Wilful non-disclosure required for sales tax penalty; mere turnover addition or rejected explanation is not enough.

Penalty under section 16(2) of the Tamil Nadu General Sales Tax Act could not be sustained because the assessing authority had not recorded a specific finding that the assessee wilfully failed to disclose assessable turnover. The provision is penal in nature and requires proof of a culpable mental element; mere rejection of the explanation or addition to turnover on the basis of suppression is insufficient. The High Court also noted that revisional interference under section 38 is limited to errors of law, and no such error was shown in the appellate order deleting the penalty. The revision was therefore rejected.

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Issues: Whether penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 could be sustained in the absence of a finding that the assessee had wilfully failed to disclose assessable turnover.

Analysis: Section 16(2) is penal in nature and requires more than a mere rejection of the assessee's explanation or an addition to turnover on the basis of suppression. The decisive requirement is a finding of wilful non-disclosure, which imports a culpable mental element. Where the assessing authority does not record such a finding, the statutory ingredients for penalty are not made out. The revisional power under section 38 is confined to erroneous decisions on questions of law or failures to decide questions of law, and no such error was shown in the appellate order affirming deletion of penalty.

Conclusion: The penalty was not sustainable and the revision was rightly rejected.

Ratio Decidendi: Penalty under a provision requiring wilful non-disclosure cannot be imposed unless there is a specific finding of mens rea or other concrete material showing culpable conduct; a mere addition to turnover or rejection of explanation is insufficient.

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