Wilful non-disclosure and pre-notice tax payment govern VAT penalty and related additions on fresh reconsideration.

Penalty under the Tamil Nadu VAT Act requires a recorded finding of wilful non-disclosure; mere non-disclosure is insufficient, and the assessee's payment of tax before the show cause notice had to be considered. The penalty issue was therefore remitted for fresh consideration. The equal time addition was also set aside because the same pre-notice payment was relevant to its re-examination. The assessment on the challenged heads was not sustained, and fresh orders were directed after considering the assessee's conduct before notice and the statutory requirement of wilful non-disclosure.

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Issues: (i) Whether penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act was sustainable in the absence of a finding of wilful non-disclosure; (ii) Whether the equal time addition required reconsideration in the light of the petitioner's payment of tax before issuance of the show cause notice.

Issue (i): Whether penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act was sustainable in the absence of a finding of wilful non-disclosure.

Analysis: Penalty under the provision requires the Assessing Officer to record satisfaction that escapement of tax occurred due to wilful non-disclosure. Mere non-disclosure is not sufficient to attract penalty. The petitioner's conduct in remitting tax at the time of inspection, before issuance of the show cause notice, was relevant to the question of penalty.

Conclusion: The penalty issue was required to be re-done and fresh consideration was directed.

Issue (ii): Whether the equal time addition required reconsideration in the light of the petitioner's payment of tax before issuance of the show cause notice.

Analysis: The same factual circumstance of payment of tax prior to the show cause notice was held to be relevant while examining the equal time addition. The matter therefore called for reconsideration on that head as well.

Conclusion: The equal time addition was also set aside for fresh consideration.

Final Conclusion: The assessment was not sustained on the challenged heads and the matter was remitted for fresh orders after considering the petitioner's payment of tax before notice and the requirement of wilful non-disclosure.

Ratio Decidendi: Penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act can be imposed only on a recorded finding of wilful non-disclosure, and relevant conduct before notice must be considered while re-examining penalty-related additions.

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