2015 (9) TMI 1633

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....d classifies the item sold by it as a Multi-Function printer and included the turnover in respect of the said item in the returns filed with the respondents under Entry 69(22)(c)(i) of the 3rd Schedule to the KVAT Act. In the returns, the petitioner stated that the applicable rate of tax for the said item was 5%. It is not in dispute that, for the above assessment years, the assessment of the petitioner has not been called into question by the assessing authority and the returns filed by the petitioner for the said assessment years have not been interfered with by the assessing authority. It is a case of the petitioner that the classification under the 3rd Schedule was effected by taking note of the fact that the supplier of the machines to....

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....ontention that, in a case of the petitioner, the classification of the item in question as photocopier was never in doubt. It is pointed out with reference to the material relied upon by the 3rd respondent, while passing Exts.P7 and P8 orders that, the petitioner had himself produced a copy of the manufacturer's brochure, which clearly indicated that the base material that was dealt with by the petitioner was a photocopier machine and the facility of using the same as a printer was an option that was available in respect of the machine in question. It is therefore, his contention that the 3rd respondent while passing Exts.P7 and P8 orders, had correctly decided the issue of classification of the product in question and was justified in ....

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....fact that under Section 67 a penalty is contemplated only if there is any willful act on the part of the assessee with a possibility of evasion of tax. In the instant case, I find that inasmuch as the petitioner was justified in adopting a classification of the product based on the classification adopted by the supplier of the product to the petitioner, the orders passed by the 3rd respondent confirming a penalty on the petitioner, merely because it was the view of the 3rd respondent that a classification of the product ought to have been under a different entry, cannot be legally sustained. In this connection, it is relevant to note the decision of this Court in Chakkiath Brothers v. Assistant Commissioner, Commercial Taxes, EKM and others....

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....td. (supra), held that if the assessee does not include a particular item to tax under a bona fide belief that he is not liable so to include it, the return filed cannot be condemned as a 'false' one which finding alone would invite imposition of penalty. What then, is the scope of a penalty proceedings, is this Courts concern, herein. In that case the assessee deducted the freight charges from the price shown in the invoice since the invoice showed the 'free on rail destination railway station' price. The amount of freight paid to the assessee, according to them, was not exigible to sales tax and hence was not included in the taxable turn over, in the returns filed. Despite the finding that freight formed part of the sale p....