Best judgment assessment is required for sales tax penalty; an incorrect return alone does not attract section 12(3).

Penalty under section 12(3) of the Tamil Nadu General Sales Tax Act is attracted only when the assessment is completed under section 12(2) by best judgment after rejection of the return. A mere incorrect return, without a best judgment assessment, does not by itself justify penalty. Here, the disputed turnover was already found in the assessee's account books and the assessment was made on that basis, not on an estimated best judgment footing. The cited precedent construing section 12(3) was applied, and the contrary decision was distinguished because it involved a genuine best judgment assessment.

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Issues: Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act could be sustained when the assessment was made on the figures disclosed in the account books without a best judgment estimation.

Analysis: Penalty under section 12(3) is attracted only when the assessing authority makes an assessment under section 12(2) by resorting to best judgment and estimate after rejecting the return. A mere incorrect return does not by itself justify penalty. On the facts, the disputed turnover was available in the assessee's account books and the assessment was completed on that basis without any best judgment assessment. The cited precedent applying this construction of section 12(3) was held to govern the case, while the contrary decision was distinguished because it involved a true best judgment assessment.

Conclusion: Penalty under section 12(3) was not leviable. The assessee succeeded on the penalty issue.

Ratio Decidendi: Section 12(3) authorises penalty only where the assessment is made to the best of judgment under section 12(2); an incorrect return, without a best judgment assessment, does not attract the penalty provision.

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