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TMI Blog1979 (4) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... Faqir Chand v. Sales Tax Officer1971 A.L.J. 25. As the Division Bench was of the opinion that there was some conflict in the two Division Benches, namely, the Bhandari's case[1969] 23 S.T.C. 324. and the Faqir Chand's case(1), and there was likelihood of misapplication of the observations made in the Faqir Chand's case(1), it referred the matter for hearing by a larger Bench. In arguments, both the learned counsel, Sri V.D. Singh, the standing counsel appearing for the Commissioner of Sales Tax, and Sri S.R. Misra, appearing for the assessee, took up extreme positions. On the one hand, absolute discretion of the assessing authority, where no return was filed, without notice, was advocated. On the other, it was urged that not only notice was necessary but it was a condition precedent. Any of the extremes does not appear to be justified. The respective arguments shall be dealt in the judgment at appropriate places. Best judgment assessment under the U.P. Sales Tax Act is made under section 7(3), but the entire section may be quoted as it may facilitate in appreciating the controversy involved. The section reads as under: "Section 7. Determination of turnover and assessment of tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the assessee does not file his return. The reason is obvious. The return filed by the assessee furnishes the basis of making inquiry and determination of turnover. But, where no return is filed, the assessing authority is required to make inquiry and assess the tax to the best of judgment. But the power to assess to the best of judgment is one thing and jurisdiction to determine turnover without notice is another. Sub-section (3) not only confers power to assess to the best of judgment where no return is filed but also deals the manner in which the power is to be exercised by using the words "after making such inquiry as he considers necessary". The word "inquiry" is of very wide import. But what meaning should be given to it depends in the context it has been used. An examination of sub-sections (2) and (3) reveals that the word "inquiry" has been used in both the sub-sections, but the scope is not the same. In sub-section (2), it is confined to the examination of return, but where no return is filed, the ambit is different. The difference is brought out by the use of the word "making". In Oxford, one of the meanings assigned to the word "make" is to acquire by effort. Similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 30. For the purpose of the question referred, it may be assumed that not only the remedies under sections 9 and 30 of the Act are concurrent but the appellate authority may also examine the sufficiency of notice. If an assessee avails of the remedy under section 30 and the assessing authority is satisfied that no notice was issued or, if issued, it was never served, the order is bound to be set aside. It is not a matter of discretion. If the argument of the learned standing counsel is accepted that no notice is necessary in best judgment assessment under section 7(3), then section 30 becomes inoperative. Such an interpretation cannot be accepted. The use of the words "in any case in which an assessment order is passed ex parte" in section 30 are wide enough to embrace in its fold any and every order. A reading of section 7(3) along with section 30, therefore, leaves no room for doubt that notice has to be sent to the dealer before the determination of his turnover to the best of judgment whether the dealer is on record or not and whether he has filed return or not. The cases cited by the learned counsel may now be examined. He relied on the following observations i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is liable to pay tax and then determine turnover. In Bhandari & Co. v. Commissioner of Sales Tax[1969] 23 S.T.C. 324. , the provisional assessment order was challenged in a writ petition. It was held by the Division Bench that the principle of natural justice was inapplicable in provisional assessment as the petitioner had a right of hearing at the time of final assessment. In the Qamruddin's case[1963] 14 S.T.C. 534 at 535. also, it was held that the principle of natural justice was inapplicable. The learned standing counsel relied on Union of India v. J.N. Sinha[1971] 1 S.C.R. 791. and argued that, when the legislature provides for several contingencies and makes a specific provision for notice being given only in one and not the other, it can safely be assumed that by necessary implication it was excluded and the non-issue of notice cannot be said to be violative of the principles of natural justice. A large number of other decisions have also been cited. It is, however, not necessary to discuss them as the conclusion reached that notice is necessary is based not on the principles of natural justice but on the construction of section 7 and its reading along with section 30. Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther under section 7(3) or section 21 for escaped assessment as held by the Full Bench in Commissioner, Sales Tax v. Sugan Chand Shyam Lal[1971] 27 S.T.C. 161 (F.B.); 1970 A.L.J. 895 (F.B.). and, notice being necessary both under section 21 and section 7(3), the effect of non-issuance or nonservice should be taken to be same. And the mere fact that under section 21 there was express provision for notice and in section 7(3) it was implied did not make any difference in law. The proceedings under section 21 without service of notice are held to be invalid. The same principle be applied in proceedings under section 7(3). Relying on Faqir Chand v. Sales Tax Officer 1971 A.L.J. 25., the learned counsel argued that a notice under section 7(3) and a notice under section 21 for all practical purposes were the same. In other words, for proceedings under section 7(3) also, notice is a condition precedent and, unless condition precedent has been complied, the assessment order is liable to be quashed. In Commissioner, Sales Tax v. Sugan Chand Shyam Lal(1), it has been held that where no return is filed the assessing authority is empowered to proceed either under section 7(3) or section 21. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 200. Reference answered in the negative. After the aforesaid decision of the Full Bench, the reference came before C.S.P. SINGH, J., for final disposal and the learned Judge passed the following order on 1st May, 1979: SINGH, J.-The Revising Authority, Gorakhpur, has referred the following question of law for the opinion of this Court: "Whether, in the facts and in the circumstances of the case, the learned additional revising authority was justified in annulling the assessment order for 1967-68 for want of notice?" As there was difference of opinion between two Division Benches of this Court, and as the dealer was entitled to notice before an ex parte assessment was made under section 7(3) of the Act, the matter was referred to the Full Bench. The Full Bench by its order dated 27th April, 1979, has held that where best judgment assessment is made under section 7(3), in case no return is filed by the dealer, the dealer is entitled to a notice, and the assessment order passed without notice should be set aside but cannot be annulled. The reference, which is being treated as a revision, is allowed and the order of the revising authority annulling the assessment is set aside. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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