Best judgment VAT assessment needs independent evidence linking income-tax additions to taxable sales, not conjecture alone.

Best judgment assessment under Kerala VAT law requires an independent enquiry and lawful material linking the disputed amount to taxable sales. A mere income-tax addition or disclosure does not, by itself, establish escaped turnover, and the assessing authority cannot presume that other income arose from sales without rejecting the trading account or adducing supporting evidence. Because the record showed no independent nexus between the income-tax treatment and alleged jewellery sales, the turnover estimate was based on conjecture and could not be sustained; the assessment was set aside in favour of the assessee.

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Issues: Whether the assessing authority could sustain a best judgment assessment under Section 25(1) of the Kerala Value Added Tax Act, 2003 by treating income reflected in the assessee's income-tax proceedings as turnover from sales, without independent material showing that the amount represented taxable sales.

Analysis: Section 25(1) authorises best judgment assessment only on a lawful basis and after an independent enquiry into the materials available. A mere addition or disclosure in income-tax proceedings does not, by itself, establish escaped sales turnover under the VAT law. The assessment record showed that the officer proceeded on an assumption that the amount shown as other income must have arisen from jewellery sales, without rejecting the trading account or adducing supporting evidence linking the amount to taxable transactions. The absence of independent material and the lack of nexus between the income-tax treatment and the alleged sales rendered the assessment unsustainable. The principles in the binding precedents relied upon require material showing that the amount assessed in income-tax proceedings actually represented sales liable to sales tax.

Conclusion: The assessment based on the income-tax addition could not be sustained, and the issue was answered in favour of the assessee.

Final Conclusion: The assessment order, as affirmed by the appellate authorities, was set aside because the turnover estimate was founded on conjecture rather than independent evidence linking the disputed amount to taxable sales.

Ratio Decidendi: An income-tax addition or disclosure cannot be treated as sales turnover for VAT purposes unless the authority independently establishes a nexus between the amount and transactions liable to tax.

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