Export deduction must be proved; penalty based on tax liability cannot exceed the statutory ceiling after reduction.

Export deduction under the sales tax law is not available as of right and must be affirmatively proved by the assessee; where export was shown only for goods supported by railway receipts, no further deduction could be claimed for turnover added in best judgment assessment without proof that it represented exported sales. The penalty rule was also limited by the reduced tax liability: a penalty fixed as a percentage of tax could not exceed the statutory ceiling once the taxable amount was lowered, so the penalty order had to be modified accordingly.

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Issues: (i) Whether the turnover added by best judgment assessment under section 11(4) of the Act could also be deducted as exported sales under section 27-A of the Act; and (ii) whether the penalty imposed under section 10 had to be restricted to one-fourth of the tax ultimately leviable.

Issue (i): Whether the turnover added by best judgment assessment under section 11(4) of the Act could also be deducted as exported sales under section 27-A of the Act.

Analysis: Deduction for export was not available as a matter of right. The assessee had to establish actual export. Where export was proved by railway receipts, deduction was available only to that extent. The additions made in assessment on the footing that the remaining sales were local sales were not displaced merely because the assessment was made on best judgment basis. In the absence of proof that the enhanced turnover represented exported goods, no further deduction could be claimed.

Conclusion: The claim for deduction of the added turnover as export sales failed and was decided against the assessee.

Issue (ii): Whether the penalty imposed under section 10 had to be restricted to one-fourth of the tax ultimately leviable.

Analysis: The penalty was imposed with reference to the tax then treated as leviable. Once the tax was reduced in consequence of the High Court's ruling, a penalty exceeding the statutory maximum calculated on the reduced tax could not survive. The existing penalty therefore required modification to bring it within the prescribed ceiling.

Conclusion: The penalty was restricted so that it could not exceed one-fourth of the tax leviable in each case, in favour of the assessee.

Final Conclusion: The petitions substantially failed, but the penalty orders were modified to conform to the statutory maximum based on the reduced tax liability.

Ratio Decidendi: A deduction for export sales must be affirmatively proved by the assessee, and a penalty fixed as a percentage of tax cannot exceed the statutory limit when the taxable amount is reduced.

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