Wilful non-disclosure is required for VAT penalty; regular compliance and prior tax payment weighed against sustaining the levy.

Penalty under section 27(3) of the Tamil Nadu VAT Act is attracted only where escapement of tax is accompanied by wilful non-disclosure. Regular filing of returns, timely tax payment, and full remittance of the differential tax after discrepancies were pointed out were relevant factors against penalty. Because the additional tax had already been paid before notice and the record did not justify a finding of wilful concealment, the penalty could not be sustained on the facts recorded. The assessment orders were set aside, with a direction for fresh consideration and redoing of the assessment.

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Issues: Whether penalty under section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 could be sustained when the assessee had filed returns regularly, paid the tax without delay, and remitted the differential tax in full after the discrepancies were pointed out during inspection.

Analysis: Penalty under section 27(3) is attracted only where the escapement of tax is accompanied by wilful non-disclosure. Mere non-disclosure does not automatically justify penalty. Where the assessee has been regularly complying with return and payment obligations and has also discharged the additional tax prior to the issuance of notice, that conduct is a relevant consideration against penalty. The impugned orders were made after the tax component had already been paid and the matter was governed by the earlier binding approach requiring reconsideration of penalty on these facts.

Conclusion: The penalty could not be sustained on the facts as recorded, and the assessment orders were set aside with a direction for fresh consideration and redoing of the assessment.

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