JUDGMENT [ENTITY], J.
1. Petitioner is questioning exhibit P6 order passed by the Member, Board of Revenue in a suo motu revision setting aside the first revisional authority's order and confirming the order imposing penalty by the assessing authority. Facts are not disputed in this case as can be seen from the averments in the original petition and counter-affidavit. Petitioner is engaged in the business of roller flour mills at Kanjikode, Palakkad and it is a registered small-scale industrial unit. Petitioner is manufacturing wheat products, such as atta, maida and sooji from wheat in its factory at Kanjikode. During the year 1992-93 petitioner filed tax returns claiming exemption for the entire turnover being sales turnover of wheat products. Petitioner, being the first seller of wheat product in the State, according to the sales tax authorities he has to pay tax at the rate of 4 per cent. The Karnataka High Court in [PRECEDENT] as well as the Patna High Court in [PRECEDENT] held that atta, maida and sooji are products made out of wheat though were different in form but wheat in substance and that tax is leviable only at first stage by virtue of [SECTION] of the [ACT]. It is also held that once tax is paid on the purchase of wheat locally, no tax is payable on the turnover of wheat products. Same view was also expressed by the Madras High Court. When no tax was collected from the customers in nearby States of Karnataka and Tamil Nadu, to face competition, petitioner also claimed exemption. Therefore, petitioner claimed exemption in the returns filed from 1991 June onwards and was not paying the tax subsequently for the wheat products. Tax was also not collected from the customers, like their counter-parts in Karnataka and Madras, so that there was uniformity of price. Petitioner also got a stay order from this Court in [CASE NUMBER]. In. the above writ petition, in an interim order this Court directed the assessing authority not to collect sales tax from the petitioner in excess of 1 per cent on the sale of wheat and wheat products. Petitioner, even though disclosed the entire turnover, claimed exemption based on the decision of the Karnataka High Court in the returns for the years 1991-92 and 1992-93.
2. Supreme Court overruling the judgments of the High Court, referred above, in the decision reported in [PRECEDENT] held that wheat and wheat products are different commodities and tax has to be paid separately. Therefore, for subsequent years petitioner has filed correct returns. The stay obtained by the petitioner was vacated in 1994. Petitioner paid the entire amount of tax due in instalments. After payment of the entire amount, assessment was made by exhibits P7 and P8. Thereafter Deputy Commissioner issued notice regarding imposition of penalty in view of the filing of the incorrect returns under [SECTION] of the [ACT]. [SECTION] of the Act is as follows :
"45A. Imposition of penalty by officers and authorities. (1) If the assessing authority or the Appellate Assistant Commissioner is satisfied that any person,
(a) to (c)
(d) has submitted an untrue or incorrect return ; or
(e) to (g)
such authority or officer may direct that such person shall pay, by way of penalty, an amount not exceeding twice the amount of sales tax or other amount evaded or sought to be evaded where it is practicable to quantify the evasion or an amount not exceeding ten thousand rupees in any other case."
3. After issuing notice, by exhibit P1 order penalty was imposed for not filing correct return for the year 1991-92. Operative portion of the order is quoted as follows :
"Wheat and wheat products are different commodities. The honourable Supreme Court has clarified this position. Even after the Supreme Court decision, the dealer was not paid the tax due on the taxable turnover. The dealer has filed incorrect return with intention to evade tax. Hence, there is no reason to deviate from the proposal. Hence, I impose a penalty of Rs. 12,08,775 (rupees twelve lakhs eight thousand seven hundred and seventy-five only) on the dealer, viz., Sreeram Roller Flour Mills, Kanjikode under [SECTION] of the [ACT] for the offence detailed above. The tax due and penalty imposed will be paid as per demand notice attached."
Similarly for 1992-93 exhibit P2 order was passed. Petitioner filed revision before the second respondent. Second respondent passed exhibit P3 common order. Since the entire facts are stated in the above order, I am quoting the above order as follows :
"Verification of the assessment records reveals that the petitioner was paying sales tax at the rate of 4 per cent on the sales turnover of wheat products for the year 1991-92. During the months of April, May and June, 1991 the petitioner filed returns in form No. 9 and paid sales tax at the rate of 4 per cent on the sales turnover of wheat products. From July 1991 onwards, the petitioner filed returns in form No. 9 claiming exemption on the sales turnover of wheat products claiming it declared goods. The firm continued claiming exemption on the sales turnover of wheat products till March, 1993 The petitioner objected to the above proposal stating that no tax was collected on the basis of the High Court stay order and it is not liable to pay sales tax The High Court of Kerala in [CASE NUMBER] in [CASE NUMBER]-W dated June 27, 1991 had directed the assessing authority not to collect sales tax from the petitioner in excess of 1 per cent on the sales turnover of products like wheat, atta, maida, sooji, rava, etc., subject to the result of the writ petition. The original petition was finally dismissed on July 5, 1994. However it is seen that the petitioner had the protection of the honourable High Court of Kerala from the payment of sales tax from June 27, 1991 and in the light of the stay order of the High Court of Kerala the petitioner cannot be found to be guilty for filing the returns in form No. 9 claiming exemption on the sales turnover of wheat products and hence I find that the assessing authority is not justified in imposing penalty in this case for no fault of the petitioner. The penalty orders passed by the assessing authority for the years 1991-92 and 1992-93 are therefore cancelled and the revision petition filed are allowed."
4. Thereafter, suo motu proceedings were taken by exhibit P4 and the impugned order of the original authority was restored. It is not disputed that penalty proceedings can be initiated only if assessee has committed an offence specified under [SECTION] of the Act and it should be proved that he has filed incorrect and untrue return. Even according to the sales tax authorities, petitioner filed true and correct return in view of the decision of the Karnataka High Court. Petitioner disclosed entire turnover. There is no mens rea. There was no suppression of turnover. It has repeatedly held that proceedings under [SECTION] is quasi criminal. The only contention raised by the respondents in justification of exhibit P6 order is that the Supreme Court set aside the decision of the Karnataka High Court the assessee ought to have paid the amount and atleast when the stay obtained by assessee from this Court was vacated, the amount should have been paid. It is the case of the petitioner that they paid the entire amount when the stay was vacated in instalments and it was accepted by the revenue and assessment was made only after payment of the amount. Penalty notice was also issued after paying the amount. So it cannot be said that the assessee has filed untrue and incorrect return.
5. According to the department, petitioner could have filed a revised return. Provisions regarding filing of revised returns are incorporated in the Act by [SECTION] with effect from June 5, 1998. Before that, there was no enabling provision to file a revised return. Even otherwise, not filing a revised return is not a ground to impose penalty under [SECTION]. Imposing of penalty being a penal provision has to be strictly interpreted. In [PRECEDENT] Supreme Court held that when the assessee files true return disclosing the entire turnover and claims exemption, penalty cannot be imposed. In the abovesaid case, the company engaged in the manufacture and sale of cement in the return filed did not include freight charges in the taxable turnover on the contention that it was under the bona fide belief that the freight charges were not liable to be included in the taxable turnover, in view of the decision of the Supreme Court in [PRECEDENT]. Subsequently the Supreme Court in [PRECEDENT] reversed the earlier view. It was held that when the return was filed bona fide at the time of filing the return, no penalty can be imposed. Mens rea is a part of imposing penalty and when the assessee bona fide filed a return, no penalty can be imposed as per decision in [PRECEDENT].
6. In the counter-affidavit also the only contention raised regarding the justification of payment of penalty is as follows :
"The order of the second respondent is erroneous in law, facts and material evidence of the case. Penalty proceedings were initiated by the assessing authority after the disposal of the original petition and the petitioner failed to file the revised return and pay tax even after the disposal of the original petition. The petitioner has to file true and complete return of his business transaction as per the provisions of the [ACT]. The returns already filed being incorrect and incomplete with the passing of the judgment in [PRECEDENT], the failure of file correct return is with ulterior motive in order to evade payment of tax."
In this case penalty was not imposed for not filing a revised return as can be seen from the show cause notice or the original authority's order. Further at the time of filing the return, they disclosed the entire turnover in the return. Exemption claimed was also bona fide. Even if exemption claimed is not allowable, if the assessee disclosed the entire turnover, it is for the assessing authority to reject the claim for exemption and make provisional or final assessment as the case may be. When entire particulars are disclosed in the return correctly and when an exemption is claimed bona fide, it is for the assessing authority to make assessment according to law. Parties can duly file appeals, if they are not satisfied. But in such cases, where all particulars are revealed, in the return, no penalty can be levied as held in [PRECEDENT]. The assessing authority could have also made demand for paying the tax after the Supreme Court decision on the point. Assessing authority failed to make assessment in time at least when the Supreme Court further decided the matter. Here tax was paid before assessment and before demand even there tax was not collected from customers. In any event they paid the tax before the assessment and before issuance of penalty notice and it is not a case where a penal provision can be invoked against the assessee. Petitioner did not file an untrue or incorrect return.
7. Another submission by the learned Special Government Pleader for Taxes is that since it is a suo motu revision, the proper course is to file an appeal before the High Court and not an original petition. Original petition was admitted on June 9, 1998. Government Pleader undertook that till the original petition is disposed of, recovery proceedings will not be made and the matter was pending before this Court for about four years. Further it is a suo motu revision under [SECTION] of the [ACT] and no appeal is provided under the Act against such orders. Even if appeal is maintainable after the pendency of writ petition for about four years, original petition cannot be dismissed in view of the alternate remedy.
8. Here even according to the department at the time of filing return, it was not untrue or incorrect. All particulars were disclosed in the return also. Petitioner claimed exemption in view of the Karnataka High Court decision. When the above decision was overruled, before assessment petitioner paid the tax. The basic and fundamental factors necessary to attract [SECTION] of the Act to attract penal provision is conspicuously absent. Since that minimal requirement is not satisfied, the assessee cannot be penalised under [SECTION]. Therefore, exhibit P6 order is illegal and, therefore, I set aside exhibit P6 order and restore the order of the second respondent, i.e., exhibit P3.
Original petition is allowed.
Order on [CASE NUMBER] in [CASE NUMBER] dismissed.