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PETITIONER: MADAN LAL ARORA

       Vs.

RESPONDENT: EXCISE & TAXATION OFFICER, AMRITSAR

DATE OF JUDGMENT: 07/04/1961

BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. GAJENDRAGADKAR, P.B. WANCHOO, K.N. GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA

CITATION:  1961 AIR 1565            1962 SCR  (1) 823  CITATOR INFO :  RF         1962 SC1621  (12,52,90,125)  D          1967 SC1408  (9)  RF         1975 SC1208  (28)  R          1977 SC 540  (13)

ACT: Sales Tax--Return furnished--Assessee called upon to produce evidence in support of teturn--Period of limitation for such demand from when to run--Punjab General Sales Tax Act, 1948, (Punj. 46 of 1948), s. II, r. 20.

HEADNOTE: Under  the Punjab General Sales Tax Act, 1948, a dealer  had to  furnish his return every quarter according to the  Rules and was also required to furnish evidence in support of  the return  if  called  for,  and if he  failed  to  do  so  the assessing  authority could proceed to make an assessment  to the best of his judgment, but this power could he  exercised "within three years after the expiry of the period". Held,  that  three years within which  the  authority  could proceed to make the best judgment assessment had to be  com- puted  from  the  end of such quarter in  respect  of  which return had been filed.

JUDGMENT: ORIGINAL JURISDICTION: Writ Petition No. 120 of 1959. Writ Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. Bhagirath Das and, B.  P. Maheshwari, for the petitioner. N. S. Bindra and D. Gupta, for the respondent. 1961.  April 7. The Judgment of the Court was delivered by 824 SARKAR,  J.-The petitioner is a dealer registered under  the Punjab General Sales Tax Act.  He filed returns of his  sale turnovers  for  the  four quarters of   the  financial  year ending  on  March  31,  1955, and  likewise,  for  the  four quarters of the financial year ending on March 31, 1956.  In

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respect of each year the Sales Tax Assessing Officer  served three  successive notices on him on March 7, 1958, April  4, 1958, and August 18, 1959, requiring him to attend with  the documents and other evidence in support of his returns.   In the  last of the notices mentioned above it was stated  that on  failure  to  produce the documents  and  other  evidence mentioned,  the  case  would be decided  "on  best  judgment assessment  basis".  The petitioner did not comply with  any of the notices, but after the receipt of the last notice  he presented  this petition under Art. 32 of  the  Constitution challenging  the  right of the authorities to  make  a  best judgment assessment. The question raised by the petitioner turns on s. 11 of  the Punjab  General Sales Tax Act, relevant provisions of  which are set out below.               S.  11.  (1)  If the  Assessing  Authority  is               satisfied  without requiring the  presence  of               registered dealer or the production by him  of               any  evidence  that the returns  furnished  in               respect   of  any  period  are   correct   and               complete,  he shall assess the amount  of  tax               due  from  the  dealer on the  basis  of  such               returns.               (2)If the Assessing Authority is not satisfied               without requiring the presence of a registered               dealer who furnished the returns or production               of  evidence  that the  returns  furnished  in               respect   of  any  period  are   correct   and               complete,  he  shall serve on  such  dealer  a               notice in the prescribed manner requiring him,               on  a date and at a place  specified  therein,               either to attend in person or to produce or to               cause  to  be produced any evidence  on  which               such  dealer  may  rely  in  support  of  such               returns.               ............................................               ...........................................               (4)  If a registered dealer, having  furnished               returns  in  respect  of a  period,  fails  to               comply with the terms of a notice issued under               sub-section (2), the 825               Assessing  Authority shall within three  years               after  the expiry of such period,  proceed  to               assess to the best of his judgment the  amount               of the tax due               from the dealer. The contention of the petitioner is that at the date of  the notice last mentioned the Sales Tax authorities had no right to proceed to make any beat judgment assessment as the three years  within which only such assessment could be  made  had expired before then.  It seems to us that the contention  of the petitioner is well founded.  The learned counsel for the respondent,  the assessing authority, also frankly  conceded that he ’found it difficult to contend to the contrary. Sub-section (4) of s. 11 deals with the case of a dealer who has  furnished  returns  in  respect of  a  period  and  has thereafter  been  asked to produce evidence to  support  the returns  but has failed to do so.  The  subsection  provides that  in such a case the assessing authority may proceed  to make an assessment which to the best of his. judgment should be  made irrespective of the returns.  The reason  for  this provision is that the correctness of the returns having been doubted  by  the  assessing authority, the  dealer  has  not availed himself of the opportunity afforded to him to remove

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these  doubts.   The sub-section however provides  that  the power  can be exercised within the three years mentioned  in it.   Quite  plainly, the power cannot  be  exercised  after these three years have gone by. The  question is, how to compute the three years?  The  sub- section  ’says "within three years after the expiry of  such period".   So  the three years have to be counted  from  the expiry  of the period mentioned.  What then is that  period? The words are "such period".  The period referred  therefore is  the  period mentioned earlier. in the  sub-section,  and that  is  the period in respect of which  returns  had  been furnished by the dealer.  This is also made clear by  sub-s. (1)  of s. 11. That deals with a case where the returns  are accepted.   Both sub-ss. (1) and (4) deal with  returns  for the same period.  Now s. 10(3) provides that 104 826 every  registered dealer shall furnish such returns by  such dates   and  to  such  authority  as  may   be   prescribed" "Prescribed" means prescribed by rules framed under the Act. Under  r.  20 of these rules, a registered dealer  like  the petitioner,  had  to furnish returns quarrerly.   The  rules define "return period" as "the period for which returns  are prescribed to be furnished by a dealer".  It would therefore appear that when sub-sec. (4) of s. 11 talks of "returns  in respect  of  a  period",  that refers in  the  case  of  the petitioner to the quarters in respect of which he  submitted the  returns.   We when come to this that  the  three  years within  which the authority could proceed to make  the  best judgment  assessment had to be counted from the end of  each quarter in respect of which returns had been filed. Now  the  last  of  the quarters in  respect  of  which  the petitioner  filed his returns ended on March 31,  1956.   So the  assessing  authority could not proceed to make  a  best judgment  assessment in respect of this quarter after  March 31,  1959.  In the case of the earlier quarters, of  course, the three years had expired even prior to this date.  It  is not in dispute that the assessing officer had not  proceeded to make any assessment on the petitioner at the date of  any of  the notices.  In the present case therefore the  notices given  on  August 18, 1959, that best  judgment  assessments would  be made in respect of the quarters  constituting  the financial years 1955 and 1956, the last of  which expired on March  31, 1956, were futile.  No such assessments could  be made  in  respect of any of these quarters after  March  31, 1959. The petition must, therefore, be allowed.  A writ will issue restraining  the  respondent from making any  best  judgment assessment  on the petitioner for sales tax for any  quarter of  the financial years 1955 and 1956.  The petitioner  will get the costs of this petition.                                    Petition allowed. 827