Mandatory enquiry before best-judgment assessment invalidates penalty demand under self-assessment rules.

Under the Tamil Nadu General Sales Tax Rules' self-assessment scheme, liability could not be fastened by best-judgment assessment without first following the enquiry and notice procedure required by rule 18(4). The text records that, where monthly returns were not filed on time, the assessing authority bypassed that mandatory step before issuing the demand and penalty. That omission was treated as non-compliance with the prescribed procedure and the resulting order was held not to be in accordance with law. The impugned order was quashed and the penalty amount directed to be refunded.

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Issues: Whether the impugned penalty demand and consequential order were liable to be quashed for non-compliance with the procedure prescribed under the Tamil Nadu General Sales Tax Rules in a self-assessment situation.

Analysis: The assessment was made on the footing of the self-assessment scheme under rule 18. The record showed that, when the monthly returns were not filed in time, the assessing authority did not first conduct the enquiry contemplated by rule 18(4) before determining turnover to the best of judgment and issuing the consequential demand. The statutory procedure required an enquiry and notice before fastening liability in the manner adopted. Since that mandatory step was omitted, the order was not in accordance with law and could not stand. The absence of the prescribed opportunity also rendered the impugned action invalid.

Conclusion: The impugned order was quashed and the penalty amount directed to be refunded, in favour of the petitioner.

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