Ordinary sales tax assessment applies after compliance with notice; best judgment is confined to non-compliance under the Act.

An assessment made after the dealer complied with notice under section 11(2), appeared, and produced books of account was treated as an ordinary assessment under section 11(3) of the Punjab General Sales Tax Act, 1948, because it was based on returns and record rather than on guesswork. Best judgment assessment under section 11(4) or section 11(5) was confined to cases where the dealer failed to comply with the notice or failed to file returns. The text also states that the statutory scheme treats the financial year as the unit of assessment, even where quarterly returns are required, and that assessment is not limited to the quarter in which returns are filed.

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Issues: (i) Whether an assessment framed after compliance with notice under section 11(2) and on the basis of returns and books of account falls under section 11(3) of the Punjab General Sales Tax Act, 1948, or is a best judgment assessment under section 11(4) or section 11(5); (ii) whether, under the scheme of the Act and the Rules, the unit of assessment is the financial year rather than the quarterly return period.

Issue (i): Whether an assessment framed after compliance with notice under section 11(2) and on the basis of returns and books of account falls under section 11(3) of the Punjab General Sales Tax Act, 1948, or is a best judgment assessment under section 11(4) or section 11(5).

Analysis: Section 11(1) governs assessments where returns are accepted as correct and complete. Section 11(2) applies where the Assessing Authority is not satisfied and requires the dealer's presence or evidence. Section 11(3) is the consequential provision under which assessment is made after hearing the dealer and considering the evidence produced. Sections 11(4) and 11(5) contemplate best judgment assessment only where a dealer, after filing returns, fails to comply with the notice under section 11(2), or fails to furnish returns at all. On the facts, the dealer appeared, produced account books, and complied with the notice. The assessment was not on guesswork or estimate, but on material on record and accepted returns, with additions made on the basis of the established variation.

Conclusion: The assessment fell under section 11(3) and was not a best judgment assessment under section 11(4) or section 11(5); the issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether, under the scheme of the Act and the Rules, the unit of assessment is the financial year rather than the quarterly return period.

Analysis: The definition of turnover and the deduction provisions in section 5 use the concept of "year", which is defined as the financial year. The Act requires quarterly returns in ordinary cases, but the Rules also permit annual return periods in specified situations. There is no prohibition in section 11 against framing assessment at the end of the financial year merely because quarterly returns are filed. The statutory scheme therefore supports assessment with reference to the financial year, and not only to a quarter.

Conclusion: The unit of assessment is the financial year, and not exclusively the quarter; the issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered in favour of the Revenue on both questions, and the assessment was held to be valid under the ordinary assessment provisions rather than as a time-barred best judgment assessment.

Ratio Decidendi: Best judgment assessment under the relevant sales tax scheme arises only on failure to comply with the notice requiring attendance or evidence, whereas compliance with the notice and assessment on the basis of returns and record attracts the ordinary assessment provision; further, the statutory notion of assessment period may extend to the financial year where the Act so contemplates.

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