Best judgment suppression of turnover can sustain sales tax penalty when incriminating slips and business records are found in premises.

Penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 may be sustained where incriminating slips found in the dealer's business premises support a sustained estimate of suppressed turnover, even if the assessment is based on best judgment. The assessee's explanation that the slips belonged to contractors or third parties was rejected, and the authorities treated the documents as evidence of unrecorded labour charges and stock deficiencies. The court distinguished earlier authority where rejection of explanation went to assessability itself, and held that the material found, together with the estimated suppression, was sufficient to invoke the penal provision.

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Issues: Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 could be sustained on the basis of estimated suppression of turnover, where the assessee's explanation regarding incriminating slips was rejected.

Analysis: The assessee's status as a dealer was not in dispute. Repeated inspections had revealed stock deficiencies, and slips found in the assessee's premises indicated payments towards labour charges not reflected in the regular accounts. The explanation that the slips belonged to contractors or third parties was not accepted by the authorities. The case was distinguished from an earlier decision where rejection of the assessee's explanation went to the root of assessability itself. Here, the material found in the business premises, coupled with the sustained estimate of suppressed turnover, was sufficient to attract the penal provision.

Conclusion: Penalty under section 12(3) was validly invoked and the challenge to the levy failed.

Final Conclusion: The refusal to interfere left intact the levy of penalty based on sustained suppression of turnover.

Ratio Decidendi: Rejection of an assessee's explanation for incriminating business records, when supported by found material and sustained estimation of suppressed turnover, can justify penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 even though the assessment rests on best judgment.

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