Best judgment assessment under entertainment tax rules upheld where the statute lacked its own assessment machinery.

Rule 28(4) under the Bihar Entertainment Tax Rules, 1948 was upheld as a valid assessment machinery because Section 21 empowered rule-making to secure payment of entertainment tax and the parent Act did not itself prescribe the assessment procedure. The rule's best judgment assessment mechanism applied where returns were not filed or notices were ignored, and it was not inconsistent with Section 9(2), which dealt with penalty rather than assessment. An assessment based on unreliable books, duplicate tickets and suppressed sales, supported by relevant material and reasonable hearing, was treated as non-arbitrary and consistent with best judgment principles.

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Issues: (i) Whether Rule 28(4) of the Bihar Entertainment Tax Rules, 1948 was within the rule-making power conferred by Section 21 of the Bihar Entertainment Tax Act, 1948 and validly authorised best judgment assessment; (ii) Whether Rule 28 was repugnant to Section 9(2) of the Bihar Entertainment Tax Act, 1948; (iii) Whether the assessment made on the assessee was arbitrary.

Issue (i): Whether Rule 28(4) of the Bihar Entertainment Tax Rules, 1948 was within the rule-making power conferred by Section 21 of the Bihar Entertainment Tax Act, 1948 and validly authorised best judgment assessment.

Analysis: Section 9 of the Bihar Entertainment Tax Act, 1948 dealt with returns and payment, but did not prescribe the machinery for determining tax liability. Section 21 empowered the State Government to make rules consistent with the Act for securing payment of entertainment tax and carrying the Act into effect. Rule 28, read as a whole, provided a complete assessment scheme and sub-rule (4) expressly authorised assessment to the best of judgment where the return was not made or the assessee failed to comply with the notice or produce evidence. The power to frame such a rule was therefore within the statutory delegation.

Conclusion: Rule 28(4) was intra vires Section 21 and validly authorised best judgment assessment.

Issue (ii): Whether Rule 28 was repugnant to Section 9(2) of the Bihar Entertainment Tax Act, 1948.

Analysis: Rule 28 operated in the field of assessment, whereas Section 9(2) dealt with penalty. The two provisions covered different subjects and were not inconsistent with each other. The rule supplemented the statutory scheme by providing the machinery for assessment and did not conflict with the penalty provision.

Conclusion: Rule 28 was not repugnant to Section 9(2).

Issue (iii): Whether the assessment made on the assessee was arbitrary.

Analysis: The authorities had concurrently found that the books of account were unreliable, duplicate tickets were maintained and ticket sales were suppressed. Those findings justified rejection of the return. The assessing authority relied on relevant material, including the cinema's seating capacity, the normal pattern of film attendance and the probable average collections per show. The assessment was thus based on relevant considerations and not on conjecture. The reference to best judgment assessment was supported by the analogy of Section 23 of the Indian Income-tax Act, 1922.

Conclusion: The assessment was not arbitrary.

Final Conclusion: The statutory rule governing assessment was upheld, the challenge to the assessment failed, and the assessee's appeal was dismissed.

Ratio Decidendi: Where the parent statute empowers rule-making to secure payment of tax and does not itself prescribe the assessment machinery, a rule authorising best judgment assessment is valid if it operates consistently with the Act and is applied on relevant material after giving a reasonable opportunity of hearing.

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