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TMI Blog1976 (9) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the assessment year 1962-63, the company raised a dispute that it was not liable to pay Central sales tax under the Central Sales Tax Act, 1956, as it claimed to be exempt from inter-State tax on the sales of its products to the various State Undertakings or Boards by reason of the provisions contained in section 5(2)(a)(iv) of the Punjab General Sales Tax Act, 1948-hereinafter referred to as the Act. The Tribunal decided the matter in favour of the assessee-company but the High Court of Punjab and Haryana answered the sales tax reference made at the instance of the revenue against the assessee. The decision of the High Court is reported in State v. Indian Aluminium Cables Ltd., Faridabad [1974] 33 S.T.C. 152.. The matter was brought to this Court in appeal and by a decision given on April 2, 1976, the view of the High Court was affirmed and it was held that the sales were not exempt from tax generally within the meaning of section 8(2A) of the Central Act read with section 5(2)(a)(iv) of the Punjab Act. The decision of this Court is reported in Indian Aluminium Cables Ltd. v. State of Haryana [1976] 38 S.T.C. 108 (S.C.). The period of assessment concerning the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(2)(a)(iv) of the Punjab General Sales Tax Act, 1948." This writ petition was dismissed in limine by a Bench of the High Court stating "Reply has been filed. The matter is covered in favour of the respondent by 33 S.T.C. 152 State v. Indian Aluminium Cables Ltd. Dismissed". It appears by the time the second writ petition came to be filed the appellant's liability to pay Central sales tax was decided by this Court in the case referred to above. Therefore, in the second writ petition, in the main, the question raised was one of limitation as in the other writ petition. Another Bench of the High Court dismissed this writ petition in limine on July 21, 1976. In substance and in effect, in spite of the Full Bench decision (by the majority) of the High Court in the case of Rameshwar Lal Sarup Chand v. Shri U.S. Naurath, Excise and Taxation Officer, Assessing Authority, Amritsar [1964] 15 S.T.C. 932 (F.B.)., on which Mr. S.T. Desai, the learned counsel for the appellant, heavily relied upon before us, neither Bench found any substance in the point of limitation raised by the company and dismissed the two writ petitions in limine. In our opinion, the High Court was right, for the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing month of the quarter and admitted sales tax as per the return has also got to be deposited and challan filed along with the return. It will be seen hereinafter from the authoritative pronouncements of this Court that the mere statutory liability of a dealer to file the return or to pay the tax has not the effect of commencement of any proceeding under the Act. If a dealer does not file a return being liable to pay tax, then action under sub- section (5) or sub-section (6), as the case may be, has to be taken by the Assessing Authority within the period of 5 years prescribed therein. The expression "proceed to assess" in those two sub-sections as also in subsection (4) means taking some effective step towards proceeding to make the best judgment assessment in accordance with the sub-section which may be applicable. In a given case action may be taken under section 11-A(1) of the Act treating the case as a case of escaped assessment within the meaning of the said section. But the Assessing Authority has got to proceed to assess or reassess within 5 years following the close of the year for which the turnover is proposed to be assessed or reassessed. But in a case where the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar statutes. It, therefore, may be open to argument whether the assessment order passed under section 11(3) of the Act after undue delay of the completion of the hearing of the evidence produced or required to be produced by the dealer is valid or not. But we are not concerned with the said question in this case as on the facts and in the circumstances appearing in relation to the assessment proceedings of either of the two years the production of evidence by the assessee could not and has not started as yet because of the filing of the writ petitions and the appeals in this Court. It goes without saying that the Assessing Authority will be well-advised to complete the assessment proceedings in question as soon as it may be possible to do so after the delivery of this judgment. Sub-section (4) of section 11 is attracted in a case where a dealer having furnished a return in respect of a period fails to comply with the terms of a notice issued under sub-section (2). In such a case the Assessing Authority has to take some effective step, such as issuance of a notice to the assessee intimating to him that he is proceeding to assess to the best of his judgment the amount of tax du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (2) the Assessing Authority may be in a position to complete the assessment under sub-section (3), treating the alleged failure of the dealer as not a real failure on his part. We now proceed to discuss some of the relevant decisions on the points at issue. In Bisesar House case [1958] 9 S.T.C. 654 (F.B.)., Chagla, C.J., delivering the judgment of a Full Bench of the Bombay High Court on a consideration of the similar provisions of section 11 of the C. P. and Berar Sales Tax Act, 1947, applied the ratio of his decision in Commissioner of Income-tax, Bombay City v. Narsee Nagsee & Co. [1957] 31 I.T.R. 164. to a case covered by section 11(2) of the Sales Tax Act. With respect to the learned Chief Justice we say that he was not right when he said at page 660: "Section 11(2) is in the substantial sense an initiation of fresh proceedings by the Commissioner. It is open to the Commissioner to be satisfied with what the assessee has done and pass an order under section 11(1). But if he is not satisfied, then he initiates fresh proceedings under section 11(2) by issuing a notice. That undoubtedly is putting the assessee to the peril of the apprehension that as a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng reasons we hold that a statutory obligation to make a return within a prescribed time does not proprio vigore initiate the assessment proceedings before the Commissioner; but the proceedings would commence after the return was submitted and would continue till a final order of assessment was made in regard to the said return." In Narsee Nagsee's case [1960] 40 I.T.R. 307 (S.C.)., it has been pointed out by the majority of the Bench that a notice under section 11(1) of the Business Profits Tax Act, 1947, "must be given within the financial year which commences next after the expiry of the accounting period or the previous year which is by itself or includes the chargeable accounting period in question" (vide page 317 of 40 I.T.R.). It was also pointed out in that case that the words "profits escaping assessment" in section 14 of the Business Profits Tax Act applied equally to cases where notice had been given but had resulted in no assessment and to cases where due to inadvertence, oversight or any other reason no notice was given and therefore no assessment was made. This Court in State of Punjab v. Tara Chand Lajpat Rai [1967] 19 S.T.C. 493 (S.C.)., reversed the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.J., and Mitter, J: "This Court in Ghanshyamdas's case(1) specifically overruled the decision of the Bombay High Court in Bisesar House case[1958] 9 S.T.C. 654 (F.B.). Therein this Court held that while 11(2) deals with pending proceedings, section 11A concerns itself with matters which are not pending. This Court further ruled that in the case of pending proceedings the Act has not prescribed any period of limitation. That decision proceeds on the basis that section 11(2) and section 11A cover different fields and that they do not overlap." Bachawat, J., speaking for himself and Ramaswami, J., went a step further and in their concurring judgment stated at page 403: "There is no limitation for the issue of a notice under section 11(2). This follows from a plain reading of section 11(2) independently of section 11A(3). Neither section 11(2) nor section 11A(3) is violative of article 14. A notice under section 11(2) is issued in a pending proceeding, whereas a notice under section 11A(1) initiates a new proceeding. There is a reasonable basis for classification and differential treatment of the notices under sections 11(2) and 11A(1) for the purposes of limitation." The majori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expiry of all the 8 quarters in respect of the two years it was held to be without jurisdiction and the respondent was restrained from making any best judgment assessment on the petitioner for sales tax for any quarter of the financial years 1954-55 and 1955-56. The decision of this Court in Madan Lal Arora's case [1961] 12 S.T.C. 387 (S.C.)., justifies our apprehension which we have mentioned in the beginning of our judgment to the effect that if a dealer fails to comply with the notice issued under section 11(2) of the Act, then in such a case, even though there may not be any time-limit for issuance of a notice, but on the dealer's failure to comply with it the Assessing Authority may be obliged to take recourse to sub-section (4) attracting the bar of limitation of 5 years for proceeding to assess on the best judgment basis. The majority, however, was wrong when they said at page 949 of 15 S.T.C.Rameshwar Lal Sarup Chand v. Shri U.S. Naurath, Excise and Taxation Officer, Assessing Authority, Amritsar., with reference to Madan Lal Arora's case [1961] 12 S.T.C. 387 (S.C.).: "In the case before the Supreme Court, two notices were within three years and the third notice was beyo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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