Best judgment assessment requires prior notice on defective returns and a real chance to revise returns before action is taken.

Under the KVAT regime, best judgment assessment cannot be initiated until the assessing authority first follows the statutory sequence for defective returns, gives the dealer an opportunity to cure the defects, and permits filing of a fresh or revised return. A notice proposing best judgment assessment issued without completing those steps was premature and could not be acted upon. The administrative circular was treated as reinforcing the obligation to follow the prescribed procedure before moving to best judgment assessment.

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Issues: Whether the assessing authority could proceed with best judgment assessment and impugned notice without first following the statutory procedure for defective returns and without affording an opportunity to revise the returns.

Analysis: The statutory scheme requires the assessing authority, when a return is found defective, to first give the dealer an opportunity to cure the defects and file a fresh return. Only if that course does not resolve the defect can the authority proceed towards best judgment assessment. The notice proposing best judgment assessment was issued without completing the sequential steps contemplated by the Act and Rules. The administrative circular also reinforced the obligation to follow the prescribed procedure before moving to best judgment assessment.

Conclusion: The impugned notice and the proposed assessment could not be acted upon until the authority complied with the statutory procedure and permitted the petitioner to revise the returns.

Ratio Decidendi: Best judgment assessment under the KVAT regime can be initiated only after the authority first follows the statutory sequence for defective returns and gives a meaningful opportunity to cure the defects and revise the returns.

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