Best judgment assessment and penalty follow when a dealer files no return and withholds accounts under sales tax law.

Failure to register as a dealer, file any return, and produce accounts can justify best judgment assessment under section 12(2) of the Tamil Nadu General Sales Tax Act, 1959, and also attract penalty under section 12(3). The text explains that Rule 15(1) requires an annual return showing total and taxable turnover, while section 12(3) permits penalty in addition to tax assessed where no return is submitted. Authorities cited for cases involving filed returns were distinguished because, here, no return or accounts were produced. The penalty was therefore treated as properly imposed and the Tribunal's cancellation was set aside.

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Issues: Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 was leviable when the assessees failed to register as dealers, did not file returns, and did not produce accounts, resulting in best judgment assessment under section 12(2).

Analysis: Rule 15(1) of the Tamil Nadu General Sales Tax Rules requires a dealer to submit the annual return in the prescribed form showing the actual total and taxable turnover. Section 12(1) contemplates assessment on the basis of the prescribed return. Section 12(2) authorises best judgment assessment where no return is filed within time or where the return is incomplete or incorrect. Section 12(3) permits levy of penalty in addition to the tax assessed under section 12(2), including where there is failure to submit a return. On the facts found, the assessees neither registered themselves as dealers nor filed any return nor produced accounts despite requisition, and the assessment had therefore to be made to the best of judgment. The cited authorities were distinguished because they involved returns filed before assessment with disclosed turnover, unlike the present case.

Conclusion: Penalty under section 12(3) was rightly attracted and the levy was justified.

Final Conclusion: The revision proceedings succeeded, the Tribunal's cancellation of penalty was set aside, and the penalty orders were restored.

Ratio Decidendi: Where a dealer fails to file any return and withholds accounts, best judgment assessment under section 12(2) carries with it liability to penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959.

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