factual basis for the claim was found to be incorrect because the exemption periods of both purchasers had already expired. On that footing, the declaration supporting exemption was false. Section 28 of the Madhya Pradesh Commercial Tax Act, 1994 empowers the authority to levy tax and penalty where a taxable sale or purchase has been under-assessed or has escaped assessment. Since the assessee secured the benefit of exemption through a false declaration, the authority was justified in treating the transaction as liable to tax and in imposing penalty.

Conclusion: The tax and penalty were validly imposed on the assessee under section 28 of the Madhya Pradesh Commercial Tax Act, 1994.

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