Strict construction of sales tax penalty provision bars penalty for short payment where returns were not incorrect or incomplete.

Penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act was held not leviable where the turnover reported and the turnover determined were the same, but the assessee had paid additional sales tax at 1% instead of 1.5%. The Court treated the dispute as one of short payment of tax, not an incorrect or incomplete return, and held that the penalty provision did not extend to such a case. As penalty is punitive in nature, Section 12(3)(b) was construed strictly and could not be applied beyond its terms.

---

---

Issues: Whether penalty was leviable under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 for payment of tax at a lower percentage, where the turnover reported and the turnover determined were the same.

Analysis: The dispute was confined to the additional sales tax payable, the assessee having paid 1% instead of the applicable 1.5% under Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970. The penalty provision was examined in the context of best judgment assessment and the statutory language governing incorrect or incomplete returns. It was held that the case did not amount to an incorrect or incomplete return merely because a lower percentage of tax had been paid. Since penalty is punitive in nature, the provision had to be strictly construed, and Section 12(3)(b) did not contemplate penalty for such short payment.

Conclusion: Penalty was not leviable, and the revision challenging the deletion of penalty failed.

---