Penalty under sales tax law applies only to best judgment assessments, not to assessments based on the assessee's accounts.

Penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 is confined to best judgment assessments based on estimate. Where turnover is determined under section 12(1) from the assessee's own accounts, the statutory condition for penalty is not met. The assessment here was made on the basis of the accounts furnished and not on best judgment, so the levy under section 12(3)(b) was unsustainable. The legal position reaffirmed is that penalty cannot be imposed merely because an assessment is completed under section 12(1) if it does not rest on estimated turnover.

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Issues: Whether penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 could be sustained where the assessment was made under section 12(1) of that Act on the basis of the assessee's accounts.

Analysis: The assessment in question was made on the basis of the accounts furnished by the assessee and was not a best judgment assessment on estimate. The statutory scheme, as understood in the earlier binding decision relied upon, permits levy of penalty under section 12(3) only in cases where the assessment is of the best judgment type and not where the turnover is determined solely from the accounts filed by the assessee. The appellate tribunal's view was therefore inconsistent with the statutory provision and the law already declared by the Court.

Conclusion: Penalty under section 12(3)(b) was not leviable on an assessment made under section 12(1), and the levy was unsustainable in favour of the assessee.

Ratio Decidendi: Penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 is attracted only to best judgment assessments and not to assessments made on the basis of the assessee's accounts under section 12(1).

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