Madan Lal Arora Vs. Excise &
Taxation Officer, Amritsar  INSC 144 (7 April 1961)
GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA
CITATION: 1961 AIR 1565 1962 SCR (1) 823
CITATOR INFO :
RF 1962 SC1621 (12,52,90,125) D 1967 SC1408
(9) RF 1975 SC1208 (28) R 1977 SC 540 (13)
Sales Tax--Return furnished--Assessee called
upon to produce evidence in support of teturn Period of limitation for such
demand from when to run--Punjab General Sales Tax Act, 1948, (Punj. 46 of
1948), s. II, r. 20.
Under the Punjab General Sales Tax Act, 1948,
a dealer had to furnish his return every quarter according to the Rules and was
also required to furnish evidence in support of the return if called for, and
if he failed to do so the assessing authority could proceed to make an
assessment to the best of his judgment, but this power could he exercised
"within three years after the expiry of the period".
Held, that three years within which the
authority could proceed to make the best judgment assessment had to be computed
from the end of such quarter in respect of which return had been filed.
ORIGINAL JURISDICTION: Writ Petition No. 120
Writ Petition under Art. 32 of the Constitution
of India for enforcement of Fundamental Rights. Bhagirath Das and, B. P. Maheshwari,
for the petitioner.
N. S. Bindra and D. Gupta, for the
1961. April 7. The Judgment of the Court was
delivered by 824 SARKAR, J.-The petitioner is a dealer registered under the
Punjab General Sales Tax Act. He filed returns of his sale turnovers for the
four quarters of the financial year ending on March 31, 1955, and likewise, for
the four quarters of the financial year ending on March 31, 1956. In respect of
each year the Sales Tax Assessing Officer served three successive notices on
him on March 7, 1958, April 4, 1958, and August 18, 1959, requiring him to
attend with the documents and other evidence in support of his returns. In the
last of the notices mentioned above it was stated that on failure to produce
the documents and other evidence mentioned, the case would be decided "on
best judgment assessment basis". The petitioner did not comply with any of
the notices, but after the receipt of the last notice he presented this
petition under Art. 32 of the Constitution challenging the right of the
authorities to make a best judgment assessment.
The question raised by the petitioner turns
on s. 11 of the Punjab General Sales Tax Act, relevant provisions of which are
set out below.
S. 11. (1) If the Assessing Authority is
satisfied without requiring the presence of registered dealer or the production
by him of any evidence that the returns furnished in respect of any period are
correct and complete, he shall assess the amount of tax due from the dealer on
the basis of such returns.
(2)If the Assessing Authority is not
satisfied without requiring the presence of a registered dealer who furnished
the returns or production of evidence that the returns furnished in respect of
any period are correct and complete, he shall serve on such dealer a notice in
the prescribed manner requiring him, on a date and at a place specified
therein, either to attend in person or to produce or to cause to be produced
any evidence on which such dealer may rely in support of such returns.
(4) If a registered dealer, having furnished
returns in respect of a period, fails to comply with the terms of a notice
issued under sub-section (2), the 825 Assessing Authority shall within three
years after the expiry of such period, proceed to assess to the best of his
judgment the amount of the tax due from the dealer.
The contention of the petitioner is that at
the date of the notice last mentioned the Sales Tax authorities had no right to
proceed to make any beat judgment assessment as the three years within which
only such assessment could be made had expired before then. It seems to us that
the contention of the petitioner is well founded. The learned counsel for the
respondent, the assessing authority, also frankly conceded that he 'found it
difficult to contend to the contrary.
Sub-section (4) of s. 11 deals with the case
of a dealer who has furnished returns in respect of a period and has thereafter
been asked to produce evidence to support the returns but has failed to do so.
The subsection provides that in such a case the assessing authority may proceed
to make an assessment which to the best of his. judgment should be made
irrespective of the returns. The reason for this provision is that the
correctness of the returns having been doubted by the assessing authority, the
dealer has not availed himself of the opportunity afforded to him to remove these
doubts. The sub-section however provides that the power can be exercised within
the three years mentioned in it. Quite plainly, the power cannot be exercised
after these three years have gone by.
The question is, how to compute the three
years? The subsection 'says "within three years after the expiry of such
period". So the three years have to be counted from the expiry of the
period mentioned. What then is that period? The words are "such
period". The period referred therefore is the period mentioned earlier. In
the sub-section, and that is the period in respect of which returns had been
furnished by the dealer. This is also made clear by sub-s. (1) of s. 11. That
deals with a case where the returns are accepted. Both sub-ss. (1) and (4) deal
with returns for the same period. Now s. 10(3) provides that 104 826 every
registered dealer shall furnish such returns by such dates and to such
authority as may be prescribed" "Prescribed" means prescribed by
rules framed under the Act.
Under r. 20 of these rules, a registered
dealer like the petitioner, had to furnish returns quarterly. The rules define
"return period" as "the period for which returns are prescribed
to be furnished by a dealer". It would therefore appear that when sub-sec.
(4) of s. 11 talks of "returns in respect of a period", that refers
in the case of the petitioner to the quarters in respect of which he submitted
the returns. We when come to this that the three years within which the
authority could proceed to make the best judgment assessment had to be counted
from the end of each quarter in respect of which returns had been filed.
Now the last of the quarters in respect of
which the petitioner filed his returns ended on March 31, 1956. So the
assessing authority could not proceed to make a best judgment assessment in
respect of this quarter after March 31, 1959. In the case of the earlier
quarters, of course, the three years had expired even prior to this date. It is
not in dispute that the assessing officer had not proceeded to make any
assessment on the petitioner at the date of any of the notices. In the present
case therefore the notices given on August 18, 1959, that best judgment
assessments would be made in respect of the quarters constituting the financial
years 1955 and 1956, the last of which expired on March 31, 1956, were futile.
No such assessments could be made in respect of any of these quarters after
March 31, 1959.
The petition must, therefore, be allowed. A
writ will issue restraining the respondent from making any best judgment
assessment on the petitioner for sales tax for any quarter of the financial
years 1955 and 1956. The petitioner will get the costs of this petition.