Best judgment assessment needs prior notice of proposed additions, and defective Form-H should be returned for rectification.

Best judgment assessment and penalty under the Tamil Nadu Value Added Tax Act were found unsustainable because the show cause notices did not propose the decisive additions and reversals later relied on, depriving the assessee of a fair opportunity to respond. The rejection of Form-H was also held unjustified because a defective statutory form should ordinarily have been returned for rectification rather than rejected outright. The assessment order was quashed and the matter remanded for fresh orders after due opportunity, including rectification of Form-H and personal hearing if necessary.

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Issues: (i) whether the best judgment assessment and penalty could be sustained when the additions and reversals made in the assessment order were not preceded by proposals in the show cause notice; (ii) whether the rejection of Form-H as incomplete without returning it for rectification was justified.

Issue (i): whether the best judgment assessment and penalty could be sustained when the additions and reversals made in the assessment order were not preceded by proposals in the show cause notice.

Analysis: The assessment was made to the best of judgment under Section 27(1) of the Tamil Nadu Value Added Tax Act, with penalty under Section 27(3). The notices issued earlier did not propose the levy of tax at 14.5% on the specified turnover, reversal of input tax credit under Section 19(5)(c), or the further disallowance of excess input tax credit under Section 19(2)(v). Since these proposals were absent from the notices, the assessee had no fair opportunity to meet the basis of the eventual assessment.

Conclusion: The assessment order was unsustainable for want of prior notice of the very proposals on which it was founded.

Issue (ii): whether the rejection of Form-H as incomplete without returning it for rectification was justified.

Analysis: The Form-H claim was rejected on the ground of incompleteness or defect. In fairness, where the assessing authority found the form defective, it ought to have returned it for rectification and representation instead of outright rejection.

Conclusion: The rejection of Form-H without affording an opportunity to cure the defect was not justified.

Final Conclusion: The assessment order was quashed and the matter was remanded for fresh orders after due opportunity to the assessee, including rectification of Form-H and personal hearing if necessary.

Ratio Decidendi: A best judgment assessment cannot be sustained where the decisive additions or reversals were not put to the assessee in the show cause notice, and a defective statutory form should ordinarily be returned for rectification rather than rejected outright.

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