Taxable incidental turnover and best judgment assessment upheld where no return was filed and penalty for non-filing was sustained.

Sales of discarded or unserviceable items arising in the course of a contractor's main business can form taxable ancillary or incidental turnover, and the absence of proof of the place of purchase does not remove that liability. Where no sales tax return is filed at all, the resulting assessment is treated as a best judgment assessment and the statutory penalty provision applies. A claimed bona fide mistake of law does not excuse the original failure to file the return when due, so penalty remains exigible, subject to any reduction already granted. The tax revision cases were dismissed.

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Issues: (i) Whether the sale of unserviceable cranes formed part of the assessee's taxable business turnover as ancillary or incidental to its construction business; (ii) whether, in the absence of a return under the sales tax provision, the assessment was a best judgment assessment attracting penalty; and (iii) whether penalty was barred because the omission to file the return was said to be due to a bona fide mistake of law.

Issue (i): Whether the sale of unserviceable cranes formed part of the assessee's taxable business turnover as ancillary or incidental to its construction business.

Analysis: The assessee was carrying on construction activity in the State, and the disputed sales were of discarded articles arising in the course of that business. Even if the cranes had been purchased outside the State, the sales of such unserviceable items were connected with and incidental to the main business carried on in the State. The principle governing sales of ancillary or incidental items applied, and the absence of proof as to the place of purchase did not take the turnovers outside taxability.

Conclusion: The disputed turnovers were taxable and the assessee was liable to tax.

Issue (ii): Whether, in the absence of a return under the sales tax provision, the assessment was a best judgment assessment attracting penalty.

Analysis: No return had been filed at all, and the assessment was completed only after investigation revealed taxable sales and the assessee furnished details of those sales. An assessment made where no return is filed falls within the statutory category of best judgment assessment, even if the figures ultimately adopted are supplied by the assessee. Once the assessment was made under that provision, the penalty provision became applicable.

Conclusion: The assessment was a best judgment assessment and the penalty provision was attracted.

Issue (iii): Whether penalty was barred because the omission to file the return was said to be due to a bona fide mistake of law.

Analysis: The statutory penalty provision covered wilful failure to submit a return, and the later furnishing of details after detection did not convert the original omission into a bona fide act. The claimed belief that the sales were not taxable did not negate the failure to file the return when due. The Tribunal had already taken mitigating circumstances into account by reducing the quantum of penalty.

Conclusion: Penalty was exigible and the reduced penalty was sustained.

Final Conclusion: The tax revision cases failed because the sales were taxable as incidental to the assessee's business and the non-filing of returns justified the assessment and penalty under the Act.

Ratio Decidendi: Sales of discarded or unserviceable items arising in the course of a trader's or contractor's main business can constitute taxable ancillary or incidental business turnover, and where no return is filed, the resulting assessment falls within the statutory best judgment category so that penalty for wilful failure to submit the return is attracted.

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