The
State of Andhra Pradesh Vs. Nav Swadeshi Oil Mills [1987] INSC 313 (3 November
1987)
VENKATARAMIAH,
E.S. (J) VENKATARAMIAH, E.S. (J) RANGNATHAN, S.
CITATION:
1988 AIR 97 1988 SCR (1) 736 1987 SCC Supl. 388 JT 1987 (4) 234 1987 SCALE
(2)920
ACT:
Andhra
Pradesh General Sales Tax Act, 1957: ss. 13 & 14(1) & 14(3)/Central
Sales Tax Act, 1956: s. 9(2)- Applicability of-Returns not filed within the
prescribed period-Assessments made after expiry of four years from assessment
year-Held, cases fall under s. 14(3) and assessment can be made within six
years from expiry of the assessment year.
HEADNOTE:
%
Sub-section (2) of s. 9 of the Central Sales Tax Act, 1956 makes the assessment
procedure prescribed under the general sales tax law of the appropriate State
applicable to the assessment to be made under the Central Act. Section 13 of
the Andhra Pradesh General Sales Tax Act, 1957 requires the dealer to submit
returns in such manner, within such period and to such authority as may be
prescribed. Sub- section (1) of s. 14 permits the assessing authority to assess
the amount of tax due on the returns submitted under s. 13 only within a period
of four years from the expiry of the year to which the assessment relates.
Sub-section (3) permits the assessing authority to make best judgment
assessment where a dealer (i) fails to submit return before the date
prescribed; (ii) produces the accounts registers and other documents after
inspection and (iii) submits a return subsequent to the date of inspection,
within a period of six years from the expiry of the year to which the
assessment relates.
In
the main appeal before this Court the assessee- respondent filed its return
relating to the quarter ending 31st March, 1969 on 7th August, 1969 under the
Central Sales Tax Act. The last date prescribed by law was 24th May, 1969.
The
Commercial Tax officer passed the assessment order on 3rd August, 1973, beyond
four years from 31st March, 1969, the last day of the assessment year 1968-69.
The assessee's appeals against that order were dismissed by the Assistant
Commissioner and the Sales Tax Appellate Tribunal. The High Court in revision,
however, held that the assessment made after four years from the last day of
the assessment year was not a valid assessment.
737
In the connected appeal the respondent who was the assessee filed the annual
return in respect of the assessment year 1968-69 under the A provisions of the
Central Act on 19th August, 1969 after the expiry of the prescribed date. The
order of assessment was passed on 2nd August, 1973 beyond four years from the
last day of the assessment year 196869. An appeal against that order was
dismissed by the Assistant Commissioner. The Sales Tax Appellate Tribunal,
however, allowed the appeal holding that the assessment had been passed beyond
four years from the last day of the assessment year. The revision petition
preferred by the State was dismissed in limine by the High Court.
In
the appeals by special leave filed by the State, it was contended for the
respondent that since the returns in the cases had been accepted, even though
they had filed been beyond the prescribed date, the assessments made thereon
could not be considered as best judgment assessments and, therefore,
sub-section (3) of s. 14 of the Act under which it is permissible to make best
judgment assessments would be inapplicable.
Allowing
the appeals. D ^ HELD: 1.1 on a true construction of sub-s. (1) and sub- s. (3)
of s. 14 of the Andhra Pradesh General Sales Tax Act, 1957 it is apparent that
where a return is not filed by a dealer before the date prescribed in that
behalf under the Act the assessing authority has jurisdiction to complete the
assessment within a period of six years from the expiry of the year to which
the assessment relates. [744C]
1.2
The two types of cases which fall under sub-s. (1) and sub-s. (3) of s. 14 of
the Act respectively are mutually exclusive. The return on the basis of which
an assessment is to be made under s. 14(1) is a return filed within the
prescribed period and in such a case the assessment has to be completed within
a period of four years from the expiry of the period to which the assessment
relates. The Act confers a distinct advantage on such a dealer who is prompt in
filing his return inasmuch as he acquires immunity against assessment on the
expiry of the said period of four years. All cases where the return is
submitted beyond the prescribed date fall under sub-s. (3) of s. 14 of the Act.
Assessment
in such cases may be completed within six years from the expiry of the year to
which the assessment relates.
When
once it is established in a case that a return has not been filed within the
prescribed period such case falls outside s. 14(1) of the Act and therefore the
period of four years prescribed therein becomes automatically inapplicable.
It
clearly falls under cl. (i) of sub-s. (3) of s. 14 of the Act and assessment
can be H 738 made in such a case within the expiry of the period of six years.
In the instant cases the returns were not filed within the prescribed dates.
The assessments have, therefore, been rightly made within six years from the
expiry of the year to which the assessments relate. [742G-H; 743A-B; 744C]
2.
Whether the assessment made is the best judgment or not has no bearing at all
on the period within which an assessment can be made under the Act. It depends
upon the other conditions mentioned in sub-s. (1) and (3) of s. 14.
Best
judgment assessment can be made even in a case falling under sub-s. (1), as is
evident from the latter part of that sub-section which reads: "but if the
return appears to him to be incorrect or incomplete he shall after giving the
dealer a reasonable opportunity of proving the correctness and completeness of
the return submitted by him and making such inquiry as he deems necessary, to
assess to the best of his judgment, the amount of tax due from the
dealer." Yet such best judgment assessment has to be completed within a
period of four years from the expiry of the year to which the assessment
relates. Therefore, in the instant case merely because the assessments are not
best judgment assessments, it cannot be said that sub-s. (3) of s. 14 is
inapplicable. Neither the High Court nor the Tribunal gave adequate attention
to the words 'before the date prescribed in that behalf' in cl. (i) of sub-s.
(3) of s. 14. They laid emphasis only on the words 'fails to submit return' in
the said sub-clause to arrive at a wrong conclusion. [743C, H;
744A-B]
State of Andhra Pradesh v. Pyarelal Malhotra, (13 S.T.C. 946), and State of
Madras v. S.G. Jayaraj Nadar & Sons, 28 S.T.C. 700, distinguished.
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 4448 of 1985.
From
the Judgment and order dated 26. 10. 1982 of the Andhra Pradesh High Court in
Tax Revision Case No. 23 of 1978.
WITH
Civil Appeal No. 694 of 1986.
From
the Judgment and order dated 31.7.1985 of the Andhra Pradesh High Court in Tax
Revision Case No. 205 of 1985.
T.V.S.N.
Chari for the Appellant.
739
R. Ramachandran for the Respondents.
The
Judgment of the Court was delivered by VENKATARAMIAH, J. The question of law
which arises in these two appeals by special leave being a common, they are
disposed of by this common judgment. The said question relates to the time
within which an assessment can be made under the provisions of the Andhra
Pradesh General Sales Tax Act, 1957 (hereinafter referred to as 'the Act')
where the return is not filed by the dealer within the time prescribed in that
behalf.
The
assessee in Civil Appeal No. 4448 of 1985 is M/s. Nav Swadeshi oil Mills, Jadcharla,
Mahboobnagar district.
For
assessment year 1968-69 the assessee filed its return relating to the quarter
ending 31.3. ,969 on 7.8.1969 before the Commercial Tax Officer of Mahboobnagar
under the Central Sales Tax Act, 1956 even though the last date for submission
of return prescribed by law was 24.5. 1969. The return filed by the assessee
showing a taxable turnover of Rs. 18,25,410.72 was accepted and it was called
upon to pay sales tax of Rs.45,424.48 under the Act. The assessment order was passed
on 3.8.1973 beyond four years from 31.3.1969 which was the last day of the
assessment year 1968-69. Aggrieved by the assessment order which had been
passed beyond the period of four years from the last day of the assessment year
the assessee filed an appeal before the Assistant Commissioner (CT) Appeals,
Warangal in Appeal No.
5
75-76 and that appeal were dismissed on 14.9.1976. Against the order of the
Assistant Commissioner (CT) Appeals.
Warangal
the assessee filed an appeal before the Sales Tax Appellate Tribunal, Andhra
Pradesh at Hyderabad in Tribunal Appeal No. 183 of 1977. That appeal also was
dismissed. The assessee thereafter filed a revision petition in Tax Revision
Case No. 23 of 1978 before the High Court of Andhra Pradesh. The High Court by
its order dated October 26, 1982 set aside the order of the Tribunal and also
the assessment on the ground that the assessment which had been passed after
four years from the last day of the assessment year was not a valid assessment.
Aggrieved by the decision of the High Court the State of Andhra Pradesh has
filed this appeal by special leave.
The
assessee in Civil Appeal No. 694 of 1986 is M S. Nav Swadeshi oil Mills and
Refinery at Jadcharla. In respect of the assessment year 1968-69 the assessee
filed an annual return under the provisions of the Central Sales Tax Act, 1956
on 19.8. 1969 after the expiry 740 Of the prescribed period. The order of
assessment was passed on 2.8.1973 beyond four years from the last day of the
assessment year 1968-69. Aggrieved by the assessment order which had been
passed by the assessing authority the assessee filed an appeal before the
Assistant Commissioner (CT) Appeals, Warangal on the ground that the
asssessment order passed beyond four years from the last day of the assessment
year was barred by time. That appeal was dismissed. Against the order passed in
that appeal the assessee filed an appeal before the Sales Tax Appellate
Tribunal, Andhra Pradesh in Tribunal Appeal No. 206 of 1977.
The
Tribunal allowed the appeal and set aside the assessment holding that the
assessment had been passed beyond time.
Aggrieved
by the decision of the Tribunal the State of Andhra Pradesh filed a Revision
Petition in Tax Revision Case No. 205 of 1985 on the file of the High Court of
Andhra Pradesh. That Revision Petition was dismissed in limine by the High
Court. Aggrieved by the decision of the High Court the State of Andhra Pradesh
has filed this appeal by special leave.
The
only question which arises for consideration in these appeals is whether the
orders of assessment in the above two cases which had admittedly been passed
beyond four years from the last day of the assessment year but within the
period of six years from that date had been validly passed. By virtue of
section 9 of the Central Sales Tax Act, 1956 the procedure prescribed for
making an assessment under the Act is applicable to the assessments to be made
under the Central Sales Tax Act, 1956. Section 13 of the Act prescribes that
every dealer who is liable to get himself registered under section 12 or
section 12-A as the case may be under the Act shall submit such return or
returns relating to his turnover in such manner within such period and to such
authority as may be prescribed. The material part of section 14 which is
relevant for purposes of these cases reads thus:
"14.
Assessment of tax: ( I) If the assessing authority is satisfied that any return
submitted under section 13 is correct and complete, he shall assess the amount
of tax payable by the dealer on the basis thereof, but if the return appears to
him to be incorrect or incomplete he shall, after giving the dealer a
reasonable opportunity of proving the correctness and completeness of the
return submitted by him and making such inquiry as he deems necessary, assess
to the best of his judgment, the amount of tax due from the dealer.
An
assessment under this section shall be made only within a period of four years
from the expiry of the 741 year to which the assessment relates.
...................
(3)
Where any dealer liable to tax under this Act- (i) fails to submit return
before the date prescribed in that behalf, or (ii) produces the accounts,
registered and other documents after inspection, or (iii) submits a return
subsequent to the date of inspection, the assessing authority may, at any time
within a period of six years from the expiry of the year to which assessment
relates, after issuing a notice to the dealer and after such enquiry as he
considers necessary, assess to the best of his judgment, the amount of tax due
from the dealer on his turnover for that year, and may direct the dealer to pay
in addition to the tax so assessed penalty as specified in subsection
(8)." It is necessary to analyse sub-section (1) and sub- section (3) of
section 14 of the Act for purposes of determining the issue involved in these
cases. Sub-section ( ]) of section 14 of the Act provides that if the assessing
authority is satisfied that any return submitted under section 13 is correct
and complete, he shall assess the amount of tax payable by the dealer on the
basis thereof but if the return appears to the assessing authority to be
incorrect or incomplete he shall after giving the dealer reasonable opportunity
of proving the correctness and completeness of the return submitted and making
such inquiry as he deems necessary, assess to the best of his judgment, the
amount of tax due from the dealer. In both these cases the return contemplated
is one which has been filed in accordance with section 13 of the Act within the
time prescribed for that purpose. Such an assessment under sub- section ( 1) of
section 14 of the Act can be made within a period of four years from the expiry
of the period to which the assessment relates. Sub-section (3) of section 14 of
the Act authorises the assessing authority to make an assessment to the best of
his judgment in three cases: (i) where a dealer under the Act fails to submit
return before the date prescribed in that behalf, (ii) where a dealer produces
the accounts. registers and other documents after inspection and (iii) where a
dealer submits a return subsequent to the date of inspection. In these three
cases the 742 assessing authority is empowered to make an assessment to the
best of '4 his judgment at any time within a period of six years from the
expiry of the year to which the assessment relates after issuing a notice to
the dealer and after such inquiry which he considers necessary to make the
assessment.
The
crucial question which arises for consideration in these cases is whether in a
case where the assessee submits a true and complete return after the prescribed
date the assessment should be completed within a period of four years
prescribed by sub-section ( 1) of section 14 of the Act or within a period of
six years permitted under sub-section (3) of section 14 of the Act. Sub-section
(1) of section 14 of the Act relates to an assessment which may be made on the
basis of a return submitted under section 13 of the Act.
Section
13 of the Act as stated above provides that every dealer shall submit such
return or returns relating to his turnover in such manner within such period
and to such authority as may be prescribed. The return on the basis of which an
assessment is to be made under section 14(1) of the Act is, therefore, a return
filed within the prescribed period and in such a case the assessment has to be
completed within a period of four years from the expiry of the year to which
the assessment relates. The return referred to in sub- section ( 1) of section
14 of the Act cannot be a return filed beyond the prescribed date is emphasised
by clause (i) of sub-section (3) of section 14 of the Act which refers to a
case where a dealer liable to pay tax fails to submit return before the date
prescribed in that behalf. All cases where the return is submitted beyond the
prescribed date fall under sub-section (3) of section 14 of the Act.
The
scheme of the Act regarding the period within which assessments can be made is
very simple. Assessments in cases falling under sub-section (1) of section 14
of the Act have to be completed within four years from the expiry of the year
to which the assessment relates and assessments in cases falling under
sub-section (3) of section 14 of the Act may be completed within six years from
the expiry of the year to which the assessment relates. The two types of cases
which fall under sub-section (l) and sub-section (3) of section 14 of the Act
respectively are mutually exclusive.
When
once it is established in case that a return has not been filed within the prescribed
period such case falls outside section 14 ( l) of the Act and therefore the
period of four years prescribed therein becomes automatically inapplicable. It
clearly falls under clause (i) of sub- section (3) of section 14 of the Act and
assessment can be made in such a case within the expiry of the period of six
years. While a dealer who files a return within the prescribed 743 period
acquires immunity against assessment on the expiry of four years from the last
day of the assessment year, a dealer who fails to file a return within the
prescribed period has to wait for six years to be over to acquire such
immunity. Thus the Act confers a distinct advantage on a dealer who is prompt
in filing his return.
We
are not impressed by the argument that since the returns in the cases before us
had been accepted even though they had been filed beyond the prescribed date
the assessments made thereon cannot be considered as best judgment assessment
and therefore sub-section (3) of section 14 of the Act under which it is
permissible to make best judgment assessments would be inapplicable. The period
within which assessments can be made under the Act does not depend upon the
answer to the question whether the assessment in question is a best judgment
assessment or it is an assessment made treating the return as correct and
complete but it depends upon the other conditions mentioned in sub-section (1)
and in sub-section (3) of section 14 of the Act. We may here point out that
even in a case falling under subsection (1) of section 14 of the Act it is
possible for the assessing authority to make a best judgment assessment as can
be seen from the latter part of the said sub-section which reads: "but if
the return appears to him to be incorrect or incomplete he shall after giving
the dealer a reasonable opportunity of proving the correctness and completeness
of the return submitted by him and making such inquiry as he deems necessary,
assess to the best of his judgment, the amount of tax due from the
dealer." Yet such best judgment assessment has to be completed within a
period of four years from the expiry of the year to which the assessment
relates. Hence it cannot be held that merely because the assessments in
question are not best judgment assessments sub-section (3) of section 14 of the
Act is inapplicable for best judgment assessments can be made both under
sub-section (1) and subsection (3) of section 14 of the Act. That the
assessment is a best judgment assessment is not, therefore, decisive of the
question involved in these appeals.
The
decision of the Andhra Pradesh High Court in the State of Andhra Pradesh v.
Pyarelal Malhotra 13 S.T.C. 946 and the decision of this Court in the State of
Madras v.
S.G.
Jayaraj Nadar & Sons 28 S.T.C. 700 which dealt with the question as to when
a best judgment assessment could be made are not relevant for purposes of
deciding the question which has arisen before us. As we have already pointed
out the question whether the assessment made is the best judgment assessment or
not has no bearing at all on the period within which an assessment can be made
under the Act. Neither in the judgment of the High Court against which Civil
Appeal No. 4448 of 1985 is filed nor in the judgment of the Tribunal out of
which Civil Appeal No. 694 of 1986 arises adequate attention is given to the
words 'before the date prescribed in that behalf in clause (i) of sub-section
(3) of section 14 of the Act. The High Court and the Tribunal laid emphasis
only on the words "fails to submit return" in the said sub-clause and
it is on this account they arrived at a wrong conclusion.
On
a true construction of sub-section (I) and sub- section (3) of section 14 of
the Act we are of opinion that where a return is not filed by a dealer before
the date prescribed in that behalf under the Act, the assessing authority has
got jurisdiction to complete the assessment within a period of six years from
the expiry of the year to which the assessment relates. Admittedly, in these
cases the returns were not filed within the prescribed date and the assessments
have been made within six years from the expiry of the year to which the
assessments relate. The orders of the High Court against which these appeals
have been filed are therefore liable to be set aside. In Civil Appeal No. 4448 or
1985 the judgment of the High Court is set aside and the judgment of the
Tribunal is restored. In Civil Appeal No. 694 of 1986 the order of the High
Court and the judgment of the tribunal are set aside and judgment of the
Assistant Commissioner (CT) Appeals, Warangal is restored. The respondent shall
pay the costs of the Appellant in both the appeals.
P.S.S.
Appeals allowed.
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