Wilful non-disclosure required for turnover penalty; best judgment assessment alone does not justify penalty.

Penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 is sustainable only on a clear finding of wilful non-disclosure of assessable turnover. A best judgment assessment or a mere finding of suppressed turnover does not by itself establish the jurisdictional fact needed for penalty. Where the dealer's computation method had been suggested by the Enforcement Wing and the relevant facts were already within the department's knowledge, suppression cannot be presumed only because the assessment differed from the return. On those facts, the penalty was set aside, while the assessments were otherwise left undisturbed.

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Issues: Whether penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 was sustainable in the absence of a finding of wilful non-disclosure of assessable turnover, particularly when the method of accounting adopted by the dealer had been suggested by the Enforcement Wing and was within the department's knowledge.

Analysis: Section 27(3) permits penalty only where the escape from assessment is due to wilful non-disclosure of assessable turnover. A best judgment assessment or a finding of suppressed turnover does not by itself establish the jurisdictional fact necessary for penalty. On the assessment records, there was no independent finding that the dealer had wilfully withheld turnover; the orders proceeded on rejection of the dealer's explanation for the turnover difference. The dealer had adopted the method of computation on the basis of instructions given by the Enforcement Wing during inspection, and that method was disclosed to the department. Where the relevant facts are already within the knowledge of the revenue, suppression cannot be presumed merely because the assessment ultimately differed from the return filed.

Conclusion: The penalty under Section 27(3) could not be sustained and was set aside. The assessments were otherwise left undisturbed.

Ratio Decidendi: Penalty for escaped turnover under Section 27(3) can be imposed only on a clear finding of wilful non-disclosure of assessable turnover, and such penalty is not automatic from a best judgment assessment or from facts already known to the department.

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