- (1.) I have had the advantage of reading the judgment prepared by my learned brother Venkataramiah, but despite the great respect which I have for his learning and erudition, I find myself unable to agree with the view taken by him. The facts giving rise to this appeal are not very material because the question which arises for consideration is essentially one of law, but the factual setting does help to see the question in its proper perspective and hence it would be useful to set out a few material facts.
(2.) The assessee is a public limited company carrying on business of manufacture and sale of cement. It has a factory for manufacturing cement at Lakheri in the State of Rajasthan and it effects sales of cement both inside as well as outside the State of Rajasthan. Since some of the sales effected by the assessee were inside the State of Rajasthan and some others were inter-state sales. the assessee filed returns of sales for the quarters comprised in the period 1st Aug., 1973 up to 31st July, 1974 both under the Rajasthan Sales Tax Act 1954 (here in after referred to as the State Act) and the Central Sales Tax Act 1956 (hereinafter referred to as the Central Act), The assessee did not include in the taxable turnover shown in the returns the amount of freight paid in respect of the goods sold under the bona fide impression that the amount of freight did not form part of the sale price and was not includible in the taxable turnover of the assessee. This impression was carried by the assessee in view of certain decisions which had been given by some High Courts as well as the Supreme Court and particularly the decision of the Supreme Court in Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh (1969) 24 STC 487. The assessee paid up for each quarter the full amount of tax calculated on the basis of the return submitted by it and the receipt for such payment was filed along with the return. The amount of tax paid by the assessee obviously did not include tax on the amount of freight, since according to the assessee the amount of freight did not form part of the sale price and was accordingly not shown in the returns as forming part of the taxable turnover. Subsequently however, the question whether the amount of freight formed part of the sale price and was therefore includible in the taxable turnover of the assessee so as to be exigible to tax came up for consideration before this Court in Hindustan Sugar Mills Ltd. v. State of Rajasthan (1979) 1 SCR 276: (AIR. 1978 SC 1496) and it was held by this Court that by reason of the provisions of the Cement Control Order 1967 which governed the transactions of sale of cement entered into by the assessee with the purchasers, the amount of freight formed part of the sale price within the meaning of the first part of the definition of that term contained in S. 2 (p) of the State Act and S. 2 (h) of the Central Act and was includible in the taxable turnover of the assessee. As soon as this decision was given by the Court on 29th August, 1978, the assessee immediately prepared revised returns in respect of the period 1st Aug., 1973 up to 31st July, 1974 showing the amount of freight as forming part of the taxable turnover and filed the same before the Commercial Tax, officer, Special Circle, Kota on 20th Oct., 1978. The assessee also deposited along with the revised returns challans showing payment of the balance of the tax on the basis of the revised returns under the State Act as well as the Central Act. Two orders of assessment were thereafter passed by the Assessing Authority, one under S. 10 sub-s (3) of the State Act and the other under S. 9 of the Central Act. The former order of assessment levied a penalty of Rs. 53,355/- under S. 7AA of the State Act and Interest amounting to Rs. 85.910.50 under S. 11B of the State Act for the delay in payment of the tax in respect of the amount of freight under State Act. which according to the Assessing Authourly ought to have been deposited alongwith the filing of the original returns. Similarly, the latter order of assessment also levied a penalty of Rs. 1,34,205/- under S. 7AA of the State Act read with S. 9 sub-s- (2) of the Central Act and interest amounting to RS 2,07,174/- under S. 11B of the State Act read with S. 9 sub-s. (2) of the Central Act for the delay in depositing the tax payable in respect of the amount of freight under the Central Act. The assessee has in the present appeal preferred with special leave challenged the validity of both these orders of assessment in so far as they levy penalty and interest on the assessee.
(3.) The. first question which arises for consideration before us is whether the Assessing Authority was right in imposing penalty on the assessee under the two assessment orders for not depositing the tax in respect of the amount of freight at the time of filing of the original returns under the State Act and the Central Act. My learned brother Venkataramiah has held, following the decision of this Court in Cement Marketing Co. of India Ltd. v. Commissioner of Sales Tax, Indore (1980) 1 SCR 1098: (AIR 1980 SC 346) that "the levy of penalties for not including the freight charges in the taxable turnover in the original returns and for not paying the tax in respect of such freight charges, is unsustainable" and that the two orders of assessment in so far as they levy penalty on the assessee are liable to be quashed and set aside. I entirely agree with the view taken by him and I do not think I can usefully add anything to what he has said.;