C.T.O. Moradabad Vs. H. Farid Ahmed
& Sons [1975] INSC 210 (12 September 1975)
FAZALALI, SYED MURTAZA FAZALALI, SYED MURTAZA
KRISHNAIYER, V.R.
CITATION: 1976 AIR 756 1976 SCR (1) 776 1976
SCC (1) 245
ACT:
U.P. Sales Tax Act, Section 7A and 7(3) and
rule 41(3) of the Rules B` provisional best Judgment assessment, if could be
made when assessee filed a I return
HEADNOTE:
By an order dated 31st December, 1968, the
sales-tax officer found from the turnover of the respondent firm as revealed
from the quarterly returns filed by the assessee that is disclosed an
assessable income. He proceeded to make a provisional assessment in respect of
the portion of the assessment year 1968 concerned purporting to act under
section 7A of' the U.P. Sales Tax Act. The respondent challenged the same
before the High Court praying that the sales tax officer had no jurisdiction to
make a provisional assessment, because the assessee had in fact filed a return.
The High Court of Allahabad accepted the
contention and quashed the order of the sales-tax officer. The High Court hold
that as conditions mentioned in section 7(3) did not apply to the facts of the
case in as much as it was not a case in which the assessee had not filed a
return at all, no assessment could have been made by the sales-tax officer.
Allowing the appeal by special leave,
HELD: Section 7A clearly authorises the
assessing authority to make provisional assessment in respect of the assessment
year to the best of his judgment, and does not contain any pre-conditions at
all. On the other hand it applies the provisions of the Act which includes the
provisions of section 7(3) which is the provision that confers power on the
assessing authority to make an assessment to the best of his judgment. It is
true that sub- rule (3) of rule 41 contains a provision that the provisional
assessment to the best of the judgment can be made where no return is
submitted, but this rule has to be read as supplemental to the provisions of
the parent Act.
What this rule implies is that whether the
return is filed by the assessee or not, the assessing authority will have the
power to make provisional assessment. There is no inconsistency between section
7A and rule 41(3) of the Rules framed under the Act. [778-A-B, D-F]
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos. 95 and 96 of 1971.
From the Judgment and order dated 3rd
October, 1969 of the Allahabad High Court in Writ Petitions Nos. 351 and
462/69.
S. C. Manchanda and o. P. Rana, for the
Appellants.
Promod Swarup and S. Markendeya, for the
Respondent. G. The Judgment of the Court was delivered by FAZAL ALI, J. These
appeals by the sales-tax officer have come up to this Court by certificate of
fitness granted by the High Court of Allahabad. The appeals involve a very
short point, turning upon the interpretation of rule 7A of the U.P. Sales Tax
Act (hereinafter referred to as the Act).
It appears that the respondent is a
partnership firm, carrying on business in the district of Moradabad. The
assessment quarters in question are two quarters of 1968. By an order dated
31st December, 1968, the sales-tax officer found from the 777 turn-over of the
firm as revealed from the quarterly returns filed by the assessee that it
disclose an assessable income.
The sales-tax officer, therefore, proceeded
to make a provisional assessment in respect of the portion of the assessment
year concerned, purporting to act under section 7A of the U.P. Sales Tax Act.
The assessee being aggrieved by this order, instead of going in appeal against
the order, challenging the same before the High Court praying that the
sales-tax officer had no jurisdiction to make a provisional assessment, because
the assessee had in fact filed a return.
This argument appears to have found favour
with the High Court which quashed the order of the sales-tax officer and held
that the sales-tax officer could have made a provisional assessment to the best
of his judgment only if no return had been filed by the assessee.
Mr. Manchanda appearing in support of the
appeals has contended that the High Court has completely overlooked the purport
ambit of section 7A of the Act, which does not exclude but in fact implies the
provisions of the Act, including section 7(3). The sheet-anchor of the High
Court's judgment is section 7(3) which runs thus "If no return is
submitted by the dealer under sub section (1) within the period prescribed in
that behalf or, if the return submitted by him ` appears to the assessing
authority to be incorrect or incomplete, the assessing authority shall after
making such enquiry as he considers necessary, determine the turnover of the
dealer to the best of his judgment and assess the tax on the basis thereof.'
Provided that before taking action under this sub- section the dealer shall be
given a reasonable opportunity of proving the correctness and completeness of
any return submitted by him." The High Court was of the opinion that as
conditions mentioned in section 7(3) did not apply to the facts of the present
case inasmuch as it was not a case in which the assessee had not filed a return
at all, no assessment could have been made by the sales-tax officer. In our
opinion, the High Court was in error in taking this view. Section 7A runs
thus:- (1) "The State Government may require any dealer to submit return of
his turn-over of a portion of the assessment year, and the assessing authority
may, without prejudice to the provisions of section 7 may provisional
assessment in respect of such portion of the assessment year in accordance with
the provisions of this Act in so far as they may be made applicable if the
turn-over of the dealer as determined by the assessing authority for such
portion of the amount, if any, specified in or notified under sub-section (2)
of Section 3 or sub-section (2) of Section 3-D, as the case may be, as the
period under assessment years to twelve months.
19-L925SCI /75 778 (2) Where the assessing
authority has made a provisional assessment under sub-section(1), it shall not,
by reason of such assessment,, be precluded from redetermining in the turn-over
and making the assessment for the whole year." This section clearly
authorizes the assessing authority to make a provisional assessment in respect
of the assessment year to the best of his judgment, and does not contain any
pre-conditions at all. On the other hand, it applies the provisions of the Act
which includes the provisions of section 7(3), which is the provision that
confers power on the assessing authority to make all assessment to the best of
his judgment. The High Court was rather carried away by the language of rule
41(3) which runs thus:- "(3) If no return is submitted in respect of any
quarter or month, as the case may be, within the period or if the return is
submitted without the payment of tax in the manner prescribed in Rule 48, the
Sales Tax Officer shall, after making such enquiries as he considers necessary,
determine the turnover Lo the best of his judgment, provisionally assess the
tax payable for the quarter or the month, as the case may be and serve upon the
dealer a notice in Form XI and the dealer shall pay the sum demanded within the
time and in the manner specified in the notice.
Back
