Escaped turnover and best judgment reassessment fail where the subject matter is electricity, which is not taxable goods.

Best judgment reassessment under Section 25(1) of the Kerala Value Added Tax Act, 2003 is sustainable only where there is escaped taxable turnover or underassessment of goods liable to tax. Electricity is excluded from the definition of goods, so a return relating to electricity does not by itself establish escaped assessment, even if it appears in the First Schedule. The materials also supported the finding that one windmill was transported in knocked-down condition under a single invoice rather than three separate sales. On that basis, the assessment order and consequential proceedings were unsustainable and were set aside.

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Issues: Whether the assessment under Section 25(1) of the Kerala Value Added Tax Act, 2003 was sustainable when the turnover alleged to have escaped assessment related to electricity, which is excluded from the definition of goods, and whether the materials showed that only one windmill was transported and installed rather than three separate sales.

Analysis: Electricity is expressly excluded from the definition of goods under Section 2(xx) of the Kerala Value Added Tax Act, 2003, and the charging provision in Section 6 applies only to sales or purchases of goods. Even if electricity was shown in the First Schedule, no tax liability arose on that score, so the case could not be treated as one of escaped taxable turnover. At the highest, the return could be regarded as incorrect, but the essential ingredients for invoking best judgment assessment under Section 25(1) were absent. The materials produced also supported the finding that what was brought into the State was one windmill in knocked-down condition in separate vehicles under the same invoice, and the windmill was shown to be functioning.

Conclusion: The best judgment assessment was unsustainable and was liable to be set aside.

Final Conclusion: The assessment order and the connected consequential proceedings could not be sustained on the facts or under the statutory scheme, and the writ petition succeeded.

Ratio Decidendi: Best judgment reassessment under Section 25(1) of the Kerala Value Added Tax Act, 2003 can be sustained only where there is escaped taxable turnover or underassessment of goods liable to tax; a return relating to electricity, which is excluded from goods, does not by itself establish escaped assessment.

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