Penalty under sales tax law requires deliberate suppression, not merely unexplained discrepancies in best judgment assessment.

Penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 requires proof of actual turnover and deliberate non-disclosure; unexplained slips or stock discrepancies may support best judgment assessment, but they do not by themselves establish wilful suppression. Where the assessee consistently denies taxable turnover and claims to be only a broker, the ingredients for penalty are not satisfied. The deletion of penalty was therefore upheld.

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Issues: Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959, could be sustained when the assessment was made on best judgment basis and the assessee disputed liability by asserting that he was only a broker.

Analysis: The assessment and penalty stand on different considerations. Non-explanation of incriminating slips may justify inclusion of turnover in a best judgment assessment, but it does not by itself establish wilful suppression for the purpose of penalty. Penalty under section 12(3) requires a finding that there was actual turnover and that such turnover was deliberately not disclosed. Where the assessee consistently maintains that no taxable turnover arose and the material only indicates an unexplained stock discrepancy, the ingredients for penalty are not satisfied.

Conclusion: Penalty under section 12(3) was not leviable and the deletion of penalty was upheld.

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