The central legal point established in the judgment is that non-payment of the due tax, despite awareness of the liability, constitutes negligence and attracts the penalty under Section 69(3) of the M.P.CT Act. The judgment emphasizes the requirement of mens rea and deliberate action to avoid tax payment to invoke the penalty provision.

Per M.C. Garg, J.;-

The short point involved in this writ petition is as to whether “nonpayment of less than 80% of the tax alongwith return amounts to filing of a false return so as to attract the penalty under Section 69(3) of the M.P. Commercial Tax Act, 1994” (hereinafter referred to as MPCT Act). The said provision reads as under:-

“Sec. 69 : Power of Commissioner or appellate or revisional authority to impose penalty in certain circumstances.

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(3) If the total tax shown as payable according to the return or returns and paid by a dealer for any period or part thereof is less than eighty per cent of the total tax assessed under Section 27 such dealer shall be deemed to have concealed his turnover or aggregate of his purchase prices or to have furnished false particulars of his sales or purchases in his return or returns or to have furnished a false return or returns for the purpose of sub-section (1) unless he proves to the satisfaction of the Commissioner or the appellate or the revisional authority, as the case may be, that the concealment of the said turnover or the aggregate of purchase prices or furnishing of particulars of sales or purchases or furnishing of the false return or returns was not due to any fraud or gross negligence on his part.”

2. According to the petitioner, once the return has been filed correctly and the tax has also been calculated in the return correctly, mere non-payment of the tax alongwith return would not attract the penalty under section 69(3) of the Act. It is submitted that in such circumstances, at the most provision of section 26 of the Act may be attracted which reads as under:-

26 : Returns- [(1) (i) Every such dealer as may be required so to do by the Commissioner by notice served in the prescribed manner; and

(ii) Every registered dealer; and

(iii) Every dealer whose registration certificate has been cancelled under clause (d) or (e) of sub-section (9) of Section 22, shall furnish return in such form, in such manner, for such period, by such dates and to such authority as may be prescribed :

Provided that the Commissioner may, subject to such terms and conditions as may be prescribed, exempt any such dealer from furnishing such returns or permit any such dealer to furnish them for such different period, in such other form and to such other authority, as he may direct.]

[(2) Every dealer required to file return under sub-section (1) shall pay the full amount of tax payable according to the return as required by sub-section (2) of Section 32 or the difference of the amount of tax payable according to the revised return as required by sub-section (3) of the said Section and the full amount of interest, if any, payable under clause (a) or clause (b) of sub-section (4) and shall furnish the proof of such payment along with the return under sub-section (1) or the revised return under sub-section (3).]

3. On behalf of the respondents it is submitted that section 69(3) and section 26 deals with different situations. In the first case, if return has been filed but without payment of less than 80% of the tax with proviso under section 69(3) of the Act is attracted and the Assessing Officer is entitled to impose the penalty. Whereas, in the case of the delayed payment of the tax alongwith returns, section 26 is attracted where the assessee alongwith return and deposit of tax can also pay the penalty as per the provision of section 26(2).

4. Briefly stating the facts giving rise to the filing of this writ petition are that the petitioner who is an entry tax assessee for the year 1997-98 filed his return. After disclosing his turn over and the amount of taxable income, tendered tax which was less than 80% of the amount due. The matter went to the Assessing Officer. However, the Assessing Officer also initiated proceedings for imposition of penalty under Section 69 of the MPCT Act on the ground of short deposit of entry tax to the tune of Rs.72,874/- alongwith the return. A