TMI Blog1976 (9) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior Advocate (Talat Ansari and Shri Narain, Advocates for J.B. Dadachanji Co., Advocates), for the appellants. M.C. Bhandare, Senior Advocate, and R.N. Sachthey, Advocate, for the respondent. -------------------------------------------------- The judgment of the Court was delivered by UNTWALIA, J.- In these two appeals by special leave a common question of law falls for our determination, hence, they have been heard together and are being disposed of by this judgment. The Indian Aluminium Cables Ltd., appellant No. 1 in both the appeals, has got its factory at Faridabad in the State of Haryana. It sells and supplies aluminium cables to several State Electricity Undertakings or Boards situated in the various States. In respect 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first writ petition were raised before the High Court the two main questions in the following terms: "(i) Whether the assessment proceedings with regard to the assessment year 1969-70 could be proceeded with and whether the assessment order could be passed beyond a period of 5 years after the expiry of the period to which the assessment relates. In other words, whether the Sales Tax Officer had jurisdiction to make assessment for the assessment year 1969-70, which had become time-barred; (ii) Whether Central sales tax was payable in respect of sale of electric cables manufactured and sold by the petitioner-company to State Electricity Boards in view of the exemption granted generally under section 8(2A) of the Central Sales Tax Act read with section 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and passed under sub-sections (1), (2) and (3). Counsel, therefore, urged that neither the issuance of any notice under section 11(2) of the Act was beyond any period of time nor was the Assessing Authority under any disability of any period of limitation in passing the final order of assessment in respect of any of the quarters in question. The alternative submission of Mr. Desai that in any view of the matter notice had to be issued under section 11(2) and assessments had to be completed under section 11(3) within a reasonable time was also refuted by Mr. Bhandare. It is beyond any dispute and debate that under section 10 of the Act read along with the Rules framed thereunder, return has to be filed by a dealer for each quarter by the last day of the following 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the dealer." On a correct interpretation of the provision aforesaid what emerges is as follows: (i) That the Assessing Authority shall hear the evidence produced by the dealer on the day specified in the notice issued under sub-section (2). (ii) It can adjourn the hearing to some other day and hear the evidence produced by the dealer on the adjourned day or days. (iii) The Assessing Authority may require the dealer to produce further evidence on specified points on the adjourned day or days. (iv) The Assessing Authority should assess the amount of tax due from the dealer, that is to say, pass the order of assessment, on the day on which the hearing of the evidence is completed or "as soon afterwards as may be". The last phrase is absent in some of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the dealer. For the issuance of a notice under sub-section (2) no time-limit has been fixed, but the Assessing Authority must remain on its guard of taking the steps and completing the assessment as soon as it may be possible to do so. Otherwise, the risk involved may just be pointed out. Take a case where a notice under sub-section (2) is issued after the expiry or just on the verge of expiry of the period of 5 years and the dealer fails to comply with the terms of the notice. In such a case the Assessing Authority may have to proceed to make the best judgment assessment under sub-section (4) attracting the bar of limitation of 5 years. But, of course, there may be a case where in spite of the failure of the dealer to comply with the terms of a notice issued under 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 considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11(2) of the Act." As rightly pointed out by Shah, J., as he then was, at page 436, if we may say so with respect, in the case of Regional Assistant Commissioner of Sales Tax, Indore v. Malwa Vanaspati and Chemical Co. Ltd. [1968] 21 S.T.C. 431 (S.C.)., section 11(2) is a typographical error in the sentence extracted above. In disapproval of the view of the Full Bench expressed in Bisesar House case[1958] 9 S.T.C. 654 (F.B.)., it was reiterated at page 989 in Ghanshyamdas's case[1963] 14 S.T.C. 976 (S.C.).: "As we have held that the submission of a statutory return would initiate the proceedings and that the proceedings would be pending till a final order of assessment was made on the said return, no question of limitation would arise...... For the foregoing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time that the decision of the Full Bench of the High Court in Rameshwar Lal's case [1964] 15 S.T.C. 932 (F.B.)., should be clearly and expressly overruled now. An identical view had been expressed by this Court reversing the decision of the Punjab High Court in Letters Patent Appeal No. 319 of 1963 in the case of State of Punjab v. Murlidhar Mahabir Parshad [1968] 21 S.T.C. 29 (S.C.). The challenge before this Court in the case of Madhya Pradesh Industries Ltd. v. State of Maharashtra[1968] 22 S.T.C. 400 (S.C.)., was whether sub-section (3) of section 11A of the C.P. and Berar Sales Tax Act, 1947, was violative of article 14 of the Constitution. The argument was repelled and it was stated at page 402 by Hegde, J., delivering the judgment on behalf of himself, Wanchoo, 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 lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be decided on best judgment assessment basis. The dealer did not comply with any of the notices and challenged with success by a petition under article 32 of the Constitution the right of the authorities to make a best judgment assessment. In that connection it was pointed out that the period of 3 years mentioned in sub-section (4) of section 11 of the Act had to be counted from the expiry of the period in relation to which the returns had been filed and on expiry of the said period the authorities could not proceed to make the best judgment assessment. The third and the last notice given on August 18, 1959, was taken to be a notice to the dealer that the Assessing Authority was proceeding to make the best judgment assessment and since this was done more than 3 years after the 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 beg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court delivered by one of us (Untwalia, J.) in the case of Gurbaksh Singh v. Union of India [1976] 37 S.T.C. 425 (S.C.); [1976] 3 S.C.R. 247., An argument quite similar to the one advanced before us was advanced on behalf of the assessee-appellant in that case before this Court. It was argued that the period of 4 years of limitation prescribed under sub-section (2a) of section 11 of the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi, should be imported into the revisional and the appellate power of the authorities conferred on them under section 20. This argument was repelled and it was pointed out that the legislature had not provided any period within which an order was to be made by an appellate or revisional authority; no such period should be imported in the exercise of the power on the basis of section 11(2a). Mr. Desai relied upon the penultimate paragraph of this decision in support of his contention that in any view of the matter notice under section 11(2) had to be issued and the assessment completed within a reasonable time. We do not accept this contention to be sound. The argument as presented cannot be accepted to be correct. In Gurb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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