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PETITIONER: THE STATE OF ANDHRA PRADESH

       Vs.

RESPONDENT: NAV SWADESHI OIL MILLS

DATE OF JUDGMENT03/11/1987

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) RANGNATHAN, S.

CITATION:  1988 AIR   97            1988 SCR  (1) 736  1987 SCC  Supl.  388     JT 1987 (4)   234  1987 SCALE  (2)920

ACT:      Andhra Pradesh  General Sales  Tax Act,  1957: ss. 13 & 14(1)  &   14(3)/Central  Sales  Tax  Act,  1956:  s.  9(2)- Applicability of-Returns  not filed  within  the  prescribed period-Assessments made  after expiry  of  four  years  from assessment  year-Held,   cases  fall   under  s.  14(3)  and assessment can  be made  within six years from expiry of the assessment year.

HEADNOTE: %      Sub-section (2)  of s.  9 of the Central Sales Tax Act, 1956 makes  the assessment  procedure prescribed  under  the general sales tax law of the appropriate State applicable to the assessment  to be made under the Central Act. Section 13 of the  Andhra Pradesh  General Sales Tax Act, 1957 requires the dealer  to submit  returns in  such manner,  within such period and  to such  authority as  may be  prescribed.  Sub- section (1)  of s.  14 permits  the assessing  authority  to assess the  amount of tax due on the returns submitted under s. 13  only within a period of four years from the expiry of the year  to which  the assessment  relates. Sub-section (3) permits  the  assessing  authority  to  make  best  judgment assessment where  a dealer (i) fails to submit return before the date  prescribed; (ii)  produces the  accounts registers and other  documents after  inspection and  (iii) submits  a return subsequent to the date of inspection, within a period of six  years from  the expiry  of the  year  to  which  the assessment relates.      In the  main appeal  before this  Court  the  assessee- respondent filed  its return  relating to the quarter ending 31st March, 1969 on 7th August, 1969 under the Central Sales Tax Act. The last date prescribed by law was 24th May, 1969. The Commercial  Tax officer  passed the  assessment order on 3rd August,  1973, beyond  four years from 31st March, 1969, the last  day of the assessment year 1968-69. The assessee’s appeals against  that order  were dismissed by the Assistant Commissioner and  the Sales Tax Appellate Tribunal. The High Court in  revision, however,  held that  the assessment made after four  years from  the last  day of the assessment year was not a valid assessment.

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737      In the  connected appeal  the respondent  who  was  the assessee  filed   the  annual   return  in  respect  of  the assessment year  1968-69  under  the  A  provisions  of  the Central Act  on 19th  August, 1969  after the  expiry of the prescribed date.  The order  of assessment was passed on 2nd August, 1973  beyond four  years from  the last  day of  the assessment year  196869. An  appeal against  that order  was dismissed by  the  Assistant  Commissioner.  The  Sales  Tax Appellate Tribunal, however, allowed the appeal holding that the assessment  had been  passed beyond  four years from the last day  of the  assessment  year.  The  revision  petition preferred by  the State  was dismissed in limine by the High Court.      In the  appeals by special leave filed by the State, it was contended  for the  respondent that since the returns in the cases had been accepted, even though they had filed been beyond the  prescribed date,  the assessments  made  thereon could not  be considered  as best  judgment assessments and, therefore, sub-section  (3) of  s. 14 of the Act under which it is permissible to make best judgment assessments would be inapplicable.      Allowing the appeals. D ^      HELD: 1.1 on a true construction of sub-s. (1) and sub- s. (3) of s. 14 of the Andhra Pradesh General Sales Tax Act, 1957 it  is apparent  that where  a return is not filed by a dealer before  the date  prescribed in that behalf under the Act the assessing authority has jurisdiction to complete the assessment within  a period  of six years from the expiry of the year to which the assessment relates. [744C]      1.2 The  two types of cases which fall under sub-s. (1) and sub-s. (3) of s. 14 of the Act respectively are mutually exclusive. The return on the basis of which an assessment is to be  made under  s. 14(1)  is a  return filed  within  the prescribed period  and in  such a case the assessment has to be completed  within a  period of four years from the expiry of the  period to  which the  assessment  relates.  The  Act confers a  distinct advantage on such a dealer who is prompt in filing  his  return  inasmuch  as  he  acquires  immunity against assessment  on the expiry of the said period of four years. All  cases where  the return  is submitted beyond the prescribed date  fall under  sub-s. (3) of s. 14 of the Act. Assessment in  such cases  may be completed within six years from the expiry of the year to which the assessment relates. When once  it is established in a case that a return has not been filed  within the  prescribed period  such  case  falls outside s. 14(1) of the Act and therefore the period of four years prescribed therein becomes automatically inapplicable. It clearly falls under cl. (i) of sub-s. (3) of s. 14 of the Act and assessment can be H 738      made in  such a case within the expiry of the period of six years.  In the  instant cases the returns were not filed within  the   prescribed  dates.   The   assessments   have, therefore, been  rightly made  within  six  years  from  the expiry of the year to which the assessments relate. [742G-H; 743A-B; 744C]      2. Whether  the assessment made is the best judgment or not has  no bearing  at all  on the  period within  which an assessment can  be made  under the  Act. It depends upon the other conditions  mentioned in  sub-s. (1) and (3) of s. 14. Best judgment  assessment can be made even in a case falling under sub-s. (1), as is evident from the latter part of that sub-section which  reads: "but  if the return appears to him

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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, to assess to the best of his judgment,  the amount  of tax  due from the dealer." Yet such best  judgment assessment  has to be completed within a period of  four years  from the  expiry of the year to which the assessment  relates.  Therefore,  in  the  instant  case merely  because   the  assessments  are  not  best  judgment assessments, it  cannot be  said that sub-s. (3) of s. 14 is inapplicable. Neither  the High  Court nor the Tribunal gave adequate attention  to the words ’before the date prescribed in that behalf’ in cl. (i) of sub-s. (3) of s. 14. They laid emphasis only  on the  words ’fails to submit return’ in the said sub-clause  to arrive  at a wrong conclusion. [743C, H; 744A-B]      State of  Andhra  Pradesh  v.  Pyarelal  Malhotra,  (13 S.T.C. 946),  and State  of Madras  v. S.G.  Jayaraj Nadar & Sons, 28 S.T.C. 700, distinguished.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 4448 of 1985.      From the  Judgment and  order dated 26. 10. 1982 of the Andhra Pradesh  High Court  in Tax  Revision Case  No. 23 of 1978.                               WITH      Civil Appeal No. 694 of 1986.      From the  Judgment and  order dated  31.7.1985  of  the Andhra Pradesh  High Court  in Tax  Revision Case No. 205 of 1985.      T.V.S.N. Chari for the Appellant. 739      R. Ramachandran for the Respondents.      The Judgment of the Court was delivered by      VENKATARAMIAH, J.  The question  of law which arises in these two  appeals by special leave being a common, they are disposed of  by this  common  judgment.  The  said  question relates to  the time  within which an assessment can be made under the provisions of the Andhra Pradesh General Sales Tax Act, 1957  (hereinafter referred  to as ’the Act’) where the return is not filed by the dealer within the time prescribed in that behalf.      The assessee  in Civil  Appeal No. 4448 of 1985 is M/s. Nav Swadeshi  oil Mills,  Jadcharla, Mahboobnagar  district. For assessment  year 1968-69  the assessee  filed its return relating to the quarter ending 31.3. ,969 on 7.8.1969 before the Commercial Tax Officer of Mahboobnagar under the Central Sales Tax Act, 1956 even though the last date for submission of return prescribed by law was 24.5. 1969. The return filed by  the   assessee  showing   a  taxable   turnover  of  Rs. 18,25,410.72 was  accepted and  it was  called upon  to  pay sales tax  of Rs.45,424.48  under the  Act.  The  assessment order  was   passed  on  3.8.1973  beyond  four  years  from 31.3.1969 which  was the  last day  of the  assessment  year 1968-69. Aggrieved  by the  assessment order  which had been passed beyond  the period of four years from the last day of the assessment  year the assessee filed an appeal before the Assistant Commissioner  (CT) Appeals, Warangal in Appeal No. 5 75-76  and that appeal was dismissed on 14.9.1976. Against the  order  of  the  Assistant  Commissioner  (CT)  Appeals. Warangal the  assessee filed  an appeal before the Sales Tax Appellate Tribunal,  Andhra Pradesh at Hyderabad in Tribunal

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Appeal No.  183 of 1977. That appeal also was dismissed. The assessee  thereafter   filed  a  revision  petition  in  Tax Revision Case No. 23 of 1978 before the High Court of Andhra Pradesh. The  High Court by its order dated October 26, 1982 set aside  the order of the Tribunal and also the assessment on the  ground that  the assessment  which had  been  passed after four  years from  the last  day of the assessment year was not a valid assessment. Aggrieved by the decision of the High Court the State of Andhra Pradesh has filed this appeal by special leave.      The assessee  in Civil  Appeal No.  694 of 1986 is M s. Nav Swadeshi oil Mills and Refinery at Jadcharla. In respect of the  assessment year 1968-69 the assessee filed an annual return under  the provisions  of the  Central Sales Tax Act, 1956 on 19.8. 1969 after the expiry 740 Of the prescribed period. The order of assessment was passed on 2.8.1973  beyond four  years from  the last  day  of  the assessment year  1968-69. Aggrieved  by the assessment order which  had  been  passed  by  the  assessing  authority  the assessee filed  an appeal  before the Assistant Commissioner (CT) Appeals,  Warangal on  the ground  that the asssessment order passed  beyond four  years from  the last  day of  the assessment  year   was  barred  by  time.  That  appeal  was dismissed. Against  the order  passed  in  that  appeal  the assessee filed  an appeal  before the  Sales  Tax  Appellate Tribunal, Andhra Pradesh in Tribunal Appeal No. 206 of 1977. The Tribunal allowed the appeal and set aside the assessment holding that  the assessment  had been  passed beyond  time. Aggrieved by  the decision  of the  Tribunal  the  State  of Andhra Pradesh  filed a  Revision Petition  in Tax  Revision Case No. 205 of 1985 on the file of the High Court of Andhra Pradesh. That  Revision Petition  was dismissed in limine by the High  Court. Aggrieved by the decision of the High Court the State of Andhra Pradesh has filed this appeal by special leave.      The only  question which  arises for  consideration  in these appeals  is whether  the orders  of assessment  in the above two cases which had admittedly been passed beyond four years from  the last  day of  the assessment year but within the period  of six  years from  that date  had been  validly passed. By virtue of section 9 of the Central Sales Tax Act, 1956 the procedure prescribed for making an assessment under the Act  is applicable  to the  assessments to be made under the Central  Sales Tax  Act, 1956.  Section 13  of  the  Act prescribes that  every dealer  who is  liable to get himself registered under  section 12 or section 12-A as the case may be under  the  Act  shall  submit  such  return  or  returns relating to  his turnover  in such manner within such period and to  such authority  as may  be prescribed.  The material part of  section 14  which is relevant for purposes of these cases reads thus:                "14. Assessment of tax: ( I) 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

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         of the 741           year to which the assessment relates.                        ...................           (3) Where any dealer liable to tax under this Act-           (i)  fails   to  submit  return  before  the  date           prescribed in that behalf, or           (ii) produces  the accounts,  registered and other           documents after inspection, or           (iii) submits  a return  subsequent to the date of           inspection, the  assessing authority  may, at  any           time within  a period of six years from the expiry           of the  year to  which assessment  relates,  after           issuing a  notice to  the dealer  and  after  such           enquiry as  he considers  necessary, assess to the           best of  his judgment,  the amount of tax due from           the dealer  on his turnover for that year, and may           direct the dealer to pay in addition to the tax so           assessed penalty as specified in subsection (8)."      It is  necessary to  analyse sub-section  (1) and  sub- section (3)  of section  14  of  the  Act  for  purposes  of determining the issue involved in these cases. Sub-section ( ]) of  section 14  of the Act provides that 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 the  assessing  authority  to  be incorrect or  incomplete he  shall after  giving the  dealer reasonable  opportunity   of  proving  the  correctness  and completeness of the return submitted and making such inquiry as he  deems necessary,  assess to the best of his judgment, the amount  of tax  due from the dealer. In both these cases the return  contemplated is  one which  has  been  filed  in accordance with  section 13  of  the  Act  within  the  time prescribed for  that purpose.  Such an assessment under sub- section (  1) of  section 14 of the Act can be made within a period of  four years from the expiry of the period to which the assessment relates. Sub-section (3) of section 14 of the Act authorises the assessing authority to make an assessment to the  best of  his judgment  in three  cases: (i)  where a dealer under  the Act fails to submit return before the date prescribed in  that behalf, (ii) where a dealer produces the accounts. registers and other documents after inspection and (iii) where a dealer submits a return subsequent to the date of inspection. In these three cases the 742 assessing authority  is empowered  to make  an assessment to the best  of ’4  his judgment at any time within a period of six  years  from  the  expiry  of  the  year  to  which  the assessment relates  after issuing a notice to the dealer and after such  inquiry which he considers necessary to make the assessment.      The crucial  question which arises for consideration in these cases  is whether in a case where the assessee submits a true  and complete  return after  the prescribed  date the assessment should be completed within a period of four years prescribed by  sub-section (  1) of section 14 of the Act or within a period of six years permitted under sub-section (3) of section  14 of  the Act. Sub-section (1) of section 14 of the Act  relates to  an assessment  which may be made on the basis of  a return  submitted under  section 13  of the Act. Section 13  of the  Act as  stated above provides that every dealer shall  submit such  return or returns relating to his turnover in  such manner  within such  period  and  to  such authority as  may be  prescribed. The return on the basis of

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which an assessment is to be made under section 14(1) of the Act is,  therefore, a  return filed  within  the  prescribed period and in such a case the assessment has to be completed within a period of four years from the expiry of the year to which the assessment relates. The return referred to in sub- section (  1) of  section 14  of the  Act cannot be a return filed beyond the prescribed date is emphasised by clause (i) of sub-section  (3) of section 14 of the Act which refers to a case  where a  dealer liable  to pay  tax fails  to submit return before  the date prescribed in that behalf. All cases where the  return is  submitted beyond  the prescribed  date fall under sub-section (3) of section 14 of the Act.      The scheme of the Act regarding the period within which assessments can be made is very simple. Assessments in cases falling under  sub-section (1) of section 14 of the Act have to be  completed within  four years  from the  expiry of the year to  which the  assessment relates  and  assessments  in cases falling under sub-section (3) of section 14 of the Act may be  completed within  six years  from the  expiry of the year to which the assessment relates. The two types of cases which fall  under sub-section  (l) and  sub-section  (3)  of section 14  of the  Act respectively are mutually exclusive. When once  it is  established in  case that a return has not been filed  within the  prescribed period  such  case  falls outside section  14 ( l) of the Act and therefore the period of  four  years  prescribed  therein  becomes  automatically inapplicable. It  clearly falls  under clause  (i)  of  sub- section (3)  of section  14 of the Act and assessment can be made in  such a  case within the expiry of the period of six years.  While  a  dealer  who  files  a  return  within  the prescribed 743 period acquires immunity against assessment on the expiry of four years  from the  last day  of the  assessment  year,  a dealer who  fails to  file a  return within  the  prescribed period has  to wait for six years to be over to acquire such immunity. Thus  the Act  confers a  distinct advantage  on a dealer who is prompt in filing his return.      We are  not impressed  by the  argument that  since the returns in the cases before us had been accepted even though they  had   been  filed   beyond  the  prescribed  date  the assessments  made  thereon  cannot  be  considered  as  best judgment assessment and therefore sub-section (3) of section 14 of  the Act  under which  it is  permissible to make best judgment  assessments  would  be  inapplicable.  The  period within which  assessments can be made under the Act does not depend  upon   the  answer   to  the  question  whether  the assessment in  question is  a best judgment assessment or it is an  assessment made  treating the  return as  correct and complete but  it depends upon the other conditions mentioned in sub-section  ( 1) and in sub-section (3) of section 14 of the Act.  We may  here point out that even in a case falling under subsection (1) of section 14 of the Act it is possible for  the   assessing  authority  to  make  a  best  judgment assessment as  can be  seen from the latter part of the said sub-section which  reads: "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." Yet such best  judgment assessment  has to be completed within a period of  four years  from the  expiry of the year to which the assessment  relates. Hence it cannot be held that merely because the  assessments in  question are  not best judgment

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assessments sub-section  (3) of  section 14  of the  Act  is inapplicable for  best judgment assessments can be made both under sub-section  (1) and  subsection (3)  of section 14 of the Act.  That the  assessment is a best judgment assessment is not,  therefore, decisive  of the  question  involved  in these appeals.      The decision  of the  Andhra Pradesh  High Court in the State of  Andhra Pradesh  v. Pyarelal Malhotra 13 S.T.C. 946 and the  decision of  this Court  in the  State of Madras v. S.G. Jayaraj Nadar & Sons 28 S.T.C. 700 which dealt with the question as to when a best judgment assessment could be made are not relevant for purposes of deciding the question which has arisen  before us.  As we  have already  pointed out the question whether  the assessment  made is  the best judgment assessment or not has no bearing at all on the period within which an assess- 744 ment can  be made  under the Act. Neither in the judgment of the High  Court against  which Civil Appeal No. 4448 of 1985 is filed  nor in  the judgment  of the Tribunal out of which Civil Appeal  No. 694  of 1986  arises adequate attention is given to  the words  ’before the  date  prescribed  in  that behalf in clause (i) of sub-section (3) of section 14 of the Act. The  High Court  and the Tribunal laid emphasis only on the words  "fails to  submit return"  in the said sub-clause and  it   is  on  this  account  they  arrived  at  a  wrong conclusion.      On a  true construction  of sub-section  (I)  and  sub- section (3)  of section 14 of the Act we are of opinion that where a  return is  not filed  by a  dealer before  the date prescribed in  that behalf  under  the  Act,  the  assessing authority has  got jurisdiction  to complete  the assessment within a  period of six years from the expiry of the year to which the assessment relates. Admittedly, in these cases the returns were  not filed  within the  prescribed date and the assessments have  been made within six years from the expiry of the  year to  which the assessments relate. The orders of the High  Court against  which these appeals have been filed are therefore  liable to  be set  aside. In Civil Appeal No. 4448 or 1985 the judgment of the High Court is set aside and the judgment  of the  Tribunal is  restored. In Civil Appeal No. 694 of 1986 the order of the High Court and the judgment of the  tribunal are set aside and judgment of the Assistant Commissioner  (CT)   Appeals,  Warangal   is  restored.  The respondent shall  pay the costs of the Appellant in both the appeals. P.S.S.                                     Appeals allowed. 745