TMI Blog1972 (7) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... this court, the petitioner challenged the legality and the validity of that assessment. By its order dated 25th February, 1969, this court quashed the assessment and directed the assessing officer to make a fresh assessment according to law after considering all the objections raised by the petitioner on merits, including limitation. The assessing officer once again issued notice on 14th January, 1970, to show cause why the assessee should not be assessed on a turnover of Rs. 15,66,004.28 of purchase of manganese ore effected by it. The legality and the validity of both the above notices dated 21st January, 1970, and 14th January, 1970, respectively relating to the assessment years 1963-64 and 1959-60, are questioned in these writ petitions filed under article 226 of the Constitution of India. The petitioner seeks a writ of prohibition directing the respondent, Commercial Tax Officer, to forbear from proceeding further in pursuance of those notices. The learned counsel Sri P. Rama Rao appearing for the assessee contended that since the assessee did not file the returns for both the assessment years 1963-64 and 1959-60, the Commercial Tax Officer could issue notices and complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore another Division Bench of this Court in Writ Petitions Nos. 1493 and 1494 of 1968. The learned judges, however, disposed of those writ petitions on another point, and left open the question whether the period of limitation fixed for making assessment in a case where the return was not filed was four years or six years as prescribed in section 14(3) or 14(4) of the Andhra Pradesh General Sales Tax Act. Relevant portion of section 14, as it stood at the relevant point of time, reads as follows: "Section 14. (1) 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 year to which the assessment relates. Section 14. (2) * * * Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole or part of the the turnover from assessment to tax or where there was under-assessment or assessment at a rate lower than the correct rate. The escapement of part of turnover from assessment to tax, under-assessment or assessment at a rate lower than the correct rate cannot occur unless an assessment has already been made. The Legislature has, therefore, provided sub-sections (4) and (4-A) of section 14. Under sub-section (4-A)(a) of section 14, the period of six years from the expiry of the assessment year to which the tax relates has been fixed, if such escapement of turnover from tax has occurred on account of the failure of the dealer to disclose the turnover or any of the particulars correctly, and four years from the expiry of the year aforesaid, if such event has occurred due to any other causes. It is no doubt true, as expressed by the Supreme Court in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax[1963] 14 S.T.C. 976 at 981 (S.C.)., the expression "escaped assessment" includes that of a turnover which has not been assessed at all. In State of Madras v. S. Balu Chettiar[1956] 7 S.T.C. 519., the Madras High Court held: "That where an assessee did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to sub-section (3) of section 14 of the Andhra Pradesh General Sales Tax Act. Hence, the decision of the Madras High Court relied upon by the learned counsel appearing for the respondent, does not advance the case of the respondent. If the argument of the learned counsel for the respondent, that in a case where the return has not been filed, the assessment has to be made in accordance with sub-section (4) of section 14, is considered to be sound and correct, then there was no need for the Legislature to specifically enact subsection (3) of section 14, fixing the time-limit of four years for making an assessment in case where no return is filed. In other words, if the argument of the learned counsel for the respondent is accepted and also the correctness of the decision of this court in Sayanna v. State Printed p. at 141 infra; I.L.R. [1971] A.P. 157., it follows that subsection (3) of section 14 is otiose or redundant. When there are two subsections in the same section, both of them must harmoniously be interpreted and no such interpretation can be put upon one sub-section, which would make the other sub-section otiose or redundant. Sub-section (3) of section 14 specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y." Thus, from the above discussion, it is clear to our mind that subsection (3) of section 14 applied to a case where no return has been filed and sub-section (4) of section 14 applies to a case where an assessment has been made, but some turnover has escaped assessment, etc. Sub-section (3) of section 14 is a special provision and sub-section (4) of section 14 deals not only with the escapement of turnover, but also other cases. It is, therefore, a general provision as compared to sub-section (3) of section 14, which is a special provision. If it is held that it is sub-section (4) of section 14 that applies to this case, then we may not find any case, which may come under sub-section (3) of section 14. Then sub-section (3) of section 14 becomes redundant. One section of the same statute cannot be interpreted in a manner which makes the other section of statute redundant. Sub-section (3) of section 14 conflicts with sub-section (4) of section 14, because they fix different time-limits. If sub-section (4) of section 14 is considered to be a general provision and sub-section (3) of section 14 as a special provision, according to the rules of interpretation of statutes, then the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the assessment year 1963-64, the petitioner was assessed to tax on a turnover of Rs. 11 lakhs by an order dated 30th March, 1965. On appeal, the turnover, however, was reduced to Rs. 50,000. The transactions between April to July of the relevant year were taken into account to arrive at a taxable turnover. The penalty proceedings culminated in the imposition of a penalty of Rs. 15,000. After a lapse of more than one year, the petitioner now challenged the validity of the order imposing penalty mainly on the ground that the penalty proceedings which ought to have been initiated within four years from the end of the relevant assessment year were actually initiated beyond four years, but, admittedly, within six years. The main contention in this writ petition was also the same, i.e., whether section 14(3) of the Act applies to the present case or it is only section 14(4) that is applicable. In W.P. Nos. 317 and 318, it was contended that since the assessee had not filed the return for both the assessment years, the Commercial Tax Officer could have issued notices and computed the assessments within a period of four years from the expiry of the assessment years concerned. As th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver for that year, and may direct the dealer to pay in addition to the tax so assessed, a penalty as specified in sub-section (8). (4) In any of the following events, namely, where the whole or any part of the turnover of business of a dealer has escaped assessment to tax, or has been under-assessed or assessed at a rate lower than the correct rate, or where the licence fee or registration fee has escaped levy or has been levied at a rate lower than the correct rate, the assessing authority may, after issuing a notice to the dealer and after making such inquiry as he considers necessary, assess the correct amount of tax payable or levy the correct amount of licence fee or registration fee- (a) within a period of six years from the expiry of the year to which the tax, licence fee or registration fee relates, if any such event has occurred on account of the failure of the dealer to disclose the turnover or any other particulars correctly; (b) within a period of four years from the expiry of the year aforesaid, if any such event has occurred due to any other causes. In a case falling under clause (a), the assessing authority may also direct the dealer to pay, in addition to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer liable to be taxed within the time prescribed. Between these two provisions, i.e., sub-section (1) and sub-section (3), all the possible cases of imposing tax appear to us to be exhausted in so far as the primary power of levy of tax is concerned. A case where incorrect or incomplete turnover is filed is covered by sub-section (1) and a case where no return is filed at all is covered by sub-section (3). It is also pertinent to note that in both the cases the assessing authority is empowered to assess to the best of his judgment. It is also relevant to note that the primary authority making such assessment is prescribed and is not the same as we would presently notice in a case coming under subsection (4). We then turn to sub-section (4) as it then stood. The first thing on a perusal of that sub-section which leaps to the eye is that the power under that sub-section is exercisable in cases which come under one or the other events mentioned in the sub-section. The events mentioned are, firstly, where the whole or any part of the turnover of business of a dealer has escaped assessment to tax or, secondly, a dealer has been under-assessed or, thirdly, he has been assessed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g common between the two provisions. They postulate two different situations. While sub-section (3) provides for a situation where a dealer liable to tax has not submitted any return. Only in such a situation that the assessing authority is empowered to assess to the best of his judgment, the amount of tax due from the dealer on his turnover for the relevant year. That provision has nothing to do with a situation envisaged by sub-section (4), which relates to escapement of a whole or part of the turnover of business of a dealer or the dealer has been under-assessed or assessed at a rate lower than the correct rate. Sub-section (4) does not provide for the best of judgment assessment in a case where no return is filed. It applies to a case where the turnover has escaped the assessment to tax irrespective of the fact whether such a case for the purpose of primary assessment falls under sub-section (1) or sub-section (3). It provides for escapement of assessment to tax in either of the two cases. It could not be doubted that in a case where no return is submitted by any dealer, an assessing authority can assess him nevertheless within four years from the expiry of the year to which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be assessed to tax by a special power conferred on the assessing authority under sub-section (3). In spite of such a power and irrespective of the fact whether such power is exercised or not by the assessing authority under sub-section (3), the assessing authority can assess the dealer to a correct tax on his turnover if it appears to the assessing authority that the turnover has escaped the tax wholly or partly. It will thus be seen that although to a superficial eye there may appear some overlapping between subsections (1) and (3) on the one hand and subsection (4) on the other, the legislative situations envisaged by subsection (4) are entirely different than what are postulated by sub-section (1) or sub-section (3). They do not, therefore, cover the same legislative field. They cannot, therefore, be considered as either conflicting or contradictory provisions nor they can be said to be special and general provisions. They are directed to achieve different objectives. While the object of subsection (1) and sub-section (3) is to assess the incomplete or incorrect return or assess the dealers who have failed to file any return to the best of the judgment of the assessing auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r had failed to file the returns. A provisional assessment was made. Thereafter proceedings for the levy of penalty were initiated and the petitioner was directed to pay the penalty. The contention before the Bench was that the penalty proceedings were initiated after a period of four years. Therefore, the imposition of penalty was bad. Their Lordships observed: "The condition precedent for the exercise of this power [sub-section (4) of section 141 is that the turnover should have escaped assessment either wholly or partly, and this must have been noticed and the authority concerned must have issued a notice within six years of the assessment year. Once these two conditions are satisfied, there is no further impediment in the exercise of this power. The turnover may escape assessment either because of the failure of the dealer to file a return who is under an obligation to file a return or because the assessing authority for any reason comes to the conclusion that the turnover was under-assessed. Whatever the reason may be, when once the assessing authority finds that the whole or any part of the turnover has escaped assessment, this power can be exercised." Their Lordships wen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (4) happens would be applicable and, therefore, that penalty becomes leviable. On the date of the initiation of the penalty proceedings, nay even on the date of the assessment order, the amended sub-section (4) had already come into force. It was that provision therefore which was applicable. The contention that since the assessment was confined to the period April to July, 1963, the law regarding penalty prevailing during that period, that is to say, penalty of one and a half times the tax should have been levied is devoid of any substance. We, therefore, experience no difficulty in rejecting the same. It is also relevant to note that the penalty order was passed by the Commercial Tax Officer on 14th January, 1969. The petitioner did not prefer any appeal. After a lapse of about one year and 5 months he filed the writ petition on 5th June, 1970. No reason is shown as to why the appeal was not filed and as to why the order of penalty was allowed to become final. No satisfactory explanation is offered for the enormous delay amounting to laches in filing the writ petition. On these grounds also, we think that the writ petition is liable to be dismissed. We, accordingly, dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. Sub-section (4) of section 14 of the Act has been amended by Act 26 of 1961 on 2nd September, 1961, and so far as it is relevant for our purpose, reads as follows: "(4) In any of the following events, namely, where the whole or any part of the turnover of business of a dealer has escaped assessment to tax, or has been under-assessed or assessed at a rate lower than the correct rate, or where the licence fee or registration fee has escaped levy or has been levied at a rate lower than the correct rate, the assessing authority may, after issuing a notice to the dealer and after making such inquiry as he considers necessary, assess the correct amount of tax payable or levy the correct amount of licence fee or registration fee- (a) within a period of six years from the expiry of the year to which the tax, licence fee or registration fee relates, if any such event has occurred on account of the failure of the dealer to disclose the turnover or any other particulars correctly; (b) within a period of four years from the expiry of the year aforesaid, if any such event has occurred due to any other causes. In a case falling under clause (a), the assessing authority may also dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t act under sub-section (4) of section 14 cannot, therefore, be accepted. Coming to the other contention as regards the penalty we notice that so far as the penalty in respect of the assessment year 1957-58 is concerned, it is beyond six years of the assessment year, while penalty in respect of the assessment year 1958-59 is within six years. The learned Government Pleader contends that since no period of limitation is prescribed for either initiation of proceedings for the levy of penalty or for the completion of the proceedings, penalty in respect of an escaped turnover under sub-section (4) of section 14 of the Act could be levied at any time the assessing authority deems fit. According to him, the limitation of six years prescribed by subsection (4) of section 14 is confined to the assessment proceedings and not to the penalty proceedings. It must be pointed out that penalty proceedings do not stand by themselves, but are dependent upon a finding by the assessing authority that the whole or any part of the turnover of the business of a dealer has escaped assessment. It is only on the finding that the turnover has escaped assessment, as a deterrent for the dealer, the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vested the assessing authority with the jurisdiction to levy penalty in addition to tax; the assessing authority may "also" direct a dealer to pay "in addition to the tax assessed" a penalty not exceeding five times the amount of that tax. In these circumstances, we are inclined to take the view that the period of limitation of six years provided for the assessment of tax where whole or any part of the turnover has escaped assessment is also the period of limitation for purposes of levying the penalty on such escaped assessment. In this view of the matter, the penalty proceedings for the assessment year 1957-58, which have been initiated on 12th May, 1964, are time-barred, while in relation to the assessment year 1958-59, they are well within time. Therefore, the levy of penalty, in so far as the assessment year 1957-58 is concerned, is quashed. In view of the amendment brought in by Act 16 of 1963 with effect from 1st August, 1963, the other contention that the penalty leviable is only 1 times the tax assessed is not pressed by the learned counsel for the petitioner. In the result to the extent that we have set aside the penalty levied for the assessment year 1957-58, the wri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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