Best judgment assessment applies when a turnover return is not filed on time under the sales tax scheme

Failure to file a turnover return within time permitted the assessing authority to make a best judgment assessment under section 7(3) read with rule 41(5) of the U.P. Sales Tax Rules. Although section 21 deals with escaped assessment, the statutory scheme was treated as analogous to provisions under which non-filing could justify either best judgment assessment or escaped assessment, depending on the Act. On that reasoning, the assessment made after default in filing the return was within jurisdiction under section 7(3) and could not be characterised as an assessment under section 21.

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Issues: Whether, where no return of turnover was filed within time, the assessment proceedings had to be treated as proceedings for escaped assessment under section 21 of the U.P. Sales Tax Act or as a best judgment assessment under section 7(3) read with rule 41(5) of the U.P. Sales Tax Rules.

Analysis: Section 7(3) authorises the assessing authority to determine turnover to the best of its judgment where no return is submitted within the prescribed time. Section 21 deals with turnover that has escaped assessment, but the provisions were treated as analogous to section 11(4)(a) and section 11-A of the C.P. and Berar Sales Tax Act, 1947, on which the Supreme Court had held that failure to file a return may justify proceeding either under the best judgment provision or under the escaped assessment provision, depending on the statutory scheme. Applying that reasoning, the assessment made after default in filing the return was within the authority's jurisdiction under section 7(3), and it could not be characterised as an assessment under section 21.

Conclusion: The assessment was rightly treated as one under section 7(3) read with rule 41(5), and not as an assessment under section 21; the answer was against the assessee and in favour of the Revenue.

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