Penalty under reassessment provisions must form part of the assessment order, not be imposed by a separate proceeding.

Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 was construed as requiring penalty to be imposed as part of the reassessment process, not by a separate and independent order. Because the provision is penal in character, notice and an opportunity to show cause were necessary, and the statutory scheme did not permit the penalty proceeding to be divorced from the reassessment even where wilful non-disclosure was found. The court held that no separate penalty order could be made under section 16(2), and the penalty had to be included in the assessment order.

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Issues: Whether, under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959, the assessing authority could levy penalty by a separate and independent order after making a reassessment under section 16(1).

Analysis: The penalty provision was held to be penal in character and to require notice and an opportunity to show cause before levy. The requirement of a specific finding of wilful non-disclosure did not justify treating the penalty as an independent proceeding divorced from the reassessment. Reading the scheme of the Act and the appellate provision together, the levy of penalty was treated as part of the reassessment process and not as a separate order.

Conclusion: No separate and independent order of penalty could be made under section 16(2); the penalty had to form part of the assessment order. The issue was decided against the assessee and in favour of the Revenue.

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