Wilful non-disclosure finding required before sales tax penalty can be imposed; assessment estimate upheld as reasonable.

Undeclared stock assessment based on a reasoned fresh scrutiny of seized notebooks was not shown to be arbitrary or perverse, so writ interference was unwarranted. Penalty could not be sustained under the sales tax penalty provision without a specific finding that escapement resulted from wilful non-disclosure of assessable turnover. The assessment was upheld, but the penalty order was quashed for lack of the requisite statutory finding.

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Issues: (i) Whether the assessing authority's estimate of the undeclared stock was arbitrary and liable to be interfered with in writ jurisdiction. (ii) Whether penalty could be levied under section 16(2) of the Madras General Sales Tax Act, 1959, without a finding of wilful non-disclosure of assessable turnover.

Issue (i): Whether the assessing authority's estimate of the undeclared stock was arbitrary and liable to be interfered with in writ jurisdiction.

Analysis: The assessing authority undertook a fresh scrutiny of the seized note-books, examined the disclosed stock position, and made deductions on a reasoned basis before arriving at the final figure of undeclared stock. Interference under article 226 is warranted only where the finding is perverse or so unreasonable that no reasonable person could have reached it.

Conclusion: The estimate was not shown to be arbitrary or perverse, and no interference was called for on that ground.

Issue (ii): Whether penalty could be levied under section 16(2) of the Madras General Sales Tax Act, 1959, without a finding of wilful non-disclosure of assessable turnover.

Analysis: The statutory power to levy penalty under section 16(2) depends on the assessing authority being satisfied, and recording a finding, that the escapement resulted from wilful non-disclosure of assessable turnover. In the absence of such a specific finding, the jurisdiction to impose penalty is not made out.

Conclusion: The penalty was unsustainable and was quashed for want of the requisite finding of wilful non-disclosure.

Final Conclusion: The assessment was sustained, but the penalty portion was set aside, leaving the assessee only partly successful.

Ratio Decidendi: Penalty under section 16(2) can be imposed only when the assessing authority records a specific finding of wilful non-disclosure of assessable turnover; absent that finding, the penal order is without jurisdiction.

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