Penalty for wilful non-disclosure must be imposed during reassessment itself; later separate action is without jurisdiction.

Penalty for wilful non-disclosure under section 19(2) of the Kerala General Sales Tax Act, 1963 must be imposed only as part of the reassessment process under section 19(1), on the assessing authority's own satisfaction reached during that proceeding. A separate penalty order issued after completion of reassessment is not a proceeding taken in making the assessment and is outside jurisdiction. Earlier compounding of a different offence, such as failure to maintain true and complete accounts, does not by itself authorise penalty for wilful non-disclosure of taxable turnover. The statutory scheme requires contemporaneous quasi-judicial satisfaction within the reassessment order.

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Issues: Whether penalty under section 19(2) of the Kerala General Sales Tax Act, 1963 could be imposed by a separate order after completion of reassessment under section 19(1), and whether the earlier compounding of a different offence barred such penalty.

Analysis: Penalty under section 19(2) is attracted only when, in making the reassessment under section 19(1), the assessing authority is satisfied that the escapement was due to wilful non-disclosure of assessable turnover. The power to impose penalty is therefore to be exercised in the course of the reassessment itself, and a separate penalty proceeding initiated after termination of the reassessment is not a proceeding taken "in making an assessment". The offence compounded earlier concerned non-maintenance of true and complete accounts, whereas the impugned penalty was for wilful non-disclosure of taxable turnover, so the compounding did not by itself confer jurisdiction to levy the penalty. The absence of any indication in the reassessment orders that penalty was being reserved, together with the fact that the later penalty action was initiated separately, showed that the statutory requirement was not met. The order also suffered from want of independent quasi-judicial satisfaction, as penalty jurisdiction must be exercised by the assessing authority on its own satisfaction and not under external dictation.

Conclusion: The separate penalty orders were without jurisdiction and could not be sustained.

Final Conclusion: The assessee succeeded, and the penalty demands were set aside as being contrary to the statutory scheme governing reassessment and penalty.

Ratio Decidendi: Under section 19(2) of the Kerala General Sales Tax Act, 1963, penalty for wilful non-disclosure can be imposed only as part of the reassessment process under section 19(1), on the assessing authority's own satisfaction formed during that process; a later independent penalty order after completion of reassessment is without jurisdiction.

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