Penalty under fiscal law requires a clear finding of wilful suppression or mens rea before it can be sustained.

Penalty under a fiscal penal provision cannot be sustained unless the assessing authority records a clear foundational finding of wilful suppression or the requisite mens rea. Here, the pre-revision notice proposed penalty without stating the basis for invoking the provision, and the assessment order gave no reasons supporting penalty or rejecting the dealer's objections. The assessment was therefore non-speaking on penalty, and the Tribunal was not justified in restoring the levy without any such foundational finding. The deletion of penalty was accordingly restored.

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Issues: Whether penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act could be sustained when the assessing authority had not recorded a prima facie or specific finding of wilful suppression or mens rea in the assessment or pre-revision notice.

Analysis: The pre-revision notice merely proposed penalty at 150% without disclosing the basis for invoking the penal provision. The assessment order also contained no discussion explaining why penalty was warranted or why the dealer's objections were rejected. In such circumstances, the assessment order was non-speaking on the penalty issue. The First Appellate Authority relied on the requirement that penalty could not be imposed without a finding showing the necessary mental element. The Tribunal, however, restored the penalty without there being any foundational finding by the assessing authority on the ingredients for levy of penalty.

Conclusion: The penalty could not be sustained in the absence of a recorded finding of wilful suppression or mens rea, and the Tribunal was not justified in restoring it.

Final Conclusion: The revision succeeded, the Tribunal's order was set aside, and the First Appellate Authority's deletion of penalty stood restored.

Ratio Decidendi: Penalty under a fiscal penal provision cannot be upheld unless the assessing authority records a clear foundational finding on the conduct warranting penalty, including the requisite element of wilful suppression or mens rea.

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