Best judgment assessment and non-retrospective exemption: later tax relief could not cover earlier completed purchases.

Taxable liability arose when the purchase transactions occurred, so a later exemption notification could not apply to earlier completed purchases absent express retrospective effect; the exemption was therefore unavailable. The assessing authority was also justified in rejecting unreliable accounts where no gum consumption records were kept, and a best judgment estimate of consumption was upheld because the estimate was supported by comparable material and was not arbitrary.

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Issues: (i) Whether the assessing authority was justified in rejecting the assessee's accounts and making a best judgment assessment by estimating the quantity of gum used in crushing copra. (ii) Whether an exemption notification issued after the assessment year but before the assessment order could be applied to exempt the assessee's purchase turnover of firewood and clay for that assessment year.

Issue (i): Whether the assessing authority was justified in rejecting the assessee's accounts and making a best judgment assessment by estimating the quantity of gum used in crushing copra.

Analysis: The assessee kept no accounts for gum consumption. In such circumstances, the estimating authority's adoption of 500 gms. per quintal could not be treated as arbitrary, especially when comparable material showed that consumption could vary within a higher range. The absence of reliable records justified rejection of the accounts for assessment purposes.

Conclusion: The rejection of accounts and the best judgment estimation were upheld, against the assessee.

Issue (ii): Whether an exemption notification issued after the assessment year but before the assessment order could be applied to exempt the assessee's purchase turnover of firewood and clay for that assessment year.

Analysis: Under sales tax law, liability attaches when the taxable purchase or sale takes place. The computation or demand may be made later, but that does not postpone the accrual of liability. As the purchases had occurred before the exemption notification and the notification contained no retrospective operation, the assessee could not claim its benefit for the completed transactions of the earlier assessment year.

Conclusion: The exemption notification was held inapplicable, against the assessee.

Final Conclusion: The petition failed because the assessment stood on a valid best judgment basis and the later exemption notification did not operate retrospectively on transactions already completed.

Ratio Decidendi: In sales tax law, the taxable liability arises on the occurrence of the taxable transaction, and a subsequent exemption notification does not apply to earlier transactions unless retrospective operation is expressly provided.

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