Best judgment assessment requires prior default in filing returns or obeying notice; assessments made on inspection alone were quashed.

Best judgment assessment under the Delhi Sales Tax Act, 1975 could be made only after a registered dealer failed to furnish the prescribed return or failed to comply with a valid statutory notice. The Delhi High Court held that the assessing authority could not bypass the return-filing procedure and proceed on the basis of inspection or search alone, because section 23 and rules 21, 25 and 26 required assessment to follow the statutory sequence of return, notice, and then best judgment only on default. The assessments were therefore invalid and quashed, with liberty to proceed only in accordance with the prescribed procedure.

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Issues: Whether the assessing authority could make a best judgment assessment and quash the assessments without first calling upon the registered dealer to file the return prescribed under the Act and the Rules.

Analysis: The statutory scheme of the Delhi Sales Tax Act, 1975 and the Delhi Sales Tax Rules, 1975 required every registered dealer to furnish returns within the prescribed return period. Section 23 drew a clear distinction between assessment on the basis of returns, assessment after notice where returns were furnished but found unsatisfactory, and best judgment assessment where the dealer failed to furnish returns by the prescribed date or failed to comply with a valid notice. Rule 21 fixed the quarterly return period, while rules 25 and 26 provided the notice and assessment procedure. The Court held that the provisos to section 23(1) did not authorize assessment outside the prescribed procedure merely on the basis of inspection or search, and that best judgment assessment could arise only after failure to furnish the required return or failure to comply with a lawful notice.

Conclusion: The assessments were invalid and liable to be quashed because the dealer was assessed without being called upon to file the return in accordance with the statutory scheme.

Final Conclusion: The writ petitions challenging the assessments succeeded, and the assessing authority was left free to proceed only in accordance with the return-filing and assessment procedure prescribed by law.

Ratio Decidendi: Best judgment assessment under the sales tax law can be made only after the dealer fails to furnish the prescribed return or fails to comply with a valid statutory notice requiring return/evidence, and not merely on the basis of inspection or before the return period has expired.

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