TMI Blog1971 (9) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... by limitation under the provisions of section 13(6) of the Act" and "(ii) whether on the facts and in the circumstances of the case section 29(1) of the Bihar Sugar Factories Control Act, 1937, bars imposition of tax on the sale of the sugarcane under the Act." (The Bihar Sugar Factories Control Act, 1937, will be referred to hereinafter as "the Control Act"). 2.. The facts leading to the aforesaid references are few: Shri Lala Kailashpat Singhania, the dealer, grew sugarcane in his agricultural farm and had been supplying the same to a local sugar mill, the value of which exceeded Rs. 15,000 (Rupees fifteen thousand) each year and yet the dealer had not got itself registered under the Act. During the period of the twelve months ending on the 30th of June, 1954, similar amount was received on the sale of sugarcane. Consequent upon this information, the Superintendent of Commercial Taxes, Champaran Circle, Motihari, within whose jurisdiction the dealer made the sales, recorded an order dated the 28th September, 1959, directing the issue of notice under section 13(5) of the Act requiring the dealer to produce its books of accounts for the period from 1st April, 1955, to 30th June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) from 1st April, 1955, to 31st March, 1956, (b) from 1st April, 1956, to 31st March, 1957, (c) from 1st April, 1957, to 31st March, 1958, (d) from 1st April, 1958, to 31st March, 1959, and (e) from 1st April, 1959, to 30th June, 1959. The rate of sales tax as applicable to the aforesaid periods of allocation was levied. After an unsuccessful appeal to the Deputy Commissioner of Commercial Taxes, Tirhut Division, Muzaffarpur, on the validity of the assessment, the dealer appealed to the Tribunal. The aforesaid two objections were pointedly raised by the dealer before it. With regard to the question of limitation the dealer's case before the Tribunal was that the proceeding under section 13(5) of the Act was initiated not by the order dated the 28th September, 1959, but only when a notice dated 10th January, 1962, under section 13(5) of the Act was issued. It was urged that any period prior to 4 years from the said date could not, therefore, be assessed to sales tax in view of the proviso to section 13(6) of the Act. It was further argued that even if the date of initiation of the proceeding under section 13(5) of the Act was taken to be 28th September, 1959, namely, the date on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion the Tribunal was of the opinion that the imposition of cess under the Control Act and the imposition of sales tax under the Act were two separate imposts authorised under two different entries, namely, entries 52 and 54 of VII Schedule, State List II, of the Constitution of India, and that the two separate impositions were valid. The Tribunal further found that in fact no cess under the Control Act had been levied during the period. 3.. The Tribunal has, therefore, asked for the opinion of this court on the questions mentioned above under section 25(1) of the Act in the aforesaid Tax Cases Nos. 61 and 62 of 1966. Both these cases were heard by a Bench of this court along with Tax Case No. 57 of 1966 and all the three cases were referred to a Full Bench, as the following important questions arose for decision in them-"Whether when a dealer fails to get himself registered under the Act and as such evades payment of sales tax in respect of his turnover and ultimately notice is issued to him for assessment of tax, the period for which he is liable to sales tax would be the entire period however long it may be from the date from which he would be liable to sales tax or this wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 13(5) of the Act must, therefore, be a quarter of a year or a year. The block of time during which the dealer failed to get itself registered must be split up into units of time as was unit of time in the case of a registered dealer. Referring to the facts of the case it was submitted that since the proceedings for assessment under section 13(5) had been initiated only on the 10th January, 1962, when a notice under section 13(5) of the Act was issued to the dealer, all periods falling beyond four years from the said date were barred for the purposes of assessment. In other words, according to the learned counsel for the dealer no assessment could be made in respect of any period falling beyond four years from the 10th January, 1962. 5.. Mr. Shreenath Singh, appearing for the department, in reply to the above arguments, submitted that the expression "period" occurring in section 13(5) of the Act had to be understood in the context of the purpose for which that particular provision had been enacted. If that was done, according to Mr. Singh, the entire period during which the dealer, though liable to pay tax had wilfully failed to apply for registration had to be taken as one u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation required by the prescribed authority for the purposes of section 9, the Commissioner shall, after giving the dealer a reasonable opportunity of being heard, assess, to the best of his judgment, the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods and the Commissioner may direct that the dealer shall pay, by way of penalty, in addition to the amount so assessed, a sum not exceeding one and a half times that amount." The proviso to sub-section (6) reads as under: "Provided that no proceeding for assessment of the tax due from a dealer in respect of any period shall be initiated later than four years from the expiry of such period or later than two years from the date of disposal of the appeal, revision, review or reference directing fresh assessment." The expression in the said two provisions which need proper interpretation are: "period" and "initiation of proceeding for assessment ". 7.. The question would be as to whether the expression "period" occurring in section 13(5) of the Act had the same meaning as understood in respect of the other provisions of the Act or that it had a special meaning for the purposes of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period not exceeding twelve months during which his gross turnover on sales which have taken place both in and outside Bihar again exceeds Rs. 10,000." Sub-section (1) deals with cases of such dealers whose gross turnover exceeded Rs. 10,000 during the year immediately preceding the date on which the Sales Tax Act commenced. Sub-section (2) deals with the cases of such dealers whose turnover exceeded Rs. 10,000 not during the year immediately preceding the date of the commencement of the Act but on some later date. In such cases also, however, the tax becomes chargeable "with effect from the commencement of the quarter immediately following a period not exceeding twelve months". Sub-section (3) deals with the circumstances under which the dealer, liable to pay tax under the Act, would be deregistered and would not be liable to pay tax. Sub-section (4) deals with the circumstances under which a deregistered dealer would again become liable to pay tax under the Act. It is significant to note that in all these provisions of the charging section the unit of time which has been prescribed for the purposes of determining the dealer's liability to sales tax is a year. Under sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to file quarterly returns and also an annual consolidated return in respect of the whole year. The expression "dealer" occurring in section 12(1) does not limit itself to a registered dealer. It covers the cases of all dealers, registered or unregistered. The position is obvious when one reads sub-section (1) of section 12 in contradistinction with sub-sections (2) and (3) thereof. Whereas sub-section (1) refers to a "dealer", sub-sections (2) and (3) refer to a "registered dealer". Now, therefore, the position which emerges on reading sections 4 and 12 read with rule 22 of the Rules is that if proceedings under section 13(5) are started against an unregistered dealer, namely, against a dealer who, although liable to pay tax, had nevertheless wilfully failed to apply for registration, he has to file quarterly returns for the period during which he was liable to pay tax and also a consolidated annual return in respect of the periods during which though liable to pay sales tax, he had wilfully failed to apply for registration. It is significant to note that sub-section (1) of section 12 does not talk of "return " but of "returns" so that the argument on behalf of the department tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assess to the best of his judgment the amount of tax, if any, due from the dealer in respect of 'such period' and of 'subsequent periods'." If the intention of the Legislature behind section 13(5) was to treat the whole period of default as one single unit of period it was not necessary to qualify the period of default as "period" and also "subsequent periods"; rather, the Legislature should have qualified the term "period" as the "total period" or "such total period". 11.. Mr. Shreenath Singh at this stage urged that the expression "such period" occurring in section 13(5) of the Act meant the total period of default and the expression "subsequent periods" meant the period after notice under section 13(5) had been issued against a dealer. I do not think that such an interpretation is warranted by the language of section 13(5) of the Act. A defaulter continues to be a defaulter. Detection does not exonerate it from the default, so that notwithstanding the use of the term "subsequent periods" it can only be understood as meaning that assessment for all the periods will have to be made but without amalgamating the periods of default into one consolidated whole. If the argument rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pril, 1955, to 31st March, 1956, the next is from 1st April, 1956, to 31st March, 1957, the next is from 1st April, 1957, to 31st March, 1958, the next is from 1st April, 1958, to 31st March, 1959, and the last is from 1st April, 1959, to 30th June, 1959. Mr. Ghose, appearing for the dealer, submitted that the bifurcation of the periods into a year each was wrong. According to him the period should be a quarter of a year and not a year. He referred to the provisions of subsection (2) of section 4 which is the charging section and rule 22 of the Rules under which every dealer was required to file quarterly returns. I think the argument is based on a faulty reading of the said provisions of the Act. Sub-section (2) of section 4 only fixes the time from which a dealer became liable to pay tax under the Act. It is in that context that it is laid therein that the dealer shall become liable to pay tax from the commencement of the quarter immediately following a period not exceeding twelve months, during which his gross turnover has exceeded Rs. 10,000. Simply because the expression "quarter" has been used in the said section of the Act it cannot be understood as meaning that a quarte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dealer had filed return for one quarter: "........The appellant has to submit quarterly returns and assessments are made on the basis of the said returns; that is to say, he has to be assessed for his turnover separately in respect of each quarter........." In respect of Civil Appeal No. 102 of 1961 in which case the dealer had not submitted any return for the year 1950-51, his Lordship observed: "........As the unit of assessment is a quarter, the period in section 11-A can only mean a quarter and it cannot be further split up into months, weeks and days..........." Referring to the case of a dealer, who did not register itself under the Act, his Lordship observed: ".........His is really a case of evasion from his obligation to get himself registered under the Act. Section 10(1) enables the Commissioner to issue a notice to him requiring him to furnish a return in the prescribed manner. In his case also the same procedure as prescribed in sections 10(3), 11(1) and 11(2) has to be followed in the matter of assessment........" Referring thereafter to sub-section (5) of section 11 of the Act which is materially the same as section 13(5) of the Act with which these r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act". In other words the word "period" occurring in section 11(5) of that Act was held to govern the whole period during which a dealer being liable to pay tax under the Act, had wilfully failed to apply for registration as one unit and then it was held that "the limitation of three calendar years has to be computed from the end of this period. That being so, no part of the assessment made on 2nd June, 1955, was barred by time." 14.. Most respectfully, I think that the answer given by their Lordships does not decide the meaning of the expression "period". It cannot be disputed that when a dealer, though liable to pay tax, has not got itself registered and has thereby evaded assessment, he is certainly liable to be assessed for all that period which had escaped assessment but subject to limitation. The fact that the dealer is liable to be assessed for all that period, however, does not define the meaning of the word "period". Their Lordships have of course held that the assessment for the entire period 8th October, 1948, to 6th November, 1953, as valid and not barred by limitation and by implication one would think that their Lordships understood the expression "period" as me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen a notice under section 13(5) of the Act was issued to him. The question of initiation of the proceeding for assessment has assumed importance because on it depends the answer of the question as to whether any part of the assessment under section 13(5) of the Act for the period 1st April, 1955, to 30th June, 1959, was barred by limitation. 17.. It cannot be gainsaid that initiation of a proceeding has to be understood in the context of the object and the purpose for which the initiation was made. I think, the test is, what was it that wag sought to be achieved by taking a particular step. By directing the office to issue notice, does it achieve the purpose of informing the dealer to submit itself for assessment to sales tax? In my opinion, a direction to issue the notice to the dealer achieves no object except that a step be taken for a notice to issue to the dealer. It does not go any further than that. Whereas if a notice has been issued to the dealer for assessment the object sought to be achieved by such a notice would be to make an assessment. In my opinion, therefore, an order directing the office to issue notice for assessment could not be understood as a step towards m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to have been initiated in the case of a registered dealer and so also in the case of an unregistered dealer. His Lordship Subba Rao, J., observed with regard to the registered dealer: "It is manifest that in the case of a registered dealer the proceedings before the Commissioner start factually when a return is made or when a notice is issued to him either under section 10(3) or under section 11(2) of the Act..." The provisions equivalent to sections 10(3) and 11(2) of the C.P. and Berar Sales Tax Act, 1947 (since known as Madhya Pradesh Sales Tax Act) are sections 12(3) and 13(2) of the Bihar Sales Tax Act. Dealing with the case of an unregistered dealer his Lordship observed: "Now coming to the case of a dealer who did not register himself under the Act, the position is different. There is no statutory obligation cast on him by any section to submit a return. His is really a case of evasion from his obligation to get himself registered under the Act. Section 10(1) enables the Commissioner to issue a notice to him requiring him to furnish a return in the prescribed manner. In his case also the same procedure as prescribed in sections 10(3), 11(1) and 11(2) has to be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nish a return of the total income expires cannot be accepted. No doubt the said public notice is the first step which sets in motion the machinery provided in the Act for inquiring into, determining, levying and recovering the tax, which is charged under the charging sections of the Act, but it does not start the assessment proceedings against any individual assessee as such. If after the publication of the notice nothing further happens, that is, neither the assessee files a return nor the Income-tax Officer calls upon him to submit a return by an individual notice, no proceeding can be said to have commenced against him. The public notice opens the arena as it were for the proceedings to commence or take place. They commence when the individual assessee steps in with his return or the Income-tax Officer calls upon the individual assessee to step in by submitting a return. The date of the public notice under section 22(1) is, therefore, anterior to the commencement of the assessment proceedings against any individual assessee. Similarly, the point of time suggested by the learned AdvocateGeneral is after the commencement of the proceedings. The stage of the notice under section 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd "initiate" his Lordship held that it meant "to originate or to take the first step". Referring to the facts of the case in reference and applying the above observations of his Lordship, learned counsel for the department submitted that the direction to the office made on the 28th September, 1959, was a direction which was the first step towards making the assessment and therefore it was on that date that the proceedings for assessment should be deemed to have been initiated. I am unable to find any support for the department's point of view in this decision, firstly, because as the facts show in that case the Tribunal was already seized of the assessment proceedings and it was during the course of that proceeding that the notice was issued. Such a position is wanting in the case before me. Here the jurisdiction is yet to be seized. The object behind the direction to the office on the 28th September, 1959, was merely to issue a notice under section 13(5) of the Act and not a direction to the assessee as in that case. The object was not to call the dealer to submit to an assessment under section 13(5) of the Act. As observed by me earlier, initiation of a proceeding must be un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pursuance of the direction having been written out might still remain in the table-drawer of the clerk concerned. Even in such a case the dealer will not know about his impending assessment. It is only when the assessing authority does some act, which in my opinion, can only be by the issue of the notice under section 13(5) that the dealer is sought to be reached for the purpose of an assessment on him, and then only the department could say that it had done all that lay in its power to apprise the dealer of the proposed assessment on him and that the proceedings for assessment had been initiated. 21.. I am, therefore, of the view on the discussions made above, that the proceeding for assessment under section 13(5) of the Act is initiated either when a dealer files a return voluntarily or when a notice is issued to the dealer and that on the facts of the case under reference such initiation was made on the 10th January, 1962, when a notice under section 13(5) of the Act was issued to the dealer. 22.. Now as held by me above that the expression "period" even for the purposes of section 13(5) of the Act meant an unit of time of one year only, not more, not less and further th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act in so far as it concerned the levy on the sale of sugarcane. The Commercial Taxes Tribunal, however, held that both the impositions would be valid being authorised under two different entries, namely, entries Nos. 52 and 54 of Schedule VII, State List II, of the Constitution of India. 25.. I do not consider it necessary to detain myself in an elaborate discussion on this issue. The law is now settled by the Supreme Court of India in the case of M/s. Mathra Parshad and Sons v. State of Punjab and Others[1962] 13 S.T.C. 180 (S.C.); A.I.R. 1962 S.C. 745.that such double impositions would be valid. That was a case in which a firm of general merchants sold, besides other goods, manufactured tobacco as defined under the Punjab Tobacco Vend Fees Act (12 of 1954) which came into force in the State of East Punjab from 1st of April, 1954. The firm was also a registered dealer under the East Punjab General Sales Tax Act, 1948, and was paying sales tax on manufactured tobacco There was some confusion in the mind of the dealer which was created by virtue of an amendment to the schedule of the exemption under section 6 of the said Sales Tax Act as to whether it was liable to pay sales t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act for the periods 1st April, 1955, to 31st March, 1956, and 1st April, 1956, to 31st March, 195 7, was barred by limitation under the proviso to section 13(6) of the Act. The answer to question No. (2) in Tax Case No. 61 of 1966 is in the negative. Tax Case No. 57 of 1966. 28.. This is a reference under section 25(1) of the Act. The petitioner in this case is M/s. Rajpur Farms Limited, which is a public limited company. It grows sugarcane on its farm and the produce is sold to a local sugar mill. The Superintendent of Commercial Taxes found that though the petitioner's annual turnover exceeded Rs. 15,000 (Rupees fifteen thousand) it had failed to get itself registered. He accordingly recorded an order dated 28th September, 1959, directing issue of notice under section 13(5) of the Act asking the petitioner to produce its books of accounts for the period 1st April, 1955, to 30th June, 1959, on the 30th November, 1959. The notice required to be issued under the said order dated 28th September, 1959, was, however, not issued then. The Superintendent of Commercial Taxes discovered the omission only when the records of the case were put up before him on the 30th of October, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mill even though cess under the Control Act be levied. 30.. Now, therefore, the Commercial Taxes Tribunal has referred the following two questions under section 25(1) of the Act for the opinion of this court. They are: "(1) Whether on the facts and in the circumstances of the case any part of the assessment under section 13(5) of the Act for the period from 1st April, 1955, to 30th June, 1959, is barred by limitation under the provisions of section 13(5) of the Bihar Sales Tax Act, 1947, read with section 47 of the Bihar Sales Tax Act, 1959? (2) Whether on the facts and in the circumstances of the case, section 29(1) of the Bihar Sugar Factories Control Act, 1937, bars the imposition of tax on the sale of sugarcane under the Bihar Sales Tax Act?" 31.. I have discussed the aforesaid two questions in my judgment passed in Tax Cases Nos. 61 and 62 of 1966. The facts and the circumstances in the case under reference are the same as were the facts and circumstances in Tax Cases Nos. 61 and 62 of 1966. The rival arguments on behalf of the parties were also the same as were raised in the said two tax cases. My answer, therefore, to the two questions will, therefore, be the same wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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