TMI Blog1958 (7) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... tice and for an order preventing the Commissioner to act upon the notice. In order to understand the question that we have to decide, it is necessary to look at the scheme of the Sales Tax Act. The scheme of the Sales Tax Act in many respects is very different from the scheme of the Income-tax Act. In the first place, under the Sales Tax Act an assessee has not to pay tax in respect of the income for the previous year. He pays tax in respect of the chargeable accounting year itself. In the second place, there is no notice which has to be served upon an assessee to file his return. The statute itself constitutes a notice which renders every registered dealer liable to make a return. The third distinction is that with the return an assessee has to pay into the Government treasury the full amount of tax due from him under the Act according to the return that he has made. Therefore, under the Income-tax Act assessment proceedings are initiated by a notice, then follows a return, on the return an assessment order is passed, and after the assessment order is passed the assessee has to pay the tax. Under the Sales Tax Act the return is made obligatory under the Act itself and even the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directing him(i) to appear in person or by an agent entitled to appear in accordance with the provisions of section 11-B; (ii) to produce evidence or have it produced in support of the returns; or (iii) to produce or cause to be produced any accounts, registers, cash memoranda or other documents as may be considered necessary by the Commissioner for the purpose." So that this notice would really initiate proceedings in a case where the Commissioner is not satisfied with the return made by the assessee. The Commissioner would want to either increase the amount of the tax, or correct the return by including sales or deals which were not included in it, or in any other way amend or alter the return made by the assessee. In such a case it is obligatory upon him to serve this notice. Then sub-section (3) provides: "After hearing the dealer or his agent and examining the evidence produced in compliance with the requirements of clause (ii) or clause (iii) of sub-section (2) and such further evidence as the Commissioner may require, the Commissioner shall assess him to tax." Therefore, this assessment is different from the assessment under section 11(1) in the sense that in the case of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11(2). When we turn to the rules, the heading of rule 31 is: "Notice under sub-sections (1) and (2) of section 11.-On receipt of a return or returns required under rule 19, 20, or 22 from any dealer, the assessing authority shall serve on him a notice in Form XI." When we turn to Form XI, that form also has the heading: "Notice under sub-sections (1) and (2) of section 11". But when we look at the contents of that Form, it really is intended to be a notice under sub-section (2) rather than a notice under sub-section (1). We fail to understand why any notice is necessary under section 11(1) if the Commissioner is satisfied with the return. It was suggested by Mr. Phadke (who appeared for the intervener) that the Commissioner should intimate to the assessee the fact of his having made the order of assessment. We fail to appreciate why such an intimation is necessary. The assessee having paid the tax and not notice having been served upon him under section 11(2), it would necessarily follow that the tax that he paid was the proper tax and the assessing authority did not wish to initiate any further proceedings against him. Therefore, in our opinion, the only necessary notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been under-assessed or he had obtained a relief to which he was not entitled. Inasmuch as section 11 does not indicate any period of time with regard to the issuing of a notice, would it or would it not be right for us to import into section 11 the consideration which led the Legislature to fix a limitation of time for the purpose of issuing a notice under section 14? If we were not to do that, we would arrive at this rather extraordinary conclusion that the Legislature, while saving the subject from harassment of proceedings with regard to escaped assessment or under-assessment, permitted that harassment with regard to the very initiation of proceedings after the lapse of four years. It is contended that the period of four years mentioned in section 14 supplies an important indication of what the period of limitation should be with regard to the issue of a notice under section 11. If income which has escaped assessment can only be taxed within four years by reason of section 14, then it must inferentially follow that income must escape assessment at some point of time anterior to the period of four years mentioned in section 14." What is urged by Mr. Kolah is that this ratio a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct, then that principle would undoubtedly apply to the issuing of a notice under section 11(2). A notice under section 11(2), as we have indicated, would never be issued unless the Commissioner wished to initiate proceedings as a result of his dissatisfaction with the return made by the assessee, and the initiation of those proceedings and the issuing of that notice might, and in all probability would, have serious consequences for the assessee. The matter may be looked at from a different point of view. Our attention has been drawn to various authorities which have taken the view that if no assessment has been made for any reason, even the inadvertence on the part of the assessing authority or omission on the part of the assessing authority, it would constitute escaped assessment or under-assessment under section 11-A, and what has been urged before us is that if the assessing authority fails to make the order of assessment, within three years under section 11(1), then the income has escaped assessment and proceedings can only be taken under section 11-A, which proceedings would be barred by limitation. In our opinion, it is impossible to accept the contention that when an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... say that no period of limitation is prescribed under section 11(1), we expect of Sales Tax Commissioners a realisation that they should make the order, if they are satisfied, long before the period of three years and if they are not satisfied issue a notice under section 11(2). If, on the other hand, a case arises for the issue of notice under section 11(2), then it is clear that that notice must be issued within three years, because if the notice is issued after three years it would infringe the provisions of section 11-A because the Commissioner would be indirectly doing, if not doing directly, what the law prohibits him from doing, viz., to bring to assessment an escaped turnover which he could not do beyond the period of three years. Our attention was drawn to a decision of the Madhya Pradesh High Court which seems to have taken a different view. It is our duty to look at that judgment, with respect, and indicate why we are not in a position to agree with the views taken by the learned Chief Justice and Mr. Justice Choudhuri in Regional Assistant Commissioner v. Ghanshyamdas[1958] 9 S.T.C. 179; A.I.R. 1958 M.P. 148. In the first place, we find that the attention of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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