Penalty for incorrect and incomplete return upheld where turnover was suppressed and best judgment assessment followed.

Penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act was sustained because the dealer's return was found incorrect and incomplete, with turnover not fully disclosed. The assessment rejected the return figures, relied on the books and surrounding material, and adopted a formula-based best judgment estimate after inspection findings. On those facts, the levy of penalty was held justified since the character of the assessment flowed from the filing of an incomplete return rather than a mere difference in estimation. The revision failed and the penalty order remained undisturbed.

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Issues: Whether penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 was justified where the return was found to be incorrect and incomplete and the taxable turnover was determined by rejecting the return figures and adopting the books and formula-based estimation.

Analysis: The assessment order showed that the dealer had not disclosed the turnover in the return, that the return figure was rejected, and that the taxable turnover was fixed on the basis of the books after applying a formula. The assessment was based on best judgment, arising from inspection findings and the dealer's use of concessional raw materials for consignments sales of finished goods in breach of section 3(4) of the Act. On these facts, the levy of penalty followed the character of the assessment as one based on incorrect and incomplete return.

Conclusion: The levy of penalty under section 12(3)(b) was valid and was rightly confirmed, against the assessee.

Final Conclusion: The revision failed, and the penalty order as sustained by the Tribunal remained undisturbed.

Ratio Decidendi: Where the return is rejected for non-disclosure of turnover and assessment is made on best judgment from the books and surrounding material, penalty for filing an incorrect and incomplete return is sustainable.

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