KRISHNA ALLOY STEELS Vs. REGISTRAR TAMIL NADU TAXATION

JUDGEMENT

(1.) THE writ petition is filed challenging the correctness of the order made in O. P. No. 52 of 2002, whereby the Taxation Special Tribunal rejected the prayer of the petitioner for deletion of the penalty imposed on it under Section 12 (3) (b) of the TNGST Act.

(2.) FOR the assessment year 1993-94, the writ petitioner 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 accounts and almost all the details furnished by the assessee has been accepted however, the details in the books of accounts stated that the first sales of cast iron rough sketch under Section 3 (3) of the Act taxable at 3% was for a turnover of Rs. 17,68, 302/- Only that portion of the turn over 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 declared goods and are liable to be assessed to tax at 4% falling under the second schedule under the TNGST Act. In view of that the petitioner was not eligible to claim levy of tax at 3% on the strength of Form 17 declaration and on that score the turn over in a sum of Rs. 17,88,302/- was altered to be assessed to tax at the rate of 4% instead of 3%. The assessing officer was also of the view that in view of the defect in the assessment as stated above, the assessee is liable to pay penalty under Section 12 (3) (b (v) of the TNGST Act and levied penalty in a sum of Rs. 3,64,041/ -. The assessee aggrieved by the penalty alone filed the O. P. before the Tribunal, which has been dismissed. The correctness of the order of the Tribunal is put in issue in this writ petition.

(3.) LEARNED counsel appearing for the petitioner submitted that the issue with regard to levy of penalty under Section 12 (3) (b) (v) has been settled long back by the supreme Court in the decision reported in 28 STC 700 (STATE OF MADRAS VS. JAYARAJ NADAR and SONS ). Subsequently, the issue has also been considered by the Division Bench of this Court in the decision in APOLLO SALINE PHARMACEUTICALS (P) LIMITED (Fac) VS. COMMERCIAL TAX OFFICER and OTHERS (125 STC 505 ). In those cases, the Supreme Court as well as the Division Bench has held that sub-section (2) of Section 12 empower the assessing authorities to assess the dealer to the best of its judgment in two 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 available material and the circumstances of each case. Where account books are accepted along with other records there can be no ground for making a best judgment assessment. In this case also as held by the Supreme Court and the Division Bench of this Court the return filed by the assessee has been taken as correct with reference to the books of accounts and the one and only infraction found by the assessing officer was that in respect of the cast iron rough castings the assessee claimed 3% tax on the strength of Form 17. That has also been accepted by the assessing officer, however, in view of the decision of the Supreme Court in Vasantham Foundry's case wherein cast iron and rough castings have been declared as declared goods coming under the second schedule to the TNGST Act. That portion has been taken out from the return and assessed to tax at 4%. That cannot be regarded as an assessment under Section 12 (2) or otherwise called as best judgment assessment.