Revised return disclosure bars penalty where full turnover and tax were paid before notice under the VAT regime.

A revised return filed within the permitted period, disclosing the correct turnover and accompanied by payment of the admitted tax and interest before any notice or inspection, displaced the original nil return for purposes of penalty under section 72(2) of the Karnataka Value Added Tax Act, 2003. The statute treats a revised return as a return, and once filed under section 35(4) with the additional tax paid under section 42(7), the earlier return does not survive independently. Because the operative revised return disclosed the full liability, there was no remaining understatement in the return to attract penalty. Penalty under section 72(2) was therefore not attracted and was wrongly imposed.

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Issues: Whether penalty under section 72(2) of the Karnataka Value Added Tax Act, 2003 could be imposed when the dealer had filed a revised return within the permissible period, disclosed the correct turnover, and paid the tax with interest before any notice or inspection.

Analysis: The definition of return in section 2(28) includes a revised return. Section 35(4) permits a revised return where an omission or incorrect statement is discovered, and section 42(7) requires payment of the additional tax with such revised return. Once the revised return was filed and accepted, the original nil return stood obliterated and could not survive alongside the revised return. For the purpose of section 72(2), only the operative revised return had to be considered. As the revised return itself disclosed the entire liability and the admitted tax and interest were paid, there was no understatement in the return that remained for consideration.

Conclusion: Penalty under section 72(2) was not attracted and was wrongly imposed.

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