Mens rea is necessary to assess penalty under Section 16(2) of the Tamil Nadu General Sales Tax Act, and the burden is on the department to prove willful and deliberate avoidance of obligations under the Act.

T.S. SIVAGNANAM, J.

The challenge in this writ petition is to an order passed by the Sales Tax Appellate Tribunal, the third respondent, in T.A.No.485/01 dated 212. 2005. The issue involved in the present writ petition relates to levy of penalty under Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959, (hereinafter referred to "as the Act"), which contemplates that the escape from the assessment to tax, if due to willful non-discloser by the dealer shall attract penalty in addition to the tax assessed.

Facts leading to the filing of the writ petition:

2. The petitioner is a registered dealer on the file of the first respondent, engaged in the export of readymade garments. The Sales Tax assessment for 1998-99 was completed and an order of assessment dated 05.08.1999 was passed by the first respondent. On 210. 1999, the place of business of the petitioner was inspected and the documents available were verified and it revealed that the petitioner received premium from the transfer of the quota entitlement certificate issued to them by the Apparel Export Promotion Council (AEPC) for Rs.9,28,925/- during the year 1998-99, which according to the department is liable to tax at 11 %. During the course of the inspection a sworn statement of the proprietrix was recorded. On 210. 1999, the petitioner appear to have paid the entire tax demanded by two cheques for Rs.1,02,181.75/- for the period 199899 and Rs.1,68,898.83 for the period 1999-2000(upto September 1999). A representation was also made on the said date, wherein the petitioner stated that they have made payments fully for the period from April 1998 to March 1999 and from April 1999 to September 1999 and under took to pay the tax in the succeeding months to the Commercial Tax Officer, Kilpauk Assessment Circle, if there is quota sales.

.3. Thereafter a notice was issued to the petitioner alleging that they have failed to disclose either in their returns regarding the AEPC quota sales nor paid the tax due thereon and at the time of check of accounts, the trading accounts were filed and details regarding receipt of premium on AEPC quota sales did not find place in the trading accounts and it has been intentionally suppressed, hence levy of penalty under Section 16(2) is warranted at 150 % of the tax due was proposed in the said notice and the penalty was quantified at Rs.1,53,273. The petitioner was given opportunity to submit their objections and the gist of the objections are that they were under the impression that there was no liability on quota sales and at the time of inspection, it was pointed out to the petitioner about the liability and therefore a statement was given on 210. 1999 that they would consult their Auditor about such liability. The first respondent considered the objections and by order dated 212. 1999 confirmed the proposal of the total taxable turnover as well as penalty. In doing so, the first respondent observed that at the time of production of accounts, the petitioner filed trading accounts, which did not disclose receipts towards AEPC quota sale and incomplete production of accounts clearly proved willful suppression.

.4. Aggrieved by the order passed by the first respondent, the petitioner preferred an appeal before the second respondent and the second respondent by order dated 15.02.2001, dismissed the appeal, as against the said order, the petitioner preferred an appeal to the third respondent-Tribunal in T.A.No.485/01 and the third respondent by order dated 212. 2005 dismissed the appeal and confirmed the orders passed by the respondents 1 & 2. Aggrieved by such order of the third respondent Tribunal the petitioner is before this Court.

.Contentions:-

5. Mr.N.Inbarajan, learned counsel appearing for the petitioner would contend that the disposal of quota sale was available in the books of accounts, which was seen by the first respondent and the original assessment was completed on 05.08.1999 and in such circumstances, it can