Wilful non-disclosure and penalty for quota-sale premium upheld where omission was found deliberate, not bona fide.

Penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 was sustained because escaped assessment was found to result from wilful non-disclosure of assessable turnover. The Department had to establish mens rea, and the Court accepted that burden on the facts, noting that the dealer omitted quota-sale premium from the trading accounts while disclosing the rest of the turnover as export sales. The quota entitlement was treated as transferable goods, and the tax position was already settled. The explanation of bona fide doubt was rejected because the omission was deliberate rather than a mere misunderstanding of law.

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Issues: Whether penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 was justified on the ground of wilful non-disclosure of assessable turnover in respect of premium received on transfer of quota entitlement.

Analysis: Section 16(2) permits penalty only where escaped assessment is due to wilful non-disclosure, and the burden lies on the Department to establish mens rea. On the facts, the dealer had shown the entire turnover as export sales, while the quota-sale premium was not disclosed in the trading accounts produced before the assessing authority. The Court found that the quota entitlement was a freely transferable commodity falling within the definition of goods, and that the legal position on taxability had already been settled. The explanation that there was uncertainty or bona fide doubt was rejected because the factual matrix showed deliberate omission rather than a mere misunderstanding of law.

Conclusion: Penalty under section 16(2) was rightly imposed, and the finding of wilful suppression was upheld against the assessee.

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