Best-judgment turnover estimates and composition cancellation require proper factual basis; compounded contraventions cannot alone justify withdrawal of benefit.

Best-judgment turnover assessments for 1982-83 and 1983-84 were upheld where the assessee failed to maintain proper books and the estimating authority relied on disclosed expenditure and related outgoings without any jurisdictional error in the method adopted. Withdrawal of composition benefit for 1984-85 could not be sustained because cancellation under the sales tax rules required an independent finding of contravention on fresh material; reliance only on the inspection report, after the alleged offence had already been compounded under section 31, was insufficient. The consequential penalty resting on the same basis was also set aside.

---

---

Issues: (i) Whether the turnover assessments for 1982-83 and 1983-84, made on the basis of best judgment in the absence of proper books of account, called for interference; and (ii) whether the withdrawal of composition benefit for 1984-85 and the consequential penalty were sustainable when the alleged contravention had already been compounded under section 31.

Issue (i): Whether the turnover assessments for 1982-83 and 1983-84, made on the basis of best judgment in the absence of proper books of account, called for interference.

Analysis: The assessment for these years was made after the assessee failed to maintain proper accounts. The turnover was estimated on the basis of the disclosed expenditure and related business outgoings, and the assessing authority as well as the Tribunal adopted a five-times multiplication method. The order notes that the Tribunal considered the salary, feeding charges, establishment charges, and other expenses, and reduced the estimated turnover to some extent. No jurisdictional infirmity or legal error was shown in that estimation process.

Conclusion: The assessments for 1982-83 and 1983-84 were upheld and the assessee's challenge failed.

Issue (ii): Whether the withdrawal of composition benefit for 1984-85 and the consequential penalty were sustainable when the alleged contravention had already been compounded under section 31.

Analysis: Section 31 confers a discretionary power to compound an offence where an offence is committed or reasonably suspected. For cancellation of composition under rule 8(2)(iv)(b), the assessing authority must independently apply its mind and record its own finding that the assessee contravened the Act or the Rules so as to lose the benefit of composition under section 17(4). Reliance only on the inspection report, after departmental compounding, was held insufficient to sustain withdrawal of the composition benefit. The penalty resting on the same footing could not stand.

Conclusion: The withdrawal of composition benefit for 1984-85 and the penalty were set aside.

Final Conclusion: The revisions succeeded only to the extent of the 1984-85 assessment, while the assessments for 1982-83 and 1983-84 and the penalty challenge did not succeed.

Ratio Decidendi: Cancellation of composition benefit under the sales tax rules requires an independent finding of contravention on fresh material, and cannot rest solely on an inspection report or on facts already compounded under the offence-composition provision.

---