Imposition of penalty under section 69 of the Act of 1994 requires deliberate or dishonest conduct, and a mistaken belief about the tax rate does not meet this standard.

Shantanu Kemkar, J.

1. The petitioner M/s Ind Exports Limited, a company incorporated under the Indian Companies Act, 1956 having its registered office at Mumbai and depot at Indore, claiming to be a registered dealer under the provisions of M. P. Commercial Tax Act, 1994 (for short Act of 1994) has filed this writ petition challenging the order dated 18-1-2003 (Annexure P-2) passed by the Assistant Commissioner,; Commercial Tax Division-II, Indore as also the order dated 29-7-2003 (Annexure P-4) passed in Revision No. 44/2003 by the Additional Commissioner, Commercial Tax, Indore.

2. Brief facts of the case are that the petitioner company dealing in various items also dealt in the edible oil for the relevant year 1-4-1999 to 31-3-2000. The petitioner had filed its quarterly returns in respect of the State Sales Tax as also the Entry Tax and had deposited the taxes on the basis of such returns. It is the case of the petitioner that its entire turnover of sales of all items including edible oil was duly and correctly disclosed in the return. However, on the basis of wrong impression, the rate of tax on edible oil was shown as 2% in place of 4%. The assessment of the petitioner's case was completed on 29-11-2002. While completing the assessment the Assessing Authority levied the tax at the rate of 4% as against 2% which was collected and paid by the petitioner.

3. The case of the petitioner is that the assessment was completed on the basis of turnover disclosed by the petitioner in its return and the said turnover of all the items including edible oil was accepted by the Assessing Authority. It is stated that the additional demand to the tune of Rs. 10,48,301/- was raised vide assessment order dated 29-11-2002 (Annexure P-1) only on account of difference in the rate of tax on edible oil from 2% to 4% on account its increase w.e.f. 1-5-1999. The petitioner's explanation was that the rate of tax on edible oil was 2% since 1-4-1995 and the same was continued upto 30-4-1999. The said rate was increased to 4% from 1-5-1999. According to the petitioner, it could know about the change in the rate only when the entire Schedule II was substituted w.e.f. 1-1-2000 by new Schedule II vide M. P. Commercial Tax (Amendment) Act, 1999. Having got the knowledge of increase in the rate of tax from 2% to 4%, the petitioner immediately paid the correct tax from 1-1-2000 to 31-3-2000.

4. On the basis of the aforesaid assessment order (Annexure P-1), proceedings under section 69 of the Act of 1994 for imposition of penalty was initiated against the petitioner. The said proceedings ended in the order of imposition of penalty on the petitioner to the extent of Rs. 51,98,280/-, (five times to the difference in tax). The said order of penalty dated 18-1-2003 (Annexure P-2) was assailed by the petitioner by filing a revision under section 62 of the Act of 1994 before the Additional Commissioner of Commercial Tax, Indore. The Additional Commissioner, by impugned order dated 29-7-2003 (Annexure P-4) dismissed the petitioner's revision and maintained the order of penalty passed by the Assistant Commissioner, Commercial Tax, Division II, Indore. Aggrieved, the petitioner has filed this petition.

5. According to the petitioner, the impugned orders by which penalty has been imposed have been passed by the authorities without fulfilment of the conditions precedent for imposing penalty. It is the case of the petitioner that deposit of tax at a lower rate without any dishonest intention does not amount to concealment and no penalty could have been imposed. It is the case of the petitioner that 2% rate of tax on edible oil was prevalent since 1-4-1995. It was changed to 4% by mere change of rate in Entry from 1-5-1999. However, petitioner under a bona fide wrong impression that the same is 2% continued to collect and deposit the tax 2%. It is only when the entire Schedule II was substituted by new Schedule II, the petitioner got knowledge of increase in the rate. T