Best judgment assessment barred after limitation period expires for the relevant return quarter

A best judgment assessment under section 11(4) is available only when a dealer, after filing returns, fails to comply with a notice under section 11(2), and it must be initiated within three years from the end of the relevant return period. Reading section 11(4) with the other provisions and the quarterly return scheme, the relevant period was the quarter for which the return was filed. Once the three-year period expired, the assessing authority lost jurisdiction to proceed against that quarter, so notices issued after that limit were invalid and the challenge succeeded.

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Issues: Whether the sales tax authority could initiate a best judgment assessment under section 11(4) after the expiry of three years from the end of the relevant return period.

Analysis: Section 11(4) permits best judgment assessment only where a dealer, after filing returns, fails to comply with a notice under section 11(2), and that power must be exercised within three years after the expiry of "such period". Reading section 11(4) with section 11(1), section 10(3), and the rules requiring quarterly returns, the relevant period is the quarter for which the return was filed. The three-year limit therefore runs from the end of each quarterly return period, and once that time has expired the assessing authority has no jurisdiction to proceed to a best judgment assessment for that quarter.

Conclusion: The notices proposing best judgment assessment after expiry of the three-year period were invalid and the challenge succeeded.

Ratio Decidendi: A best judgment assessment under section 11(4) can be made only within three years from the end of the relevant return period, and any attempt to assess after that limitation period is without authority.

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