A. Vinayagamurthy Nadar vs Joint Commissioner-Ii (Commercial ... on 30 July, 1991
The facts of the case in State of Tamil Nadu v. Jaya Pharmacy [1984] 57 STC 164 (Mad.) are clearly distinguishable. That was a case where the assessee had collected tax at 30 per cent on sales of arishtams and subsequently at 8 per cent treating the same as drugs. When the assessee pleaded that the goods are taxable only at 4 per cent, the assessing authority did not accept the contention and consequently the assessee had to go up to the Tribunal to get a ruling in his favour. In these circumstances the court came to the conclusion that both the assessee as well as the assessing authority were under a mutual mistake. Therefore, it was held that section 22(2) of the Act was not attracted. In the present case the assessee claimed that sales of mustard are taxable at 3 1/2 per cent and the return was accepted by the assessing authority. Later the assessing authority found that the collection at 3 1/2 per cent was illegal and the rate was only 3 per cent, and therefore proceeded to levy penalty under section 22(2) of the Act. In this case, the assessing authority himself had realised the mistake in accepting the return of the assessee and, therefore, there is no question of any mutual mistake. Section 22(2) of the Act leaves no option to the assessing authority once he comes to the conclusion that the dealer had collected any amount by way of tax or purported to be by way of tax in contravention of sub-section (1), but to impose a penalty not exceeding 1 1/2 times the amount collected. We, therefore, confirm the order of the Joint Commissioner on this aspect of the case.