Penalty for book-based turnover not sustainable absent suppression under sales tax law

Penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act was held inapplicable where the disputed turnover was traced to the assessee's books of accounts and the assessment was based on estimation from recorded figures, not on discovery of concealed turnover. The provision was applied only in the context of an assessment under Section 12(2), but it could not be invoked merely because the final assessment exceeded the return when no specific suppression or concealment was established. The Explanation to Section 12(3)(b) was treated as excluding book-based turnover from penal computation in the absence of proven suppression, and deletion of the penalty was upheld.

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Issues: Whether penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 was leviable when the assessment was made on the basis of the books of accounts and no suppression of turnover was found.

Analysis: The assessment and appellate records showed that the disputed turnover was traced to the books of accounts and the addition was made on estimation from the recorded figures rather than from any independent discovery of concealed turnover. The legal position applied was that penalty under Section 12(3)(b) arises in the setting of an assessment under Section 12(2), but it is not attracted merely because there is a difference between the return and the final assessment where the turnover is already reflected in the accounts and no concealment is established. The Explanation to Section 12(3)(b) was also treated as material, since it excludes book-based turnover from the penal computation where there is no specific suppression.

Conclusion: Penalty under Section 12(3)(b) was not leviable and its deletion was upheld.

Ratio Decidendi: Where the assessed turnover is drawn from the assessee's books of accounts and no specific suppression or concealment is found, penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 is not automatic and cannot be sustained merely on the basis of an estimated enhancement.

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