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TMI Blog2007 (10) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner a manufacturer of steel and iron rough castings reported a total and taxable turnover of Rs. 68,60,790.10 and Rs. 66,44,492.10, respectively, in the monthly returns in form 1 under the TNGST Act. While framing the assessment, the assessing officer checked the returns with the books of account and almost all the details furnished by the assessee have been accepted. However, the details in the books of account stated that the first sales of cast iron rough sketch under section 3(3) of the Act taxable at three per cent was for a turnover of Rs. 17,68,302. Only that portion of the turnover has been rejected by the assessing officer on the ground that the Supreme Court has ultimately settled the issue that the cast iron rough castings are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o events: (i) if no return has been submitted by the dealer under sub-section (1) within the prescribed period, and (ii) if the return submitted by him appears to be incomplete or incorrect. Sub-section (3) empowers the assessing authority to levy the penalty only when it makes an assessment under sub-section (2). In other words, when the assessing authority has made the assessment to the best of its judgment, it can levy a penalty. It is well-known that the best judgment assessment has to be on an estimate, which the assessing authority has to make not capriciously but on settled and recognised principles of justice. An element of guess-work is bound to be present in best judgment assessment but it must have a reasonable nexus to the avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Sons [1971] 28 STC 700 at page 701 after extracting section 12(2) of the Tamil Nadu General Sales Tax Act, 1959 which remains in the same form even now, observed thus: 'The question is whether penalty can be levied while making the assessment under sub-section (2) of the above section merely because an incorrect return has been filed. The High Court was of the view that it is only if the assessment has to be made to the best of the judgment of the assessing authority that penalty can be levied. It seems to us that the High Court came to the correct conclusion because subsections (2) and (3) have to be read together. Sub-section (2) empowers the assessing authority to assess the dealer to the best of its judgment in two events: (i) if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intention therefore, except during the period December 3, 1979 to May 27, 1993 and on and after April 1, 1996 must be taken to be to permit the levy of penalty only in case where the assessment is a best judgment assessment made on an estimate and not by relying solely on the accounts furnished by the assessee in the prescribed return. On and after April 1, 1996 an Explanation has been added below section 12(3) which requires the turnover relating to the tax assessed on the basis of the accounts of the assessee, to be disregarded, while determining the turnover on which the penalty is to be levied under section 12(3). 8. The assessments for the assessment years 1993-94 and 1994-95 which were assessments made on the basis of the accounts, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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