Escaped turnover penalty requires a wilful non-disclosure finding in the assessment order; separate penalty orders are unsustainable.

Penalty for escaped turnover under the Tamil Nadu VAT Act cannot be imposed through a separate, independent order when the scheme requires a finding of wilful non-disclosure. Treating the provision as pari materia with the earlier sales tax provision, the Madras HC held that the assessing authority must record the necessary satisfaction in the assessment order itself. A penalty order issued outside the assessment process is not contemplated under this framework and was therefore unsustainable. The separate penalty order was set aside.

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Issues: Whether penalty for escaped turnover could be imposed by a separate and independent order without forming part of the assessment order.

Analysis: The penalty provision under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 was treated as pari materia with Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959. The Court followed the settled view that, where penalty depends on a finding of wilful non-disclosure, the assessing authority must record that conclusion in the assessment order itself. A separate penalty order, not integrated with the assessment, is not contemplated under this scheme.

Conclusion: The separate penalty order was unsustainable and was set aside in favour of the petitioner.

Ratio Decidendi: Under the relevant escaped-turnover penalty provision, penalty cannot be imposed by a separate and independent order unless the assessment order itself contains the necessary finding of wilful non-disclosure.

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