Book-recorded turnover and no concealment barred penalty under concessional-rate turnover rules

Penalty under the Tamil Nadu General Sales Tax Act could not be sustained by invoking the explanation for concessional-rate turnover where the disputed turnover was already reflected in the books of accounts and there was no specific concealment. The dealer had treated the transaction as a works contract and paid tax under the applicable special provision, so the case did not fall within the explanation relied on by the Revenue. Penalty was therefore not automatic merely because a revised assessment was made, and the proper treatment of the turnover had to be examined under the other applicable explanatory clauses. The revision was allowed and the penalty set aside.

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Issues: Whether penalty could be sustained under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 by applying Explanation (iii), when the turnover was disclosed in the books of accounts and the dealer had opted for tax under Section 7C of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The turnover in question was recorded in the books of accounts and was not found to be the result of any specific concealment. The dealer had treated the transaction as a works contract and had paid tax at the rate applicable under Section 7C. In such circumstances, the case did not fall within Explanation (iii), which concerns tax paid at a concessional rate subject to furnishing declarations. The proper approach was to consider the turnover under the other explanatory clauses to Section 12(3)(b), and penalty could not be treated as automatic merely because a revised assessment was made. The reasoning in the cited precedent also supported exclusion of book turnover from penal computation where there was no suppression.

Conclusion: The Tribunal was not right in applying Explanation (iii) to Section 12(3)(b) to sustain the penalty. The question of law was answered in favour of the assessee and against the Revenue.

Final Conclusion: The revision was allowed and the penalty sustained by the Tribunal was set aside.

Ratio Decidendi: Where the assessed turnover is reflected in the books of accounts and there is no specific concealment, penalty under Section 12(3)(b) cannot be sustained by invoking the explanation applicable to concessional-rate turnover supported by declarations.

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