Wilful suppression in escaped assessment justified sales tax penalty, and the penalty quantum was upheld as proportionate.

Wilful suppression of assessable turnover in a finally concluded escaped assessment justified penalty under the Kerala General Sales Tax Act, because the non-disclosure was not accidental or technical and the proceedings were issued within a reasonable time after revised assessment. The court held that the penalty was properly linked to the assessment process and upheld it in favour of Revenue. The quantum was also left undisturbed because it was within the statutory ceiling, had already been reduced in revision, and was not shown to be irrational, excessive, or disproportionate. The assessment-linked penalty order was sustained in full.

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Issues: (i) whether penalty under section 19(2) read with section 45A of the Kerala General Sales Tax Act, 1963 was justified on the facts found in the escaped assessment proceedings; (ii) whether the quantum of penalty imposed was liable to be interfered with as excessive or unreasonable.

Issue (i): whether penalty under section 19(2) read with section 45A of the Kerala General Sales Tax Act, 1963 was justified on the facts found in the escaped assessment proceedings.

Analysis: The escaped assessment order had become final and established that the assessee had suppressed sales turnover and retained tax collected on those sales without remitting it within the prescribed time. On those findings, the non-disclosure was not accidental or technical, but a wilful suppression of assessable turnover attracting penalty. The notice for penalty was also issued within a reasonable time after the revised assessment, and the requirement that the penalty proceedings be connected with the assessment process was satisfied.

Conclusion: The levy of penalty was justified and is upheld, in favour of Revenue.

Issue (ii): whether the quantum of penalty imposed was liable to be interfered with as excessive or unreasonable.

Analysis: The penalty was imposed within the statutory ceiling, the revisional authority had already reduced the amount, and the authorities had considered the seriousness of the suppression and the delayed remittance of tax collected. In those circumstances, the court found no ground to apply interference on proportionality or unreasonableness principles.

Conclusion: The quantum of penalty was not interfered with and is upheld, in favour of Revenue.

Final Conclusion: The challenge to the penalty proceedings failed in full, and the assessment-linked penalty order, as modified in revision, was sustained.

Ratio Decidendi: Where escaped assessment is finally found to be based on wilful non-disclosure of assessable turnover, penalty under the corresponding sales tax provisions may be imposed within a reasonable time after assessment, and the quantum will not be disturbed if it is within the statutory limit and is not shown to be irrational or disproportionate.

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