Best judgment assessment requires market-price enquiry and comparable sales analysis before treating low-priced transactions as tax evasion.

A price difference between first and second sales, by itself, did not justify treating the transactions as under-invoiced sales for best judgment assessment. Section 12A of the Tamil Nadu General Sales Tax Act operates only when the assessing authority is satisfied, on relevant materials, that sales were shown at abnormally low prices with intent to evade tax. Rule 18C requires enquiry into prevailing market price, comparable sales, and reasons for variation, including relationship between parties, packing, transport and after-sales service. Because those mandatory enquiries were not undertaken and the dealer's objections were not properly examined, invocation of section 12A read with rule 18C was held unjustified.

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Issues: Whether the assessing authority could invoke section 12A of the Tamil Nadu General Sales Tax Act and rule 18C of the Tamil Nadu General Sales Tax Rules on the basis of a price difference between first sale and second sale, and treat the transactions as under-invoiced sales liable to best judgment assessment.

Analysis: Section 12A is a machinery provision that permits reassessment only where the assessing authority is satisfied, on relevant materials, that sales have been shown at abnormally low prices with a view to evade tax. Rule 18C requires the authority to examine the prevailing market price and the reasons for variation, including the relationship between the parties, after-sales service, packing, transport and other relevant circumstances. A mere comparison showing more than 15 per cent difference in prices is not sufficient by itself. The authority must also consider the dealer's objections and verify whether comparable sales to other customers were made on identical terms and prices. On the facts, those mandatory enquiries were not undertaken and the materials relied on were insufficient to establish the statutory satisfaction required for invoking the provision.

Conclusion: The invocation of section 12A read with rule 18C was not justified, and the finding in favour of the assessee was upheld.

Final Conclusion: The revisions failed because the statutory preconditions for treating the sales as abnormally low-priced transactions with intent to evade tax were not established.

Ratio Decidendi: A price disparity between sales, without the statutorily required enquiry into market price, comparable transactions and the reasons for variation, does not justify best judgment assessment under section 12A and rule 18C.

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