(1.) THIS Tax Revision Case is preferred by the State of Andhra pradesh against the Order of the Sales Tax Appellate Tribunal in Tribunal Appeal no. 256 of 1960 on its file. The relevant facts are these. The assessce-rcspondent opened a branch office at Masulipatnam on 14th april, 1958 as dealers in Usha Sewing Machines and their spare parts. For the assessment year 1958-59 they failed to submit a return in Form A of the estimated turnover, or Form A-1 of the actual turnover. They, however, got themselves registered as dealqrs soon after they opened the branch at Masulipatnam. The concerned A. C. T. O. inspected the business premises of the assessee and checked the accounts, and found the turnover relating to their sales for the year ending March, 1959, to be Rs. 17,177-37 np. Thereafter, the dealers voluntarily filed the annual return in Form A-1 on 17th August, 1959 disclosing the turnover of Rs. 17,177-37 np. Subsequently, the A. C. T. O. , Bandar, who was the assessing authority, called on the assessee to produce his accounts, and, after examining them, accepted the return made by the assessee as complete and correct, and by his order, dated 25th September 1959, assessed him to tax at Rs. 340-56 np. , which was paid. The assessing authority, after completing the assessment, issued a show-cause notice why penalty at one and a half times the tax, amounting to Rs. 515-31 np. , should not be levied under section 14 (3) of the Andhra Pradesh General Sales Tax act (hereinafter referred to as " the Act " ). The Commercial Tax Officer reduced the penalty to Rs. 343 and against that order the matter was carried in appeal to the appellate Tribunal.
(2.) TWO members of the Tribunal took the view that, in a case like this, where the return has been accepted Section 14 (1) of the Act will apply, and there is no question of levying any penalty when an assessment is made on the basis of an accepted return, and that the levy was, therefore, without jurisdiction. The learned Chairman of the tribunal took the view that, as the appellant had not filed the return as contemplated under section 13, he would necessarily come under section 14 (4) for levy of assessment and penalty, and that the penalty levied is valid irrespective of the fact whether it is an original assessment, or not. The opinion of the majority was made the final order of the Tribunal, and the penalty was set aside. It is the correctness of this order that is challenged by the State before us. The contention raised on behalf of the Department is that penalty can be levied under section 14 (3) of the Act in cases where the returns are not submitted within time. As the validity of this contention depends on the construction of section 14 (3), the section may usefully be extracted. "14. (1) If the assessing authority is satisfied that any return submitted under section 13 is correct and complete, he shall assess the amount of tax payable by the dealer on the basis thereof; but if the return appears to him to be incorrect or incomplete he shall, after giving the dealer a reasonable opportunity of proving the correctness and completeness of the return submitted by him and making such inquiry as he deems necessary, assess to the best of his judgment, the amount of tax due from the dealer. An assessment under this section shall be made only within a period of four years from the expiry of the year to which the assessment relates. (2) When making an assessment to the best of judgment under sub-section (1) the assessing authority may also direct the dealer to pay in addition to the tax assessed, a penalty not exceeding one and half times the tax due on the turnover that was not disclosed by the dealer in his return. (3) If no return is submitted by any dealer liable to tax under this Act before the date prescribed in that behalf, the assessing authority may, at any time within a period of four years from the expiry of the year to which assessment relates, after issuing a notice to the dealer and after making such inquiry as he considers necessary, assess to the best of his judgment, the amount of tax due from the dealer on his turnover for that year, and may direct the dealer to pay, in addition to the tax so assessed 2 penalty not exceeding one and half times the amount of that tax. (4) Where, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax, or has been under-assessed or assessed at too low a rate,. . . . . . . . . . . . . . . . the assessing authority may, at any time within a period of four years from the expiry of the year to which the tax or the licence fee or registration fee relates assess the tax payable on the turnover which has escaped assessment. . . . . . . . . . . . after issuing a notice to the dealer and after making such in-quiry as he considers necessary. Such authority may also direct the dealer to pay in add ition to the tax so assessed, a penalty not exceeding one and half times the amount of that tax, if the turnover had escaped assessment or had been under-assessed or assessed at too low a rate by reason of its not being disclosed by the dealer : provided that before issuing any direction for the payment of any penalty under sub-section (2), sub-section (3) or sub-section (4), the assessing authority shall give the dealer a reasonable opportunity to explain the omission to disclose the information, and make such inquiry as he considers necessary. "
(3.) THE effect of this section may be summed up as follows :-Under section 14 (1) where the assessing authority is satisfied that the return submitted under section 13 is correct and complete, the dealer shall be assessed to the amount of the tax on that basis. If, however, the return is incorrect or incomplete, after the necessary inquiry, the assessment to the best of his judgment could be made, and the amount of tax determined thereon.;