Non-disclosure penalty and exemption burden: wilful concealment not required, and assessee must prove factual entitlement.

Penalty under a sales tax provision that refers only to non-disclosure in the return does not require proof of wilful concealment or mens rea; the court distinguished provisions that expressly make wilfulness a condition and upheld penalty under section 12(3). The assessees also failed to prove entitlement to exemption because they did not produce records or other evidence to rebut the departmental material showing import and use of the art silk yarn in Tamil Nadu. In the absence of proof of disposal outside the State or non-use, the exemption claim failed and the assessments were sustained.

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Issues: (i) Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 required proof of wilful non-disclosure or mens rea; (ii) Whether the assessees had established entitlement to exemption by proving the disposal and use of the imported art silk yarn.

Issue (i): Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 required proof of wilful non-disclosure or mens rea.

Analysis: The language of section 12(3) was contrasted with section 16(2). Section 16(2) expressly required satisfaction that escapement was due to wilful non-disclosure, whereas section 12(3) spoke only of non-disclosure in the return or failure to submit a return. The earlier decision in A. V. Meiyappan was treated as authority only for the proposition that penalty should not be imposed as a routine matter and must be exercised with judicial discretion, not as requiring proof of deliberate concealment under section 12(3). The decision in Hindustan Steel Ltd. was held distinguishable because it turned on materially different statutory language.

Conclusion: Wilful non-disclosure or mens rea was not essential for invoking section 12(3); the levy of penalty under that provision was upheld.

Issue (ii): Whether the assessees had established entitlement to exemption by proving the disposal and use of the imported art silk yarn.

Analysis: The assessees had failed to produce records or other proof to rebut the departmental material showing import and use in Tamil Nadu. The authorities found that the accounts consistently recorded the imported yarn as having been utilised in manufacture, and the assessees did not substantiate their alternative case that the licences were sold or that the yarn never entered the State. In the absence of proof, the claim for exemption could not be accepted and the assessment was sustained.

Conclusion: The assessees did not prove their claim to exemption, and the assessments were rightly confirmed.

Final Conclusion: The challenge to the assessment and penalty failed, and the revision petitions were dismissed with costs.

Ratio Decidendi: Where the penal provision uses only non-disclosure as the statutory trigger, proof of wilful concealment is not a prerequisite; the assessee seeking exemption bears the burden of proving the factual basis for that claim.

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