Sales tax turnover must reflect actual consideration, not full excise invoice value; best judgment needs proof of suppression.

Carbon dioxide supplied to a sister concern was treated as a sale for Tamil Nadu sales tax purposes, but turnover had to be confined to the actual consideration attributable to the supply and could not automatically follow the full excise invoice value. Excise valuation and sales tax valuation operate on different bases, so the amount collected towards the central excise duty component could be brought to tax, while the balance shown in the invoices could not. Best judgment enhancement was also rejected because the assessing authority had not recorded satisfaction of suppression or produced material showing understatement; suspicion, party relationship, or product value could not replace proof.

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Issues: (i) Whether the supply of carbon dioxide by the assessee to its sister concern constituted a sale and turnover under the Tamil Nadu General Sales Tax Act, 1959, and whether tax could be levied on the full invoice value; (ii) whether the best judgment assessment and enhancement based on alleged suppression and the excise valuation figures were justified.

Issue (i): Whether the supply of carbon dioxide by the assessee to its sister concern constituted a sale and turnover under the Tamil Nadu General Sales Tax Act, 1959, and whether tax could be levied on the full invoice value.

Analysis: The expressions "sale" and "turnover" under Sections 2(n) and 2(r) are of wide amplitude and cover transfer of property in goods for consideration. The transaction was treated as a sale, but the Court distinguished between excise valuation and sales tax valuation. Excise duty is levied on manufacture, whereas sales tax is attracted at the stage of sale. Applying the principle that only consideration forming part of the contract of sale can enter turnover, the Court held that the amount collected towards central excise duty component constituted the consideration for the supply, but the full excise invoice value could not automatically be adopted as sales turnover.

Conclusion: The transaction was a sale for tax purposes, but sales tax was payable only on the amount collected towards the central excise duty component and not on the full value shown in the excise invoices.

Issue (ii): Whether the best judgment assessment and enhancement based on alleged suppression and the excise valuation figures were justified.

Analysis: Section 12A permits best judgment assessment only when the assessing authority is satisfied that sales or purchases were shown at abnormally low prices with a view to evade tax. The Court found no recorded satisfaction, no discrediting of the assessee's accounts or documents, and no material to show understatement of consideration. Mere relationship between the parties, the value of the product, or the volume supplied could not substitute for proof. A best judgment assessment must have a reasonable nexus with available material and cannot rest on conjecture or suspicion.

Conclusion: The best judgment assessment was not justified on the facts, and the enhancement based on alleged suppression was unsustainable.

Final Conclusion: The revisions were allowed, the demand on the full invoice value was set aside, and the matter was remitted for fresh assessment limited to the taxable amount actually collected towards the central excise duty component.

Ratio Decidendi: For sales tax purposes, turnover must reflect the actual consideration received for the transfer of property in goods, and best judgment assessment can be made only on the basis of recorded satisfaction and material showing suppression, not on mere suspicion or on excise valuation figures.

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