KIRAN ROLLER FLOUR MILLS Vs. ASST COMMISSIONER

JUDGEMENT

(1.) The petitioner is challenging Ext. P4 order of the Commissioner of Commercial Taxes whereunder he has confirmed the order of penalty levied on the petitioner under Section 45A of the KGST Act, as modified by first revisional authority for the assessment years 1991-92 and 1992-93. The penalty originally levied under Section 45A(d) of the Act was Rs. 36,59,000/- for the year 1991-92 and Rs. 62 lakhs for the year 1992-93. However, in the first revision, the penalty was reduced by the Deputy Commissioner of commercial Taxes to Rs. 7,31,800/- and Rs. 12,40,000/- respectively. On further revision by the petitioner, the reduced penalty was sustained by the Commissioner of commercial Taxes, and the Original Petition is against the said order. The petitioner is challenging Ext. P4 order of the Commissioner of Commercial Taxes whereunder he has confirmed the order of penalty levied on the petitioner under Section 45A of the KGST Act, as modified by first revisional authority for the assessment years 1991-92 and 1992-93. The penalty originally levied under Section 45A(d) of the Act was Rs. 36,59,000/- for the year 1991-92 and Rs. 62 lakhs for the year 1992-93. However, in the first revision, the penalty was reduced by the Deputy Commissioner of commercial Taxes to Rs. 7,31,800/- and Rs. 12,40,000/- respectively. On further revision by the petitioner, the reduced penalty was sustained by the Commissioner of commercial Taxes, and the Original Petition is against the said order.

(2.) I have heard counsel for the petitioner, Sri. T.M. Sreedharan, and the Government Pleader for the respondents. The contention of the petitioner is that it is a roller flour mill engaged in manufacture of various wheat products, such as atta, suji, etc. from wheat purchased by it. According to the petitioner, since wheat purchased has suffered tax, the petitioner's impression was that the products made out of wheat, namely, atta, suji, etc., which are different forms of wheat, would not attract any tax as the activity does not amount to manufacture of products. Counsel contended that this was the legal position existing at the time of filing the returns during the years 1991-92 and 1992-93 by virtue of the decision of the Patna High Court in DHANBAD FLOUR MILLS V. STATE OF BIHAR, 75 STC 47, and that of the Karnataka high court in SWASTIK FLOUR MILLS V. STATE OF KARNATAKA , 84 STC 47. However, later, the Supreme Court vide judgment dated 1.9.1993 in RAJASTHAN FLOUR MILLS ASSOCIATION V. STATE OF RAJASTHAN, reversed this position and held that there is manufacture of atta, suji, etc., from wheat and somuch so, tax is payable on these products. The petitioner further contended that subsequent to the judgment of the Supreme Court, the petitioner voluntarily remitted the tax during the course of the period commencing from 1993 to 1996, of course, the date of payments are not available in the records. Inspite of the decision of the Supreme Court, the petitioner did not file revised returns offering tax in the place of the original returns under which exemption was claimed and no tax was paid. However, without revising the returns, the petitioner just volunteered to pay tax in instalments from 1993-96, even prior to the completion of assessments.

(3.) The learned counsel for the petitioner relied on the decision of the Supreme Court in BRIJ MOHAN V. COMMISSIONER OF INCOME-TAX, (1979) 120 ITR 1, wherein the Supreme Court held that in order to appreciate as to whether a return filed is true or correct, the law as on the date of filing of the return has to be considered and if the return with reference to the law as prevailing on the date of commission of offence, that is the date of filing of the return, supports the claim taken in the return, then the return cannot be held to be a wrong return. Counsel submitted that the Supreme court decision came only on 1.9.1993 and by that time returns were filed for the years 1991-92 and 1992-93 based on the law declared by various High Courts holding that the products of the petitioner are not manufactured products of wheat attracting sales tax. The Government Pleader on the other hand contended that even after the pronouncement of the decision of the Supreme court, the petitioner consciously avoided filing of the revised returns probably to avoid payment of tax and therefore it is the non-filing of the revised returns that is to be frowned upon to justify the penalty. Counsel for the petitioner on the contrary contended that the department also did not issue notice for making provisional assessment for demanding tax. According to the petitioner, there is no violation of Section 45A(d) of the Act because the correctness of the returns is to be considered with reference to the law as on the date of filing of the returns as held by the Supreme Court in the judgment referred to above, and since the decisions on the subject were in favour of the petitioner, the exemption claimed on the basis of the said decisions of various High Courts in the returns was correct, and there is no violation of Section 45A(d) of the Act.