N. M. KASLIWAL, J. - (1.) FOLLOWING two questions of law have been referred by the Board of Revenue for the opinion of this Court : (1) Whether, under the facts and circumstances of the case, the Board was justified in holding that the price of goods sold during the year 1965-66 and returned by the purchaser to the dealer during the year 1966-67 could not be included in the taxable turnover ? (2) Whether, under the facts and circumstances of the case, the Board was justified in setting aside the penalty imposed under section 16 (1) (c) of the Rajasthan Sales Tax Act, when admittedly returns were filed late ?
(2.) BRIEF facts of the case are that sales of certain goods were effected by M/s. Premnath Motors (P.) Ltd. (hereinafter referred to as "the dealer") during the year 1965-66, but the same were returned by the purchaser during the year 1966-67. The first question mentioned above has to be determined as to whether the prices of goods sold during the year 1965-66, and returned by the purchaser to the dealer during the year 1966-67, could not be included in the taxable turnover. The above question is already concluded by a decision of their Lordships of the Supreme Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Motor Industries Co. [1983] 53 STC 48. The Supreme Court while considering the identical provisions contained in the Kerala General Sales Tax Act, 1963 and the Kerala General Sales Tax Rules, 1963, observed as under : " Deduction under rule 9 (b) (i) from the turnover in respect of goods sold in a financial year has to be claimed in respect of that financial year and cannot be claimed from the turnover of the succeeding financial year. In cases where goods sold in one financial year are returned after the assessee has filed his annual return without his having had any opportunity to claim any deduction in relation thereto, the assessee can always file a revised return and claim the deduction; and if the assessment is completed he can demand adjustment or refund by preferring the claim in time. Under rule 9 (b) (i) the deduction in respect of 'sales return' has to be allowed in the assessment relating to the financial year in which the sales of the returned goods had taken place and even where assessment for that year is completed, the department has to comply with the demand for adjustment or refund by making necessary rectification in the order of assessment, proved that other conditions are satisfied, as that is the inevitable consequence of rule 9 (b) (i) which allows deduction of the value of the goods returned within three months from the date of their delivery from the total turnover of that financial year. But such a deduction cannot be claimed in the assessment proceedings for the financial year subsequent to the financial year in which the sales took place. " It has thus been clearly held by the Supreme Court that a deduction cannot be claimed in the assessment proceeding for the financial year subsequent to the financial year in which the sales took place. The question No. (1) is, therefore, answered in the negative and it is held that in the facts and circumstances of the case the Board was not justified in holding that the prices of goods sold during the year 1965-66 and returned by the purchaser to the dealer during the year 1966-67 could not be included in the taxable turnover of 1966-67. The question is thus answered in favour of the department and against the dealer. So far as question No. (2) is concerned, the learned Division Bench of the Board of Revenue while deciding Special Appeal No. 102 of 1973 (Sales Tax) on November 25, 1974, held in this regard that a penalty under section 7-A of the Rajasthan Sales Tax Act cannot be imposed for a period less than a month. It was further observed that it was clear from the bare perusal of section 7-A of the Act that if the assessing authority is satisfied that any dealer without reasonable cause has failed to furnish returns within the time allowed he may direct that such dealer should pay by way of penalty a sum equal to 2 per cent of the tax in addition to the amount of tax, for every month during which the default continued. So far as this proposition of law is concerned, we think that the Board of Revenue had committed no error. It is, however, pertinent to mention that the assessing authority had imposed the penalty not merely on the ground that the dealer had failed to furnish returns within the time allowed without any reasonable cause but had also imposed the penalty on the ground that even the tax was not deposited in time. It was observed in this regard that the tax, which was to be deposited on June 21, 1966, was deposited on July 21, 1966. The tax, which was to be deposited according to the second quarterly return was Rs. 32,705. 70 but was deposited less by the amount of Rs. 10,000. The tax for the third quarter was not deposited within time and similarly, the tax for the fourth quarter was also deposited late. The assessment authority had thus imposed the penalty on account of gravity of filing the return late as well as by not depositing the entire tax amount in time and thereby causing loss to the State exchequer. In some cases the entire tax amount was not deposited even after the returns were filed. The Board of Revenue while deciding the special appeal took note of the only fact that the returns which were filed late and that being so the penalty was quashed. We have already mentioned above that in case the finding of the Board of Revenue is that the dealer was negligent in filing the returns late by 4 or 5 days, then of course the view taken by the Board of Revenue is correct. We have to decide the question of law on the basis of facts found established by the Board of Revenue and in this view of the matter we hold that the Board was justified in setting aside the penalty imposed under section 16 (1) (c) of the Rajasthan Sales Tax Act. The question No. (2) is therefore answered in the affirmative and in favour of the dealer. Reference answered accordingly. .;