Retrospective tax amendments and best judgment assessment of escaped turnover cannot apply absent clear legislative intent.

A notice under Section 14(4) of the Andhra Pradesh General Sales Tax Act was not invalid merely because escaped turnover was inferred from sales observed during a period of watch over the dealer's premises; observed sales could support initiation of escaped-assessment proceedings. However, the 1963 amendment empowering best judgment determination of escaped turnover was substantive, because it affected tax liability itself, and could not apply retrospectively to an earlier assessment year absent express words or necessary implication. The notice, having proceeded on a best judgment basis under the unamended provision, was therefore illegal, and the proceedings were quashed.

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Issues: (i) Whether a notice under Section 14(4) of the Andhra Pradesh General Sales Tax Act was invalid merely because the escaped turnover was inferred from a period of watch over the dealer's premises; (ii) Whether the amendment to Section 14(4) by Act 16 of 1963, which empowered best judgment determination of escaped turnover, applied retrospectively to an assessment year preceding the amendment.

Issue (i): Whether a notice under Section 14(4) of the Andhra Pradesh General Sales Tax Act was invalid merely because the escaped turnover was inferred from a period of watch over the dealer's premises.

Analysis: The mere absence of power to maintain continuous surveillance over a dealer's premises does not by itself invalidate proceedings under Section 14(4). That provision authorises action where turnover has escaped assessment, been under-assessed, or suffered levy at a lower rate. If the authority relies upon sales actually observed during the watch as material for initiating escaped-assessment proceedings, the notice is not vitiated on that ground alone.

Conclusion: The notice was not illegal merely because it was founded on sales observed during the watch period; this objection failed.

Issue (ii): Whether the amendment to Section 14(4) by Act 16 of 1963, which empowered best judgment determination of escaped turnover, applied retrospectively to an assessment year preceding the amendment.

Analysis: Before amendment, Section 14(4) permitted assessment only of turnover actually found to have escaped assessment and did not authorise best judgment determination. After amendment, the assessing authority could determine escaped turnover to the best of its judgment, thereby affecting the quantum of tax payable. Since the amendment altered substantive rights and not merely procedure, it could not be given retrospective effect in the absence of express words or necessary implication.

Conclusion: The amendment was not retrospective, and the notice, which proceeded on a best judgment computation, was governed by the unamended provision and was therefore illegal.

Final Conclusion: The challenge succeeded on the ground that the amended power could not be retrospectively applied, and the impugned proceedings were quashed.

Ratio Decidendi: A statutory amendment enabling best judgment determination of escaped turnover is substantive in nature because it affects the tax liability itself, and cannot be applied retrospectively unless the legislature clearly so provides.

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