Best judgment assessment for sales tax penalty under section 12; no penalty where turnover came from account books.

Penalty under section 12 of the Madras General Sales Tax Act, 1959 was held to depend on an actual best judgment assessment. Section 12(2) applies where no return is filed or the return is incomplete or incorrect, but section 12(3) authorises penalty only when the assessment is made under section 12(2). Read together, the provisions require the assessing authority to have resorted to estimate or guesswork before penalty can be imposed. Where the disputed turnovers were taken from the assessee's own account books and not determined by best judgment, the statutory condition for penalty was absent, and penalty could not be levied.

---

---

Issues: Whether penalty could be levied under section 12 of the Madras General Sales Tax Act, 1959 merely because an incorrect return had been filed, when the assessment of the relevant turnover was not made on a best judgment basis.

Analysis: Section 12(2) authorises best judgment assessment where no return is filed or where the return is incomplete or incorrect. Section 12(3) permits penalty only when the assessment is made under section 12(2). The two sub-sections must be read together. Penalty is therefore attracted only where the assessing authority actually resorts to best judgment assessment. On the facts, the disputed turnovers were taken from the assessee's own books of account and were not determined by estimate or guesswork. Since the assessment of those items was not a best judgment assessment, the statutory condition for penalty was absent.

Conclusion: Penalty could not be levied in respect of the items assessed from the assessee's account books, and the answer was in favour of the assessee.

---