Penalty under sales tax law cannot be restored where assessment is based on the assessee's accounts, not best judgment.

Penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, read with Section 9(2-A) of the Central Sales Tax Act, was held inapplicable where the assessment was completed under Section 12(1) on the basis of the assessee's accounts. The court followed binding precedent that this penal provision operates only in cases of best judgment assessment or estimate, not on a regular assessment made from disclosed accounts. On that reasoning, restoration of the penalty was found unsustainable and the penalty order was set aside.

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Issues: Whether penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act read with Section 9(2-A) of the Central Sales Tax Act could be restored in respect of an assessment made under Section 12(1) of the Tamil Nadu General Sales Tax Act.

Analysis: The assessment year involved was 1993-94. The penalty had been levied on an assessment made on the basis of the assessee's accounts under Section 12(1), and not on a best judgment assessment or an estimate. The Court followed the earlier Division Bench decision holding that the penal provision under Section 12(3)(b) is attracted only where the assessment is of the kind contemplated by that provision and not where the assessment is based solely on the accounts furnished by the assessee.

Conclusion: The penalty under Section 12(3)(b) was not leviable for the assessment made under Section 12(1), and the restoration of penalty was held unsustainable.

Final Conclusion: The appeal succeeded and the penalty order was set aside in line with the binding precedent on the scope of penalty under the sales tax provisions.

Ratio Decidendi: Penalty under the relevant sales tax provision cannot be imposed where the assessment is made on the assessee's accounts under the regular assessment provision and not by best judgment or estimate.

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