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2022 (2) TMI 613 - HC - VAT and Sales TaxBest judgement assessment - defects found on verification of accounts - whether the the best judgment assessment made on the basis of the electricity consumption vis-a-vis determining the input-output ratio, was relevant or not? - levy of penalty under Section 12(3)(b) of the TNGST Act, 1959 at 150% of the difference between the tax assessed and tax paid, which was nil - HELD THAT:- On going through the orders of the lower authorities, viz., Assessing officer, First Appellate Authority and Tribunal, we find a consistent view that the books of accounts of the petitioner suffers from defects and not reliable and therefore, warrant a best judgment. While the First Appellate Authority has proceeded to reject the estimation on the basis of electricity consumption, but found that the books of accounts suffer from defects warranting best judgment assessment. The Tribunal has however restored the best judgment assessment made on the basis of the electricity consumption and its bearing on the input-output norms, besides rendering a finding that the books of accounts of the petitioner was not reliable for the various defects. There appears to be divergents views insofar as the question as to whether the consumption of electricity can constitute the sole basis for making a best judgment assessment. However, in the present case, the best judgment assessment was not only necessitated by the survey report/case study on electricity consumption vis-a-vis production of jelly, but also the fact that the books of accounts maintained by the petitioner suffered from defects as set out above, which even according to the First Appellate Authority, required the best judgment assessment - A best judgment assessment necessarily involves an element of guesswork and is a matter of discretion to be exercised by the Assessing Officer and exercise of such power ought not be interfered with lightly unless and until the Court is of the view that the discretion/power of best judgment is exercised in a arbitrary and capricious manner. Any best Judgment assessment is likely to be an over-estimate or an under-estimate, but that itself does not supply a reason or ground for interfering with the same. Levy of penalty - HELD THAT:- The assessing officer had levied penalty on the entire turnover arrived at on the best judgment assessment and the same was restored by the Tribunal, by the order impugned herein. Whereas, Explanation to Section 12(3)(b) of the TNGST Act, 1959 provides for certain deductions, while assessing tax at the time of final assessment, for the purpose of determining the quantum of penalty, as can be seen from the extract of the Explanation to Section 12(3)(b) of the TNGST Act, 1959 - the Explanation has been completely overlooked by the lower authorities including the Tribunal and hence, the matter has to be remanded to the Assessing Authority to re-work the quantum of penalty alone, taking into account the Explanation to Section 12(3)(b) of the TNGST Act, 1959 with respect to the eligible deductions and after providing reasonable opportunity of being heard to the petitioner. The order impugned herein stands set aside and the matter is remanded to the third respondent / Assessing Authority, who shall complete the said exercise within a period of three (3) months from the date of receipt of a copy of this order - Petition allowed by way of remand.
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