Statutory sales tax penalty is mandatory where assessed tax exceeds tax paid beyond the threshold, not replaceable by penal interest.

Penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 applies where the tax assessed exceeds the tax paid and the shortfall crosses the statutory threshold. The Court held that the governing factor is the extent of the assessed-tax shortfall, not the substitution of penal interest under Section 24(3). On the facts, the assessee's return disclosed tax paid well below the final assessment, so the penalty was mandatory and was correctly restored by the Joint Commissioner. The challenge therefore failed.

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Issues: Whether penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 was exigible on the difference between the tax assessed and the tax paid by the assessee.

Analysis: The assessee's return disclosed tax paid substantially below the tax finally determined. The statutory scheme under Section 12(3)(b) treats the extent of shortfall between the assessed tax and the tax paid as the governing factor for levy of penalty. The Court found that the shortfall in this case exceeded the statutory threshold and that the Appellate Assistant Commissioner was not right in treating penal interest under Section 24(3) as an equivalent substitute for the statutory penalty. The restoration of the Assessing Officer's order by the Joint Commissioner was therefore consistent with the Act.

Conclusion: The penalty under Section 12(3)(b) was rightly imposed and sustained, and the assessee's challenge failed.

Ratio Decidendi: Where the difference between the tax assessed and the tax paid satisfies the statutory threshold, penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 is mandatory and cannot be substituted by penal interest under Section 24(3).

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