Penalty barred under revised VAT assessment; turnover dispute remanded for fresh notice, disclosure of particulars, and hearing.

Penalty was held unsustainable where the revised assessment proceeded under Section 27(1)(b) of the Tamil Nadu Value Added Tax Act on the basis of enhanced tax rate for branded bakery products. The assessment also required fresh consideration because the turnover figures showed duplication and the assessee had not been given full particulars of the additional turnover relied on; effective objections could not be filed without disclosure and a proper hearing. The assessment was therefore set aside in part and remitted for de novo consideration on the disputed turnover and rate of tax, while the penalty component was annulled.

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Issues: (i) Whether penalty could be levied where the revision of assessment was made under Section 27(1)(b) of the Tamilnadu Value Added Tax Act, 2006; (ii) whether the assessment required reconsideration on the basis of the turnover figures and supporting details to be furnished to the assessee.

Issue (i): Whether penalty could be levied where the revision of assessment was made under Section 27(1)(b) of the Tamilnadu Value Added Tax Act, 2006.

Analysis: The revision was found to have been made under Section 27(1)(b) for enhancing the rate of tax on the basis that the petitioner had sold branded bakery products. On that footing, the penalty provision was held not to be attracted. The penalty aspect was therefore treated as unsustainable.

Conclusion: Penalty could not be levied and stood set aside.

Issue (ii): Whether the assessment required reconsideration on the basis of the turnover figures and supporting details to be furnished to the assessee.

Analysis: The assessment notice and the materials on record showed a duplication of the turnover figure of Rs. 1,02,00,700/-, which could not be separately added when it was already included in the total turnover of Rs. 1,63,24,728/-. The assessee was also entitled to full particulars regarding the additional turnover of Rs. 1,43,71,748/- so that effective objections could be filed. The matter therefore required fresh notice and reconsideration after hearing the assessee.

Conclusion: The assessment was remanded for fresh consideration on the turnover issue with opportunity of personal hearing and disclosure of details.

Final Conclusion: The assessment order was quashed in part and the matter was sent back for a de novo assessment only on the disputed turnover and rate of tax, while the penalty component was finally annulled.

Ratio Decidendi: Where revised assessment is made under Section 27(1)(b) of the Tamilnadu Value Added Tax Act, 2006, penalty cannot be imposed under the penalty provisions, and reassessment must be preceded by a proper notice and disclosure of the material particulars relied upon.

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