Best judgment assessment under KVAT rules permits separate monthly orders when proceedings begin within the assessment year.

Rule 39(5)(iv) of the KVAT Rules requires a single best judgment assessment only when the assessment process is initiated after the expiry of the relevant year and covers more than one return period; where audit assessment proceedings were begun during the financial year and were already in progress before year-end, separate monthly assessments were permissible. A turnover estimate based on inspection material showing the actual business mix was treated as a factual finding, and the appellate estimate was found reasonable. No substantial question of law arose in revision, so the modified assessment orders were sustained.

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Issues: (i) Whether separate monthly assessments for the year 2005-06 were invalid under rule 39(5)(iv) of the KVAT Rules. (ii) Whether the estimation of turnover adopted by the appellate authorities gave rise to a substantial question of law warranting interference in revision.

Issue (i): Whether separate monthly assessments for the year 2005-06 were invalid under rule 39(5)(iv) of the KVAT Rules.

Analysis: Rule 39(5)(iv) requires a single order only where best judgment assessment is done after the expiry of the year in which the relevant return periods fall and the assessment covers more than one return period. The audit assessment procedure under section 24 of the Kerala Value Added Tax Act involves enquiry, notice, reply and hearing, so the expression "where the best judgment assessment is done" covers the entire assessment process, not merely the final signing of the order. Since the proceedings had been initiated during the financial year itself and were in progress before the year ended, the rule did not compel a single assessment order. The assessee also had not objected during assessment.

Conclusion: The separate monthly assessments were valid and this challenge failed, in favour of Revenue.

Issue (ii): Whether the estimation of turnover adopted by the appellate authorities gave rise to a substantial question of law warranting interference in revision.

Analysis: The turnover was estimated on the basis of inspection findings showing that textiles were available only in one of five shops, while the business was substantially in ready-made garments. The first appellate authority had already granted relief by treating 30% of the turnover as exempt, and the Tribunal found that estimate reasonable. The finding was factual and based on inspection material, and no substantial question of law arose under section 63 of the KVAT Act.

Conclusion: No interference was warranted with the turnover estimation, in favour of Revenue.

Final Conclusion: The revision failed in its entirety, and the assessment orders as modified in appeal were sustained.

Ratio Decidendi: Under rule 39(5)(iv) of the KVAT Rules, a single best judgment assessment is required only when the assessment process is initiated after the expiry of the relevant year and covers more than one return period; factual turnover estimates based on inspection do not give rise to a substantial question of law in revision.

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