Best judgment assessment upheld, but penalty set aside where the statutory basis for maximum penalty was not disclosed.

A best judgment assessment under the Assam General Sales Tax Act was upheld because the dealer had been told the proposed turnover basis, given opportunities to respond, and the returns appeared incomplete and unsatisfactory. The assessment was therefore not vitiated by any breach of fairness or failure to consider the returns. The penalty under section 23 was not sustained, however, because the order imposed the maximum penalty without identifying the specific statutory clause invoked or giving proper reasons. The penalty matter was remanded for fresh decision after hearing the dealer.

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Issues: (i) Whether the best judgment assessment under section 17(5) of the Assam General Sales Tax Act, 1993 was vitiated for breach of fairness or for failure to consider the returns filed by the dealer. (ii) Whether the penalty imposed under section 23 of the Assam General Sales Tax Act, 1993 could be sustained in the absence of disclosure of the precise statutory clause and relevant reasons.

Issue (i): Whether the best judgment assessment under section 17(5) of the Assam General Sales Tax Act, 1993 was vitiated for breach of fairness or for failure to consider the returns filed by the dealer.

Analysis: The dealer had repeatedly been informed of the turnover on the basis of which assessment was proposed and was given opportunities to respond. The materials supplied to the dealer sufficiently disclosed the basis of the proposed assessment, and the dealer did not dispute the turnover stated in the notices. The statutory scheme permitted provisional best judgment assessment where the return appeared incorrect or incomplete. As the returns filed reflected a negligible turnover and did not satisfy the assessing authority, resort to best judgment assessment was justified.

Conclusion: The challenge to the best judgment assessment failed, and the assessment was upheld.

Issue (ii): Whether the penalty imposed under section 23 of the Assam General Sales Tax Act, 1993 could be sustained in the absence of disclosure of the precise statutory clause and relevant reasons.

Analysis: The penalty provision under the Assam General Sales Tax Act, 1993 operated differently from the provision considered in the relied-upon Tripura case, and therefore automatic invalidation was not warranted on that basis. However, the impugned order imposed penalty at the maximum rate without disclosing which clause of section 23(1) had been invoked. On the facts, the notices indicated possible default in filing returns, which would attract clause (c), under which a lesser maximum could apply. In the absence of clear identification of the statutory basis and proper consideration of the matter, the penalty order could not be sustained as it stood.

Conclusion: The penalty was interfered with and the question of penalty was remanded for fresh decision after giving the dealer an opportunity of hearing.

Final Conclusion: The assessment was sustained, but the penalty component was set aside and sent back for reconsideration, leaving the petition only partly successful.

Ratio Decidendi: Where the basis of a proposed best judgment assessment is disclosed and the dealer is given an effective opportunity to respond, the assessment is not vitiated by breach of fairness; but a penalty order must disclose the statutory foundation for the maximum penalty and cannot stand without proper application of mind to the relevant clause.

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