Penalty under sales tax law applies only to best judgment assessments, not assessments based on returned accounts.

Penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, read with section 9(2A) of the Central Sales Tax Act, was confined to best judgment assessments and did not extend to an assessment made under section 12(1) on the basis of the assessee's accounts. As the assessment was not a best judgment estimate but was completed from returned accounts, the penal provision was inapplicable. The Tribunal's deletion of the penalty was therefore upheld.

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Issues: Whether penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959, read with section 9(2A) of the Central Sales Tax Act, 1956, could be levied where the assessment was made under section 12(1) of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The assessment in question was made on the basis of the assessee's accounts and not as a best judgment estimate. The settled legal position is that the penal provision in section 12(3)(b) is attracted only to assessments falling within the scope of the provision governing best judgment assessment, and not to assessments made under section 12(1) on the basis of returned accounts. The earlier Division Bench ruling relied on by the Court had already declared that, for such assessments, the levy of penalty is not sustainable.

Conclusion: The penalty was not leviable on the assessment made under section 12(1); the deletion of penalty by the Tribunal was correct and the writ petition was dismissed.

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