Best-judgment sales tax assessment upheld where records were withheld and statutory deeming provisions supported taxation of in-State goods transactions.

Failure to file returns or produce books of account can justify a best-judgment sales tax assessment where inspection reports and surrounding facts supply a reasonable basis for estimating local turnover. The Bihar Sales Tax Act was also applied to linseed transactions connected with goods in Bihar, because the statutory definition deemed certain in-State contracts to be sales within the taxing territory even if delivery or disposal occurred elsewhere. On the record, despatch entries and railway receipts did not prove that title passed outside Bihar, so the claim of an out-of-State sale was not established.

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Issues: (i) Whether there was material to support the assessment of sales tax on the local turnover of goods valued at two lakhs; (ii) whether the assessment of sales tax on linseed valued at Rs. 1,24,998 despatched outside Bihar was legally valid; (iii) whether there was material to support the assessee's contention that the linseed valued at Rs. 1,24,998 had been sold outside Bihar.

Issue (i): Whether there was material to support the assessment of sales tax on the local turnover of goods valued at two lakhs.

Analysis: The assessee had not filed quarterly returns or produced its books of account despite repeated opportunities, and the assessment was therefore made to the best of judgment under section 13(4). The Inspector's report, the surprise inspection, and the surrounding facts showed business activity and transactions within the local area. These materials furnished a reasonable basis for the estimate of local sales.

Conclusion: The issue was answered against the assessee and in favour of the State; there was material to support the assessment on the local turnover of goods valued at two lakhs.

Issue (ii): Whether the assessment of sales tax on linseed valued at Rs. 1,24,998 despatched outside Bihar was legally valid.

Analysis: Even if the linseed was ultimately delivered or disposed of outside Bihar, section 2(g) of the Bihar Sales Tax Act extended the statutory meaning of sale and deemed certain sales of goods actually in Bihar at the time of the contract to have taken place in Bihar. The statutory scheme therefore conferred jurisdiction to tax such transactions, and the constitutional validity of the amended provision had already been upheld. The linseed assessment thus remained supportable in law.

Conclusion: The issue was answered against the assessee and in favour of the State; the assessment of sales tax on the linseed was legally valid.

Issue (iii): Whether there was material to support the assessee's contention that the linseed valued at Rs. 1,24,998 had been sold outside Bihar.

Analysis: The despatch entries and railway receipts did not establish that title passed outside Bihar. There was no reliable material showing the form of endorsement of the railway receipts or that the seller retained the right of disposal so as to postpone transfer of property until delivery at the destination. In the absence of such proof, the contention that the sales took place outside the State could not be accepted.

Conclusion: The issue was answered against the assessee and in favour of the State; there was no material to support the contention that the linseed had been sold outside Bihar.

Final Conclusion: All the referred questions were decided in favour of the Revenue, and the reference was answered against the assessee.

Ratio Decidendi: When an assessee fails to produce books and the record supplies material supporting a best-judgment estimate, the assessment can be sustained; further, a sales tax statute may validly deem certain in-State goods transactions to take place within the taxing territory and tax them accordingly.

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