Best judgment assessment cannot rest on shop inspection materials unless mandatory inspection safeguards are followed.

Inspection materials may be used in a best judgment assessment only if they are gathered and relied on in compliance with the mandatory procedure under clause (12) of rule 34 of the Kerala General Sales Tax Rules. The High Court treated that procedure as a safeguard against arbitrary use of shop-inspection material and noted that no statement of facts or list of goods and particulars collected during inspection was furnished to the assessee. As the prescribed procedure was not followed, the materials could not validly sustain the assessment, and the assessment was held not to be in accordance with law.

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Issues: Whether materials gathered during shop inspection could be relied upon for best judgment assessment when the procedure under clause (12) of rule 34 of the Kerala General Sales Tax Rules was not complied with.

Analysis: The inspection materials formed the basis of the pre-assessment notice, but no statement of facts or list of goods and particulars collected during inspection was furnished to the assessee. Clause (12) of rule 34 was treated as a procedural safeguard intended to protect the assessee from arbitrary use of inspection materials. While there was no general legal bar to reliance on inspection material, the Court held that materials obtained without compliance with the prescribed procedure could not validly support the assessment in question.

Conclusion: The Tribunal was correct in holding that the assessment was not made in accordance with law, and the challenge failed in favour of the assessee.

Ratio Decidendi: Inspection materials used to sustain a best judgment assessment must be collected and relied upon in compliance with the mandatory procedural safeguard prescribed for shop inspections.

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