Penalty under VAT law requires prior notice and hearing; levy without a show-cause notice was set aside.

Penalty under the Tamil Nadu Value Added Tax Act cannot be sustained unless the dealer is given a separate notice proposing penalty and a reasonable opportunity to show cause. The assessment order showed notice only for revision of assessment, not for penalty, and the proviso to Section 27(4) required a fair hearing before levy under Section 27(3)(b). Because that procedural safeguard was not followed, the penalty was contrary to law, was set aside, and the matter was remitted for fresh orders after personal hearing.

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Issues: Whether penalty levied under the Tamil Nadu Value Added Tax Act could be sustained when no notice or opportunity was given before imposition of penalty.

Analysis: The impugned assessment order showed that notice had been issued for revision of assessment, but no separate notice proposing penalty had been served. Penalty under Section 27(3)(b) of the Tamil Nadu Value Added Tax Act, read with the proviso to Section 27(4), could not be imposed without affording the dealer a reasonable opportunity to show cause against such levy. Imposition of penalty without such notice was contrary to law and offended the requirement of fair hearing.

Conclusion: The penalty levy was unsustainable and was set aside. The matter was remitted to the authority for fresh orders after affording personal hearing to the petitioner.

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