Penalty under sales tax law applies only to best judgment assessments, not to assessments based solely on account books.

Penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 is confined to best judgment assessments under section 12(2). Where the assessment is made on the basis of the assessee's accounts alone, without any estimate or other material leading to a best judgment assessment, the penal provision does not apply and the assessment is treated as one under section 12(1). The governing reading of section 12(2) and 12(3) requires both provisions to operate together, so penalty cannot be sustained merely because an assessment is completed on accepted account books.

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Issues: Whether penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 could be sustained when the assessment was made on the basis of the accounts and not as a best judgment assessment.

Analysis: The governing principle was that sub-sections (2) and (3) of section 12 have to be read together. Penalty is attracted only when the assessing authority makes a best judgment assessment under section 12(2). Where the assessment is based on the assessee's accounts and not on an estimate or other material, the assessment is treated as one under section 12(1), and the penal provision in section 12(3) does not apply. The prior decisions relied upon had already settled that a best judgment assessment must rest on a reasonable estimate and not merely on accepted account books.

Conclusion: The penalty was not leviable on the facts of the case, and the revision by the Revenue failed.

Final Conclusion: The legal position affirmed that penalty under section 12(3)(b) is confined to best judgment assessments and cannot be imposed where the assessment is made on the basis of the accounts alone.

Ratio Decidendi: Penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 is permissible only when the assessment is a best judgment assessment under section 12(2), and not when the assessment is founded solely on the assessee's accounts.

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