Penalty under Tamil Nadu VAT law needs specific notice and factual foundation; enhanced penalty cannot apply retrospectively.

Penalty under Section 27(4) of the Tamil Nadu VAT Act could not be sustained without a specific show cause notice and a foundational finding of wilful non-disclosure, wrong availment of input tax credit, or false billing; on that basis, the levy was quashed. The amended 300% penalty also could not be applied to assessment year 2012-2013 because the enhancement took effect later and penal provisions are not retrospective absent clear legislative authority. The impugned assessment and penalty orders were therefore set aside.

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Issues: (i) Whether penalty under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006 could be sustained in the absence of a specific show cause notice and a finding of wrong availment of input tax credit or false billing. (ii) Whether the amended 300% penalty under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006 could be applied to the assessment year 2012-2013.

Issue (i): Whether penalty under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006 could be sustained in the absence of a specific show cause notice and a finding of wrong availment of input tax credit or false billing.

Analysis: The penalty provision was treated as not automatic. A levy under Section 27(4) required compliance with natural justice and an express opportunity to meet the proposed penal action. The record did not contain the necessary finding of wilful non-disclosure, wrong availment of input tax credit, or production of false bills to justify the penalty. In the absence of such foundational material, the penal invocation was held to suffer from jurisdictional infirmity.

Conclusion: The penalty under Section 27(4) could not be sustained and the finding was in favour of the assessee.

Issue (ii): Whether the amended 300% penalty under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006 could be applied to the assessment year 2012-2013.

Analysis: The amendment substituting Section 27(4) and enhancing the penalty to 300% came into force after the relevant assessment period. Penal provisions are not to be applied retrospectively unless the statute clearly so provides. Since the assessment year preceded the amendment, the enhanced penalty could not be imposed merely on the basis of the later amendment.

Conclusion: The amended 300% penalty could not be applied to the assessment year 2012-2013 and this issue was decided in favour of the assessee.

Final Conclusion: The impugned assessment and penalty orders were quashed, and the writ petitions were allowed.

Ratio Decidendi: A penalty under Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006 cannot be imposed automatically or without a specific notice and foundational finding of culpable conduct, and an enhanced penal provision cannot be applied retrospectively to an earlier assessment year absent clear legislative authority.

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