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BEST JUDGMENT ASSESSMENT IN SERVICE TAX

Service Tax - By: - Dr. Sanjiv Agarwal - Dated:- 2-7-2015 - The provisions of best judgment assessment were omitted w.e.f. 10.09.2004 by the Finance Act, 2004 and reinserted w.e.f. 10.5.2008 by the Finance Act, 2008 vide Section 72. Section 72 provides for best judgment assessment as follows - If any person, liable to pay service tax - (a) fails to furnish the return under section 70; (b) having made a return, fails to assess the tax in accordance with the provisions of this Chapter or rules mad .....

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f such assessment. Section 72 authorizes the Central Excise Officer to make assessment according to his best judgment in certain circumstances and after complying with certain conditions. Such a power has to be exercised only when assessee or the person liable to pay service tax fails to - (a) furnish the return of Service Tax u/s 70, or (b) furnish the return but fails to assess the tax (self assessment). Thus, there should be a failure on the part of assessee for (a) or (b) above or both. Such .....

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best judgment assessment is proposed to produce any accounts, documents or other evidences as he may deem necessary. (d) Before such assessment, central excise officer should take into account all relevant material available on record and/or evidences gathered by him as aforesaid. (e) Central excise officer should make assessment of the value of taxable service to the best of his judgment. (f) Central excise officer shall also determine the sum payable by the assessee or sum refundable to the a .....

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an estimate and involves guess work, the estimate must relate to some evidence or material and it must be something more than mere suspicion Raghubar Mandal v. State of Bihar 1957 (5) TMI 28 - SUPREME COURT OF INDIA;. Even a best judgment assessment must be made reasonably and not on surmises - Kathyaini Hotels v. ACCT 2002 (1) TMI 1134 - SUPREME COURT OF INDIA. Though there is no doubt that authorities should try to make an honest and fair estimate of the income even in best judgment assessment .....

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