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PETITIONER: ANANDJI HARIDAS & CO. (P.) LTD.

       Vs.

RESPONDENT: S. P. KUSHARE, S. T. O. NAGPUR & ORS.

DATE OF JUDGMENT: 28/09/1967

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. WANCHOO, K.N. (CJ) BACHAWAT, R.S. RAMASWAMI, V. MITTER, G.K.

CITATION:  1968 AIR  565            1968 SCR  (1) 661  CITATOR INFO :  R          1974 SC1300  (74)  D          1979 SC1098  (12,15,17,18,29)  RF         1980 SC1789  (36)

ACT: Provinces  and Berar Sales Tax Act (21 of 1947) as  amended- Bombay Sales Tax Laws (Validating Provisions and  Amendment) Act  (22  of  1959) ss.  11(4)(a),  11A(1)  and  (3)-Section 11(4)(a), if violative of Art. 14 of Constitution. Notices  under s. 11(4)(a)-One notice for several  quarters- Inapplicable  portion  of  printed notice  not  struck  off- Assessment  year,  wrongly mentioned  in  notice-Notice,  if valid. C.P.  and  Berar  Sales  Tax Rules,  r.  32-30  days  notice prescribed for submitting explanation-Notice giving  shorter period-Validity.

HEADNOTE: Under  s.10(1) of the Central Provinces and Berar Sales  Tax Act 1947 every dealer required so to do by the  Commissioner by  notice, and every registered dealer, shall furnish  such returns  by  such  dates and so such  authority  as  may  be prescribed,  and  r.19  of the Rules framed  under  the  Act provides   that  every  registered  dealer  should   furnish quarterly returns accompanied by a treasury challan in proof of  payment  of the tax payable.  If the  registered  dealer does  not   so furnish his  return,  the  Commissioner  may, after giving the dealer a reasonable opportunity assess  him to the best of his judgment (4)(a). Under s.11(4) (a).  Rule 32  prescribes that ordinarily not less than 30 days  notice should   be  given  to  an  assessee  for   submitting   his explanation before action is taken under s.11(4)(a). In  1953, s.11A was added to the Act.  Under s.11A(1) if  in consequence  of  any  information which has  come  into  his possession,  the  other Commissioner is satisfied  that  any turnover   of   a  dealer  has   escaped   assessment,   the Commissioner  may,  within  three calendar  years  from  the expiry of  such period, after giving the dealer a reasonable opportunity  of  being heard, proceed to re-assess  the  tax

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payable  on any such turnover and also direct the dealer  to pay  a  penalty.   In 1959, s.11A(3)  was  added  by  which, nothing in s.11A(1) shall apply to any proceeding  including any notice under s.11, that is, the period of limitation  of 3  years  mentioned  in  s.11A(1)  shall  not  apply  to   a proceeding under s.11(4)(a) on best judgment basis. The  appellants were registered dealers.   Their  assessment year was from 1st November to 31st October.  They  submitted their  quarterly  returns upto 30th April  1952.   Since  no returns  were submitted thereafter, on 13th September  1955, the assessing authority issued a notice with respect to  the period  1st January 1953 to 31st December 1953 calling  upon them  to show cause why action should not be  taken  against them under s.11(4) (a).  A similar notice was issued on 27th October  1955  for  the  period 1st  January  1954  to  31st December  1954,  and on 7th July 1956, for  the  period  1st January   1955  to  31st  December  1955.   The   appellants repeatedly  took time for submitting their explanation.   In 1958, fresh notices were issued for L/P(N) 7SCI-(3)(a) 662 the calendar years1952 to 1955 and the appellants raised the objection,  for the first time, that their  assessment  year was not the calendar year, but 1st November to 31st October. In  view  of  that objection, the  first  respondent  issued another set of notices on 8th July 1959 for the periods  1st May  1952  to 31st October 1952, 1st November 1952  to  31st October 1953, 1st November 1953 to 31st October 1954 and 1st November  1954  to  31st  October  1955  respectively.   The appellants  contended that those notices were barred by  the 3-year   period  of  limitation  under  s.11A(1),  but   the assessing authority assessed the appellants on best judgment basis  under s. 11 (4) (a).  The appellants thereupon  filed writ petitions in the High Court challenging the validity of the  notices and the order of assessment, but the  petitions were dismissed. In appeals to this Court, the appellant contended that:  (1) Section 11(4), (a) read with s.11A(3) contravenes Art. 14 of the  Constitution,  because,  a registered  dealer  who  had failed  to  submit  his return could  be  proceeded  against either  under s.11(4)(a) or s.11A(1), but, whereas  s.11A(1) provides  a 3-year period of limitation, a proceeding  under s.  11(4)(a)  could  be initiated at any  time  in  view  of s.11A(3);  (2) the notices of 1959 were barred by time;  and (3)  the notices of 1955 and 1956 were not  valid,  because, (a)  the  issue  of  one notice  for  several  quarters  was contrary  to  law, (b) that portion of  the  printed  notice which  said  that the appellants had failed to  furnish  the return as required by a notice in that behalf served on them under  s.10(1) did not apply to the appellants as no  notice under  s.10(1)  had been given to them, (c)  the  assessment year mentioned in the notice was the calendar year which was not the assessment year of the appellants, and (d) though r. 32  provides  that ordinarily not less than 30  days  notice should   be  given  to  the  assessee  for  submitting   his explanation, the first notice gave to the appellants only  9 days time. Held:     (Per  Wanchoo  C. J., Mitter and Hegde,  JJ.)  (1) Section 11(4) (a) is void as it is violative of Art. 14. The expression ’dealer’ in s.11A(1) includes both registered and  unregistered dealers, and it cannot be  contended  that dealers  are  classified into  registered  and  unregistered dealers,  the former coming under s.11(4)(a) and the  latter under  s.11A(1). To be a valid classification, it  must  not only  be  founded  on  an  intelligible  differential  which

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distinguishes  persons and things that are grouped  together from others left out of the group, but that differentia must have  a  reasonable  relation to the  object  sought  to  be achieved.   In  the  present case, both  s.11(4)(a)  and  s. 11A(1)  are concerned with taxing escaped  assessments,  and judged  from this object sought to be achieved by  the  Act, the   classification   of  dealers   into   registered   and unregistered  dealers  is not reasonable.   Therefore,  even registered  dealers  are  covered  by  s.  11A(1).   As  the ’information’  contemplated  by s.11A(1) need  not  be  from outside  sources  but  could be gathered  by  the  assessing authority  from his own records, his knowledge of the  facts that the appellants had not submitted quarterly returns  and treasury challans and that they were notassessed to tax with respect   to   the   turnovers   in   question   constituted ’information’ to the assessing authority from which he could be satisfied that the turnovers had escaped assessment.   It would  thus  be open to the assessing authority  to  proceed against the appellants either under s.11(4)(a) or  s.11A(1). But  as they were proceeded against under s. 11(4)(a),  they could not get the benefit of the limitation prescribed under S.  11A(1).   It  follows  that s.  11(4)(a)  has  become  a discriminatory  provision in view of s. 11A(3), [672 B;  674 D-E; 675 H; 676 A-G]. 663 Ghanshyam  Das v. Regional Assistant Commissioner  of  Sales tax,  Nagpur [1964] 4 S.C.R. 436 and Suraj Mall Mohta &  Co. v.  A,  V.  Visvanatha Sastri & Anr. [1955]  1  S.C.R.  448, followed. Maharaj  Kumar  Kamal Singh v. Commissioner  of  Income-tax, Bihar  &  Orissa [1959] Supp. 1 S.C.R. 10,  Commissioner  of Incometax, Bombay City v. M/s.  Narsee Nagsee & Co.  Bombay, [1960]  3 S.C.R. 988.  Salem Provident Fund Society Ltd.  v. C.  I,  T. Madras, 42 I.T.R. 547 and United  Mercantile  Co. Ltd.  v. Commissioner of Income-tax, Kerala, 64  I.T.R.  218 referred to. (2)  But  s.11(4)(a) is severable from the rest of  the  Act and its severance does not affect the implementation of  the other provisions of the Act.  Therefore, the validity of the notices  should  be tested under s.11A(1).  So  tested,  the notices  of  1959  are all barred by the  3-year  period  of limitation. [676 G-H]. (3)  Since there was no valid notice for the period 1st  May 1952  to 31st October 1952, there could be no assessment  in respect of that period.  As regards the quarter 1st November 1952  to 31st January 1953 also, there was no valid  notice. The notice issued on 13th September 1955, no doubt refers to the  period 1st January 1953 to 31st January 1953, but  that is  only a part of the quarter.  As a quarter is a  unit  in itself and there should be a notice for the entire  quarter, the  proceeding in respect of the quarter from 1st  November 1952 to 31st January 1953 is also barred by limitation  [677 E-F]. But the notices issued in 1955 and 1956 are valid notices in so  far  as they relate to the period 1st February  1953  to 31st  October  1955.  Any irregularity in the issue  of  the notices  does  not  vitiate  the  proceeding,  because,  the liability  to pay tax is founded on the  charging  sections. [680 B-C]. Chatturam  &  Ors. v. C.I.T. Bihar, [1947]  F.C.R.  116;  15 I.T.R. 302, applied. Further, (a) The issue of one notice for several quarters is not contrary to law. [678 E]. State of Orissa and Anr. v. M/s.  Chakobhai Chelabhai &  Co. [1961] 1 S.C.R. 719, followed.

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(b)  The  assessing  authority, by mistake,  had  failed  to strike  out  the  portion  in the  printed  form  which  was inapplicable  to the appellants who were registered  dealers and  on whom no notice need be served to furnish  a  return. But   this  circumstance  could  not  have  prejudiced   the appellants  and such a mistake does not vitiate the  notice. [678 H]. Chakobhai Chelabhai’s case, [1961] 1 S.C.R. 719, followed. (c)  The  mistake  as  regards the assessment  year  in  the notices  does not render the notices invalid.  The  assesses deliberately kept silent and when they felt that the  period of limitation prescribed by s. 11A had expired, brought  the fact to the notice of the authority.  The assesses were  not prejudiced  and could not be permitted to take advantage  of such a mistake. [679 G-H]. (d)  Rule  32  prescribes that ordinarily  30  days’  notice should  be given.  Therefore, the period is  not  mandatory. All that ss.11(4) and 11A require is that an assessee should be  given  a reasonable opportunity before he  is  proceeded against.  Since, in the present                             664 A  case,  the  appellants  appeared  before  the   assessing authority and did not object to the validity of the  notices but asked for sub-mitting their explanation, and as the time asked  for  was  given,  the  appellants  had  a  reasonable opportunity, for submitting their explanation. [679 D-G]. (Per  Bachawat and Ramaswami JJ.) (1) Section 11(4)  is  not violative of Art. 14.  Construing ss.11(4)(a) and 11A(1) together it must be  held that  cases falling within s.11(4)(a) are excluded from  the purview  of  S.11A(1). Section 11(4)(a)  specially  provides for  the  initiation of  proceedings  against  a  registered dealer.    Having   made  this   special    provision,   the legislature  must be taken to have intended that  the  sales tax  authorities must proceed against. a  registered  dealer under  s.11(4)(a) and not under s.11A(1). [683 C-B]. The classification and differential treatment of  registered and unregistered dealers are based on substantial difference having a reasonable relation to the object of the Act.   The legislature  did not prescribe a period of limitation for  a proceeding initiated under  s. 11(4)(a) against a registered dealer,  because,  (i)  the registered  dealer  is  under  a statutory  obligation to file a return, (ii) no penalty   is leviable  under s.11(4) and (iii) the registered  dealer  is given  many  advantages under the Act which are denied to an unregistered  dealer.  Therefore, the bar of  limitation  in the case of an unregistered dealer and the absence of such a bar in the case of a registered dealer cannot be regarded as unjust or discriminatory.[684 B, G-H]. Ghanshyam  Das v. Regional Assistant Commissioner  of  sales Tax Nagpur, [1964]4 S.C.R. 436, Maharaj Kumar Kamal Sing  v. Commissioner  of Income-tax, Bihar & Orissa, [1959] Supp.  1 S.C.R. 10 and  Commissioner of Income-tax v. Narsee Nagsee & Co. [1960] 3 S.C.R. 988,  explained. (2)  Section 11A(3) expressly provides that nothing in s. 11 A(1)   shall  apply to any proceeding including  any  notice under  s. 11 and  the section is retrospective.  It  follows that the period of limitation provided by s.11A(1) cannot be applied   to  a  proceeding  or  notice   under  S.   11(4). Consequently,  the impugned notices of 1959,  issued   under s.11(4)  are  not barred by limitation and are  not  invalid [682 H; 683 A]. Ghanshyam Das’s Case, [1964] 4 S.C.R. 436, referred to (3)  Even  the  notices issued in 1955  and  1956  initiated proceedings  validly under S. 11(4) for the period from  1st

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February 1953 to 31st October 1955, as the irregularities in the notices did not invalidate them. [685 B-C].

JUDGMENT:  CIVIL APPERLATE JURISDICTION: Civil Appeals Nos. 511-514 of 1966. Appeals,  by  special leave from the  judgments  and  orders dated   August  9, 1961, July 20, 1964, of the  Bombay  High Court, Nagpur  Bench in Misc.  Civil Applications Nos.  1118 of  1959.  192  of  1961.  1360 of  1959  and  193  of  1961 respectively. H.   R.  Gokhale,  M. R. Bhandare, P. C. Bharta, and  O.  C. Mathur, for the appellant (in all the appeals). N.   S.  Bindra,  P.  C. Chatterjee, S. P.  Nayar  for  R.H. Dhebar,  the respondents (in all the appeals). 665 The  Judgment  of WANCHOO C. J., MITTER and HEGDE,  JJ.  was delivered  by HEGDE, J. The dissenting judgment of  BACHAWAT and RAMASWAMI, JJ. was delivered by BACHAWAT, J. HEGDE, J. The principal question canvassed in this group  of appeals  by  special  leave is whether s.  11(4)(a)  of  the Central  Provinces  and  Berar Sales Tax  Act  1947,  to  be referred  to as the Act hereinafter, is ultra vires  Article 14 of the Constitution and consequently the notices impugned in  the  writ petitions from which these appeals  arise  are liable to be struck down and the respondents restrained from levying  sales tax on the appellants for the period  May  1, 1952 to October 31, 1955. The  appellants  are a private limited company  carrying  on business  inter alia as dealers in iron and steel  materials in Vidharba region of the Maharashtra State.  In that region they have more than one place of business.  They  registered themselves as dealers under s. 8A of the Act and obtained  a certificate  of  registration on August,  17,  1947.   Their assessment  year as shown in their registration  certificate is  from  November 1 to October 31.  They were  required  to submit  quarterly returns of their turnovers.  They  did  so till April 30, 1952.  Thereafter no returns were  submitted. On  September 13, 1955, the Assistant Commissioner of  Sales Tax,  the assessing authority at that time, issued a  notice calling upon the appellants to show cause why action  should not  be taken against them under ss. 10(3) and 11(4)(a),  on account  of  their  failure to furnish the  return  for  the period  1.1.53 to 31.12.53. Similar notices were  issued  to them  on October 27, 1955 for the period 1.1.54 to  31.12.54 and  on July 7, 1956 for the period 1.1.55 to  31.12.55.  It appears  that  the  appellants  repeatedly  took  time   for submitting their explanation.  The first respondent to  whom the appellants’ case stood transferred issued in 1958  fresh notices  to the appellants similar to those issued in  1955. At  that  stage the appellants objected to the  validity  of those  notices  both  orally as well as in  writing  on  the ground that their assessment year was not the calendar  year as  mentioned in those notices but the year  ending  October 31.  Evidently in view of that objection, the first  respon- dent  issued another-set of notices on July 8,  ’1959.   The appellants contended that those notices were barred by time. Thereafter  the  appellants challenged the validity  of  the notices issued in 1959 in     the  petitions under Art.  226 from which these appeals arise. In  these  apneals the questions arising  for  decision  are whether s.     11 (4)(a) or s. 11 A(3) or any parts  thereof contravene the guarantee of equal protection of the laws  or

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equality  before  the law or whether  those  provisions  are based on a valid classification which is reasonable in  view of  the  object  with which they  were  enacted.   Mr.  H.R. Gokhale learned counsel for the appellants, urged that  both these provisions deal with the same class of persons  having common characteristics and Properties and hence there is  no just 666 basis  for  the classification made.  According to  him  the classification   complained   of   has   brought   about   a discrimination.   Further  he  asserted  that  the  Act  had conferred arbitrary power on the assessing authority to pick and  choose from the persons belonging to the same class  to be dealt with either under S. 11(4)(a) or under 11A(1).   He urged  that  as a case coming under s. 11(4)(a)  also  falls under S. 11 A, as the law now stands, the persons  proceeded against under s. 11A(1) will have the benefit of the  period of limitation prescribed therein; while the said benefit  is not available for those proceeded under S. 11(4)(a). According  to  the  learned counsel  for  the  revenue,  ss. 11(4)(a) and 11A deal with different classes of persons; the classification  made under those provisions is a  reasonable classification  having  nexus with the object sought  to  be achieved. Before  adverting  to  the  points at  issue,  it  would  be convenient  to  set  out the circumstances  under  which  s. 11A(3)   which   is   said  to  have   brought   about   the discrimination complained of came to be enacted.  The Act is in  force  ever since 1947.  Section 11A  as  it  originally stood  was inserted into the Act in 1953.  In Bisesar  House v.   State of Bombay(1) the question arose whether a  notice under s.  11(2) initiates a fresh proceeding and if that  is so,  whether  the limitation prescribed  under  s.11A(1)  is attracted  to that proceeding.  A Full Bench of  the  Bombay High Court speaking through Chagla, C. J. held that a notice under  S. 11(2) initiates a fresh proceeding and to  such  a proceeding the limitation prescribed in s. 11A is attracted. From  the  ratio  of  that decision  it  followed  that  the limitation   prescribed   under  S.  11  A   also   governed proceedings  under  s.11(4)(a). Evidently, to get  over  the effect of that decision, the Bombay Legislature enacted  the Bombay Sales Tax Laws (Validating Provisions and  Amendment) Act 1959 (No. 22 of 1959) which came into force on April 18, 1959.  Section 6 of that Act inserted the new subsection (3) into  S.11A and the reason for that amendment, as stated  in the statement of objects and reasons, is as follows:               "In   its   judgment  in  Bisesar   House   v.               Commissioner of Sales Tax, Nagpur, the  Bombay               High  Court  has  held  that  the  period   of               limitation  laid down in S.IIA of the  Central               Provinces  and Berar Sales Tax Act, 1947,  for               reassessment of the turnover which has escaped               assessment  applies  to  original   assessment               also.   It has also been found that  the  said               limitation applies to suo motu revisions also.               The said decision affects the original assess-               ments and suo motu revisions, which have  been               made  after  the  expiry  of  the  period   of               limitation  laid down for the reassessment  of               turnover   escaping   assessment   under   the               different  sales  tax laws in  force  in  this               State.  It has,               (1) 60 B.L.R. 1395               667               therefore,  become necessary to establish  the

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             validity  of  all  such  assessments  and   to               provide   that   the  period   of   limitation               prescribed  for reassessment of escaped  turn-               overs  does not apply to  original  assessment               and suo motu revisions." In Ghanshyam Das v. Regional Assistant Commissioner of Sales Tax,  Nagpur(1) this Court did not agree with that  decision so far as the scope of s.11(2) is concerned.  Therein it was held that a notice under s. 11(2) does not initiate a  fresh proceeding and to that proceeding the limitation  prescribed in s. 11A does not apply.  Though in view of that  decision, s.11A(3)  became superfluous in respect of a  proceeding  in which  a  notice under s. 11 (2) is  given,  it  undoubtedly changed the law in respect of proceedings under s.11(4)(a). Before  we proceed to consider the aforementioned  complaint of  discrimination, it is necessary to have a survey of  the relevant  provisions of the Act.  ’Dealer’ is defined in  s. 2(c)  as meaning a person who whether as principal or  agent carries on in the State the business of selling or supplying goods whether for commission, remuneration or otherwise  and includes a firm, a partnership, a Hindu undivided family  or a State government or any of their departments and  includes also  a  society, club or association selling  or  supplying goods  to its members.  A ’registered dealer’ is defined  in s.  2(f)  as  meaning a dealer  registered  under  the  Act. Section 2(j) defines ’turnover’ as meaning the aggregate  of the amounts of sale prices and parts of sale prices received or  receivable by a dealer in respect of the sale or  supply of goods or in respect of the sale or supply of goods in the carrying  out  of any contract effected or made  during  the prescribed  period;  and the expression  ’taxable  turnover’ means  that part ’of a dealer’s turnover during such  period which remains after deducting therefrom his turnover  during that  period  in respect of the sale of goods  declared  tax free  under  s.  6  The definition of  the  term  ’year’  as provided in s. 2(1) to the extent necessary for our  present purpose reads:-               "year’ means the 12 months ending on 31st  day               of  March, or if the accounts of the  assessee               are  made up to any other day in respect of  a               year  ending on any date other than  the  31st               day  of  March,  than at  the  option  of  the               assessee  the year ending on the day to  which               his    accounts    have    been    so     made               up................."               Section 8 says:               "(1)  No dealer shall, while being  liable  to               pay tax under this Act, carry on business as a               dealer  unless he has been registered as  such               and possesses a registration certificate." (1) [1964] 4 S.C.R 436. 668 Section 8A provides for voluntary registration of a  dealer. Sub  s.(3) thereof provides that every dealer who  has  been registered   upon an application made under this section  so long as his registration remains in force, be liable to  pay tax  under that Act. Sub-s. (4) of that  section  stipulates that the registration of a dealer  upon an application  made under that section shall be in force for  a period not  less than  three  complete  years  and  shall  remain  in   force thereafter unless cancelled under the provisions of the Act. Section 10 provides for returns by dealers.  It reads:               "(1)  Every such dealer as may be required  so               to do  to by the Commissioner by notice served               in  the prescribe manner and every  registered

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             dealer  shall  furnish  such returns  by  such               dates   and  to  such  authority  as  may   be               prescribed."               Sub-s.  (2) of that section is  not  necessary               for  our present purpose.  Sub-s. (3) of  that               section reads:               "(3)  it  a dealer fails to  comply  with  the               requirement  of  a notice  issued  under  sub-               section  (1) or a registrate dealer  fails  to               furnish  his  return  for  any  period  within               prescribed  time to the prescribed   authority               without any sufficient cause, the Commissioner               may,  after  giving such dealer  a  reasonable               opportunity  of  being heard, direct   him  to               pay,  by way of penalty, a sum  not  exceeding               one-fourth of the amount of the tax which  may               be assesses on him under s. 11 ".               Sections  11  and 11A are  important  for  our               present  purpose.  They deal  with  assessment               and    assessment   on    turnover    escaping               assessment.  They, to the extent necessary for               our present purpose read:               "11(1).  If the Commissioner is satisfied that               the  returns furnished by a dealer in  respect               of  any  period are correct and  complete,  he               shall assess the dealer on them.               (2)   If the Commissioner is not so  satisfied               he  shall  serve  the  dealer  with  a  notice               appointing  a place and day and directing  him               (i)  to  appear  in  person  or  by  an  agent               entitled  to  appear in  accordance  with  the               provision  of  section 11B,  (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  document,  as  may   be               considered  necessary by the Commissioner  for               the purpose,               (3)   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               be require, the Commissioner shall assess  him               to tax.                                    669               (4)   If  a  registered dealer  (a)  does  not               furnish  returns in respect of any  period  by               the  prescribed date. or (b) having  furnished               such  returns fails to comply with any of  the               terms  of  a notice issued  under  sub-section               (2),  or  (c) has not regularly  employed  any               method of accounting or if the method employed               is   such   that,  in  the  opinion   of   the               Commissioner,  assessment cannot  properly  be               made on the basis thereof,               the  Commissioner  shall  in  the   prescribed               manner  assess the dealer to the best  of  his               judgment:               Provided  that he shall not so assess  him  in               respect of the default specified in clause (a)               unless  the  dealer  has been  first  given  a               reasonable opportunity of being heard."  (Sub-               ss.  5  and  (6) are  not  necessary  for  our               present purpose).

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             Section 11A provides:               "(1).   If in consequence of  any  information               which   has   come   into   possession,    the               Commissioner is satisfied that any turnover of               a  dealer  during any period has  been  under-               assessed or has escaped assessment or assessed               at  a  lower rate or any  deduction  has  been               wrongly made therefrom, the Commissioner  may,               at  any time within three calendar years  from               the  expiry of such period, after  giving  the               dealer a reasonable opportunity of being heard               and after making such enquiry as he  considers               necessary,  proceed in such manner as  may  be               prescribed to reassess or assess, as the  case               may be, the tax payable on any such  turnover;               and  the  Commissioner  may  direct  that  the               dealer  shall  pay,  by  way  of  penalty   in               addition  to the amount of tax so assessed,  a               sum not exceeding that amount.               (2).  The  assessment  or  reassessment   made               under sub-               s.    (1)  shall  be at the rate at  which  it               would have been made, had there been no under-               assessment or escapement.               (3)   (a).   Nothing in sub-sections  (1)  and               (2)   (i)  shall  apply  to   any   proceeding               (including  any notice issued) under  Sections               11.  or 22A or 22B, and  (ii)  notwithstanding               any  judgment, decree or order ’of a Court  or               Tribunal,  shall be deemed ever to  have  been               applicable to such proceeding or notice.               (b)   The  validity of any such proceeding  or               notice shall not be called in question  merely               on  the ground that such proceeding or  notice               was  inconsistent with the provisions of  sub-               sections (1) and (2)." Rule  19  of the rules framed under the  Act  provides  that every  registered dealer should furnish to  the  appropriate sales tax 670 officer  his quarterly return in the prescribed form  within one  calendar month from the expiry of the quarter to  which the  return relates.  Each of such returns submitted  should be accompanied by a treasury challan in the form  prescribed in proof of the fact that he had paid the tax payable on the basis  of his return, The only other rule relevant  for  Our present  purpose  is r. 32 in Part VII of the  Rules,  which deals  with  assessment of tax and/ or penalty.   That  rule provides that where a registered dealer has rendered himself to  a best judgment assessment as well as penalty by  reason of  his default in furnishing the prescribed return  or  re- turns  in respect of any period by the prescribed date,  the assessing  authority shall serve on him a notice in form  12 specifying  the  default, escapement or concealment  as  the case may be and calling upon him to show cause by such  date ordinarily not less than 30 days, from the date of issue  of the  notice, as may be fixed in that behalf, why  he  should not  be assessed or reassessed to tax, or a  penalty  should not be imposed upon him and directing him lo produce on  the said date his books of account and other documents which the assessing  authority  may require or which he  may  wish  to produce in support of his objection.  That rule further pro- vides  that  no  such notice shall be  necessary  where  the dealer,  having  appeared before  the  assessing  authority, waives such notice.

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Now  we may turn to the questions formulated  for  decision. As mentioned earlier, the main contention advanced on behalf of  the appellants is that sub-s. (3) of s. 11A has  brought about  a  discrimination  between  those  dealers  proceeded against under s. 11(4)(a) and those dealt with under s. 11A. The contention advanced on behalf of the appellants is  that the turnover of a registered dealer who has failed to submit his  return  and also to deposit the tax due from  him,  has escaped  assessment;  the case of such a dealer  comes  both within  s. 1 1 (4) (a) as well as s. 11A; therefore, he  can be  dealt with under either of those two provisions.   Where s.  11A prescribes a period of limitation for  a  proceeding under  that  provision,  in view of sub-s. 3  of  s.  11A  a proceeding  under s. 11(4)(a) can be initiated at any  time; under  those circumstances it is open to the authorities  to proceed  against some of the same class of dealers under  s. 11(4)(a)  and  others under s. 11A.  It was  said  on  their behalf  that it is well-settled that in its  application  to legal  proceedings,  Art. 14 assures to every one  the  same rules  of evidence and modes of procedure; in  other  words, the  same rule must exist for all in similar  circumstances. On  the  other hand, it was urged on behalf of  the  revenue that s. 11(4)(a) deals only with registered dealers who have certain advantages under the Act, whereas s. 11A deals  with dealers  who do not come either under s. 11(4) or s.  11(5), and  therefore the classification of dealers made under  the various   provisions  is  based  on  real  and   substantial distinction  bearing a just and reasonable relation  to  the object sought to be attained. 671 We  have now to see whether the dealers who come within  the mischief of s. 11(4)(a) can also be dealt with under s. 11A. Before  a person can be dealt with under s. 11A, it must  be shown that in consequence of any information which has  come into his possession, the Commissioner is satisfied that  any turnover  of that dealer during any period has  been  under- assessed  or has escaped assessment or assessed at  a  lower rate  or  any  deduction has been  wrongly  made  therefrom. Quite plainly the expression ’dealer’ in s. IIA(1)  includes both  registered and unregistered dealers.  In this case  we are concerned with the escapement of assessment.   Therefore the  first question that arises for decision is  whether  it can be said that the appellants’ turnovers for the period 1- 5-52  to  30-10-55  had escaped  assessment.   There  is  no dispute  that those turnovers had not been  assessed.   From the fact that those turnovers had not been assessed, can  it be said that they had escaped assessment?  In Maharaj  Kumar Kamal  Singh  v.  Commissioner  of  Income  Tax,  Bihar  and Orissa,(1),  this Court laid down that the  expression  "has escaped assessment" in s. 34(1)(b) of the Indian Income  Tax Act,  1922 is applicable not only where the income  has  not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted, but also where a return  has  been  submitted  but  the  income  tax  officer erroneously  failed to tax a part of assessable income.   In Commissioner  of  Income Tax, Bombay City  v.  M/s.   Narsee Nagsee  and Co., Bombay(2) interpreting the  words  "profits escaping  assessment" in s. 14 of the Business  Profits  Tax Act, 1947, this Court held that those words apply equally to cases  where  a  notice was received  by  the  assessee  but resulted  in  no assessment, under-assessment  or  excessive relief  and to cases where due to any reason no  notice  was issued  to the assessee and there was no assessment  of  his income.   Kapur, J. speaking for the majority of  Judges  in that  case,  observed (at p. 993 of the report) that  it  is

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well-settled  that  an income escapes  assessment  when  the process  of assessment has not been initiated as also  in  a case  where  it  has resulted in  no  assessment  after  the completion of the process of assessment.  The true scope  of the  expression "escaped assessment" in s. 11A came  up  for consideration before this Court in Ghanshyam Das v. Regional Assistant  Commissioner  of Sales Tax, Nagpur(3).   This  is what  Subba  Rao,  J. (as he then  was)  who  delivered  the judgment  of  the majority of the Judges, observed  in  that regard:               "In  Commissioner  of Income  Tax,  Bombay  v.               Pirojbai  N.  Contractor (5  I.T.R.  338)  the               words  ’escaped  assessment’  in  the   Indian               Income-tax  Act  were defined.   It  was  held               therein  that the said words were wide  enough               to include cases where no notice under s.22(2)               of  the Income tax Act had been issued to  the               assessee and therefore his income had not been               assessed at all under s. 23 thereof.               (1) [1959] Supp.1 S.C,R. 10.                (2) [1960] 3 S.C.R.  988.                (3)  [1964] 4 S.C.R. 436. 672 The  said view has been assumed to be correct by this  Court in Maharaj Kumar Kamal Singh v. Commissioner of Income  Tax, Bihar   and   Orissa   [1959]  Supp.   1   S.C.R.   10   and Maharajadhiraj Sir Kameshwar Singh v. State of Bihar ([1960] 1 S.C.R. 322) and extended to cover a, case where the  first assessment  was made in due course but a part of the  income escaped  therefrom.  This Court, in Commissioner  of  Income tax, Bombay v. Narsee Nagsee and Co. ([1960] 3 S.C.R.  988), construing  the provisions of s. 14 of the Business  Profits Tax  Act, 1947, reviewed the law on the subject and came  to the following conclusion: All  these cases show that the words  "escaping  assessment" apply  equally to cases where a notice was received  by  the assessee  but resulted in no assessment at all and to  cases where  due  to  any  reason no  notice  was  issued  to  the assessee,  and,  therefore, there was no assessment  of  his income.’ It is true that the said decisions were given with reference to  either  s. 34(1) of the Income Tax Act or s. 14  of  the Business Profits Tax Act. but so far as the present  enquiry is  concerned the said sections are in pari materia with  s. 11A of the Act.  In construing the meaning of the expression ’escaped assessment’ in s. 11A of the Act there is no reason why  the said expression should bear a more limited  meaning than  what it bears under the said two Acts.  All the  three Acts  are  taxing statutes and the three  relevent  sections therein  are  intended  to  gather  the  revenue  which  has improperly  escaped.   A division Bench of the  Madras  High Court in the State of Madras v. Balu Chettiar (7 S.T.C. 519) following  the decision of a Full Bench of that Court,  held that where an assessee did not tile at any time a return  of his  turnover  for  a  year and,  therefore,  there  was  no assessment  made, the turnover escaped assessment.   It  was observed therein: ’Whether  it  was  a  case  of  omission  or  of  deliberate concealment  on the part of the assessee, he did not  submit any  return.  It was his default that led to the  escape  of the turnover for 1951-52 from assessment to the tax lawfully due.   It was the whole of the turnover for that  year  that escaped assessment.’ It  is not necessary to multiply citations.  We,  therefore, hold  that the expression ’escaped assessment’ in s. 11A  of

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the  Act  includes  that of a turnover which  has  not  been assessed at all, because for one reason or other no  assess- ment proceedings were initiated and therefore no  assessment was made in respect thereof." In one of the appeals dealt with in that judgment, i.e. C.A. No.  102 of 1901, this Court had to consider whether a  case under 673 (a)  also  comes  under  s. 11A.  The  Court  answered  that question  in the affirmative. seen  earlier it was the duty of the appellants not only  to submit  their  quarterly returns but send along  with  those returns the treasury challans in proof of the payment of the tax admittedly due from  them.  As they have failed to do so within the prescribed period, it follows that the  turnovers in question had escaped assessment. This  takes us to, the next question whether in the  instant case  the  assessing  authority can be  said  to  have  been satisfied  about  the  escapement  of the  assessment  as  a consequence  of  any  information which had  come  into  his possession.   From  the notices issued in 1955  as  well  as later  on, it is clear that the assessing  authorities  were satisfied  about the escapement of the assessment  due  from the appellants.  But the real question is whether they  were so  satisfied "in consequence of any information  which  had come into their possession".  The assessing authorities knew that the appellants had neither submitted their returns  nor treasury  challans  in proof of the payment of the  tax  due from them.  From that circumstance it is reasonable to, hold that  in consequence of the information that the  appellants had  not  submitted their returns as well  as  the  treasury challans  the assessing authority should have been  stisfied about  the  escapement of the assessment.  It was  urged  on behalf  of  the revenue that ’information’  contemplated  by s.11A  should be from some outside source and not  something that  could be gathered by the assessing authority from  his own  records. According to the revenue in the  instant  case there was no information from any outside source, therefore, it cannot be said that the assessing authority was satisfied about   the  escapement  of  tax  in  consequence   of   any information which has come into its possession. In our view, this contention is untenable.  In Maharaj Kumar Kamal  Singh v. Commissioner of Income Tax, Bihar and Orissa, this  Court held  that  the  word ’information’ in s.  34(1)(b)  of  the Income  Tax Act, 1922, includes information as to  the  true and correct state of the law and so would cover  information as  to  the relevant judicial decisions.  It was  laid  down therein that that information need not be about any fact; it may  be even as to the legal position.  In other words,  the term ’information’ in s. 34(1)(b) of the Income Tax Act 1922 really  means  knowledge.  In Salem Provident  Fund  Society Ltd.  v.  Commissioner of Income Tax  madras(1)  a  division bench of the Madras High Court interpreting the scope of the words ’information which has come into his possession’ found in s. 34 of the Indian Income Tax Act, observed thus:               "We   are   unable  to  accept   the   extreme               proposition that nothing that can be found  in               the record of the               (1) 42 I.T.R. 547.               674               assessment  which itself would show escape  of               assessment or under-assessment, can be  viewed               as  information which led to the  belief  that               there  has  been  escape  from  assessment  or               under-assessment.   Suppose a mistake  in  the

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             original order of assessment is not discovered               by the Income Tax Officer- himself on  further               scrutiny  but it is brought to his  notice  by               another assessee or even by a subordinate or a               superior  officer,  that would  appear  to  be               information   disclosed  to  the  Income   Tax               Officer.    If  the  mistake  itself  is   not               extraneous  to  the record and  the  informant               gathered the information from the record,  the               immediate source of information to the Income,               Tax  Officer in such circumstances is  in  one               sense   extraneous  to  the  record.   It   is               difficult  to accept the position  that  while               what  is  seen  by another in  the  record  is               ’information’  what is seen by the Income  Tax               officer himself is not information to him.  In               the  latter case he just informs himself.   It               will  be information in his possession  within               the  meaning of section 34.  In such cases  of               obvious  mistakes apparent on the face of  the               record  of assessment, that record itself  can               be  a source of information, if that  informa-               tion leads to a discovery or belief that there               has  been  an escape of assessment  or  under-               assessment." The  meaning  of the word ’information’ came  up  again  for consideration  before  a division bench of the  Kerala  High Court  in  United  Mercantile Co. Ltd.  v.  Commissioner  of Income Tax Kerala(1).  Their Lordships held that to ’inform’ means  to ’impart knowledge’ and a detail available  to  the Income  Tax Officer in the papers filed before him does  not by  its mere availability become an item  of  ’information’. It  is  transmuted  into  an  item  of  information  in  his possession  only if and when its existence is  realised  and its  implications  recognized.  Applying that  test  to  the facts  of  the  case before them. the Court  held  that  the awareness of the Income Tax Officer for the first time after the  assessment order of November 19, 1957, that  the  bonus shares were issued not out of Premiums received in cash  and the consequent result in the light of the Finance Act. 1957, was  information  within the meaning of that  expression  as used  in  s. 34(1) of,the Indian Income Tax Act,  1922,  and consequently.  the reopening of the assessment under  that provision was not illegal. In  our  judgment,  the  knowledge  of  the  fact  that  the appellants had not submitted their quarterly returns as well as the treasury challans. constituted In information to  the assessing authority from which it could be satisfied and  in fact  it was satisfied that the turnovers with which we  are concerned in this case bad escaped assessment. (1)  64 I.T.R. 218. 675 From  the above conclusions it follows that the  appellants’ case falls both under s. 11(4)(a) and s. 11A(1).  Therefore, it  was open to the assessing authority to  proceed  against them under any one of those two sections.  But as they  were proceeded  against  under s. 11(4)(a) they cannot  have  the benefit  of the period of limitation prescribed under s.  11 A(1).   Hence, it must be held that the present  case  falls within the rule laid down by this Court in Suraj Mail  Mohta and  Co.  v. A. V. Visvanatha Sastri & another(1).   On  the facts  found  it  follows  that s. 1  (4)(a)  has  become  a discriminatory  provision in view of s. 11 A(3).  Hence  the same is liable to be struck down under Art. 14.  But for the inclusion  of sub-s. 3 in s. 11A, there would have  been  no

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discrimination  between those dealt with under  s.  11(4)(a) and  those  under  s.  11A(1).   The  period  of  limitation prescribed  in  s.  11A(1) would have  attracted  itself  to proceedings  under  s.  11(4)(a) as held by  this  Court  in Ghanshyam Das’s case(2). Mr. Bindra, learned counsel for the revenue, contended  that a   registered  dealer  has  certain  advantages   over   an unregistered dealer; therefore the classification made under the  Act  is  a reasonable classification.  To  be  a  valid classification,  the  same must not only be  founded  on  an intelligible  differentia  which distinguishes  persons  and things that are grouped together from others left out of the group  but that differentia must have a reasonable  relation to  the object sought to he achieved.  Both s. 11(4)(a)  and s. 11A(1) concern themselves with escaped assessments.   The classification  suggested  has no nexus  with  that  object. That  much is established by the decision of this  Court  in Ghanshyam Das’s case(1) which is binding on us.  It is  true the  State  can by classification determine  who  should  be regarded  as a class for the purpose of legislation  and  in relation  to a law enacted on a particular subject, but  the classification  must be based on some real  and  substantial distinction  bearing a just and reasonable relation  to  the object sought to be attained and cannot be made  arbitrarily and  without any substantial basis.  Judged from the  object sought to be achieved by the Act, we are of the opinion that the   classification   made  between  the   registered   and unregistered  dealers  is not a  reasonable  classification. From  this conclusion it follows that s. 11(4)(a) is  liable to  he  struck down as being discriminatory in  view  of  s. 11A(3). Section  11(4)(a)  is separable from the rest  of  the  sub- section.   Its  separation from that  sub-section  does  not affect  the  implementation of the other provisions  of  the Act. This  takes us to the question which was debated at our  in- stance whether the notices issued by the assessing authority in  1955  were  valid  notices.   The  High  Court  had  not considered  this question, though it appears that  the  same was presented to it for decision (1) [1955] 1 S.C.R, 448, (2) [1964] 4 S.C.R. 436. L/P(N)7SCI-4 676 by  the  parties.  In the course of its judgment,  the  High Court observed:               "In   this  view  (in  view  of  its   earlier               findings) of the matter it is not necessary to               consider  whether the earlier notices  of  the               year  1955  are  good  and  valid  notices  or               whether  they stood superseded  by  subsequent               notices of 1958 and 1959".               For   convenience   we  shall  take   up   for               consideration notice No. 4519/STN dated  13-9-               55.  Our conclusions in respect of that notice               would  cover the other notices.  The  material               facts  as  set  out by  the  High  Court,  the               correctness  of which was not disputed  before               us, are these:               "On  the  3rd September, 1955,  the  Assistant               Commissioner, Sales Tax, issued a notice under               s. 10(3), s. 11(4) (a), s. 11A and sub-s.  (1)               of  s.  22C  of  the  Act,  calling  upon  the               petitioners  to show cause why  action  should               not  be taken against them under s. 10(3)  and

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             S.  11(4)  of  the Act  on  account  of  their               failure to furnish the returns for the  period               1-1-53  to  31-12-53.   Similar  notices  were               given  on  27th October, 1955 for  the  period               1-1-54  to 31-12-54 and on 7th July 1956.  for               the period 1-1-55 to 31-12-55." From those facts, it is seen that no notice had been  issued within  three years in respect of the turnover  relating  to the  period  from  1-5-52 to 31-12-52.   The  assessment  in respect  of  that period is clearly barred in  view  of  our earlier  conclusion.  The period 1-1 1-52 to  31-1-53  forms part of the quarter commencing from 1-11-52.  No notice  was given in respect of that quarter.  A quarter forms a unit by itself.   Therefore,  it  follows  that  the  proceeding  in respect of that quarter is also barred by limitation. Now we shall take up the question whether the notices issued in  1955  in  respect of the  turnovers  relating  to  other quarters  were  in  accordance with  law.   The  notice  No. 4519/STN dated 13-9-55 reads. "Notice  (for 1-1-53 to 31-12-53) dated 13-9-55.  No.  4519/ STN.  D/13-9-55.                           Form XII                        (See rule 32) Notice under sub-section (3) of section 10, sub-section  (4) (a) and (5) of section 11, sub-section (1) of section 11 (A) and  sub-section (1) of section 22 of the Central  Provinces and B erar Sales Tax Act, 1947.               Whereas  Shri Anandji Haridas and  Co.,  Ltd.,               Nagpur.                You  have  failed  to  furnish  a  return  as               required by a               677               notice  in  that behalf served  on  you  under               section  10(1)  of the Central  Provinces  and               Berar Sales Tax Act, 1947.                                     OR               You  being a registered dealer have failed  to               furnish a return for the periods 1-1-53 to 31-               12-53  and  have  thereby  rendered   yourself               liable under section 11 (4) to be assessed  to               the best of judgment;               Further, you are hereby directed to attend  in               person  or  by a person authorised by  you               in  writing  in that behalf,  being  a  person               specified  in section 11B(1) before me and  to               produce or cause to be produced your books  of               accounts  and the documents specified  in  the               schedule  hereunder and any evidence on  which               you  rely  in  support of  your  objection  at               Jabalpur at 11-00 A.M. on 22-9-55.                                    Sd/-               Asstt.  Commissioner of Sales Tax               Nagpur Region, Nagpur." It  is  true  that  it is not a notice  in  respect  of  any particular quarter, it is a notice in respect of the  period 1-1-53  to 31-12-53.  In the State of Orissa and another  v. M/s.   Chakobhai Chelabhai and Company,(1) this  Court  held that  the issue of one notice under s. 12(5) of  the  Orissa Sales Tax Act, 1947 which section is similar to s. 11(4)(a), for several quarters was not contrary to law as the  section makes reference to a period which might consist of more than one quarter. From  the notice in question it cannot be made  out  whether the assessing authorities wanted to deal with the appellants under s. 10(1) or under s. 11(4).  The notice says that  the

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appellants "had failed to furnish the return as required  by a notice in that behalf served on them under s. 10(1) of the Act,  or  that they being registered dealers had  failed  to furnish return for the periods mentioned therein and thereby rendered themselves liable under s. 11(4) to be assessed  to the  best of judgments Quite dearly, the  first  alternative mentioned  in  the notice did not apply to  the  appellants. They  are registered dealers.  No notice under s. 10(1)  had been given to them.  The assessing authority by mistake  had failed  to  strike out the first alternative  shown  in  the printed   form.    That   circumstance   could   not    have prejudiced  the  appellants. It was held by  this  Court  in Chakobai Chelabhai’s case(1) referred to earlier that such a mistake does not vitiate the notice issued.      (1) [1961] 1 S.C.R. 719.      L/P(N)7SCI-4 (a) 678 But  the more serious mistake pointed out by Mr. Gokhale  in that  notice is that the assessment year mentioned  in  that notice is not the assessment year of the ’appellants.  Their assessment  Years commenced from 1st November.   This  error according  to Mr. Gokhale vitiated the notices issued.   Yet another complaint made by Mr. Gokhale was that though r.  32 provides that ordinarily not less than 30 days notice should be given to the assessee, only 9 days notice was given.  But this  defect was found only in the notice quoted  above  and not in the other notices issued in,1955.  For the reasons to be  mentioned presently, we see no merit in either of  these contentions. We are unable to accept the contention of Mr. Gokhale that a notice under s. 11(4)(a) or 11A(1) is a condition  precedent for initiating proceedings under those provisions or that it is the very foundation for the proceedings to be taken under those  provisions.  The notice contemplated under r.  32  is not  similar to a notice to be issued under S.  34(1)(b)  of the  Income  Tax Act, 1922.  All that ss. 11(4)  and  11A(1) prescribe  is  that  before taking  proceedings  against  an assessee  under  those  provisions, he  should  be  given  a reasonable  opportunity  of  being heard.   In  fact,  those sections  do not speak of any notice.  But r. 32  prescribes the manner in which the reasonable opportunity  contemplated by those provisions should be afforded to the assessee.  The period of 30 days prescribed in r. 32 is not mandatory.  The rule  itself  says that ’ordinarily’ not less than  30  days notice should be given.  Therefore, the only question to  be decided is whether the defects noticed in those notices  had prejudiced  the appellants.  It may be noted that  when  the assessees  received the notices in question,  they  appeared before  the assessing authority, but they did not object  to the  validity  of those notices.  They asked  for  time  for submitting their explanation.  The time asked for was given. Therefore,  the fact that only nine days were given to  them for  submitting  explanation could not have  in  any  manner prejudiced  them.  St) far as the mistake in the  notice  as regards the assessment year is concerned, the assessees kept silent about that circumstance till 1958.  It was only  when they  were sure that the period of limitation prescribed  by S.  11A had expired hey brought that fact to the  notice  of the  assessing authority.  It is clear that  the  appellants were  merely trying to take advantage of the  mistakes  that had crept into the notices.  They cannot be permitted to  do so.   We  fail  to see why those notices are  not  valid  in respect of the periods commencing from February 1, 1953 till 31  10-55.   We  are  unable to  agree  with  Mr.  Gokhale’s contention  that each one of those notices should,  be  read

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separately  and that we should not consider  them  together. If those notices are read together as we ’think they  should be, then it is clear that those notices give the. appellants the  reasonable opportunity contemplated by ss.  11(4)  ’(a) and  11A(1).   In Chatturain and Others v.  Commissioner  Pt ’Income Tax, Bihar,(1) the: (1)  15 I. T. R. 302 679 Federal Court held that any irregularity in issuing a notice under s. 22 of the Income Tax Act, 1922 does not vitiate the proceeding  that  the  income  tax  assessment   proceedings commence  with  the issue of the notice, but  the  issue  or receipt of the notice is, however, not the foundation of the jurisdiction   of  the  Income  Tax  Officer  to  make   the assessment  or of the liability of the assessee to  pay  the tax.  The liability to pay the tax is :founded on ss. 3  and 4  of  the Income Tax Act which are the  charging  sections. Section  22  and  others  are  the  machinery  sections   to determine  the  amount of tax.  The ratio of  that  decision applies  to the facts of the present case.  In our  opinion, the notices issued in the year 1955 are valid notices so far as  they  relate to the period commencing from  February  1, 1953 to 31-10-55. In   view  of  our  conclusion  that  every  escapement   of assessment  coming within the scope of s. 11(4)(a)- is  also an  escapement  of  assessment under s. 11  A(1),  a  notice issued under s. 11 (4)(a) would be a vaild notice in respect of a proceeding under s. 11A(1). In  the result, we hold that the assessing authority has  no competence  to  assess the turnovers of  the  appellants  in respect  of the quarters commencing from 1-5-52  and  ending with January 31, 1953 as the same is barred by time under s. 11A.   We  further hold that s. 11(4)(a) is void as  it  is: violative  of Art. 14.  We accordingly issue a direction  to the respondents to refrain from assessing the appellants  in respect of those turn overs.  In other respects, the appeals fail and they are dismissed.  In the circumstances of  these cases, we make no order as to costs. Bachawat, J. Sections, 11(4), 11(5) and 11-A of the C.P. and Berar Sales Tax Act, 1947 are as follows:               "11(4) If a registered dealer-               (a)   does  not furnish returns in respect  of               any period by the prescribed date, or               (b)   having  furnished such ;return fails  to               comply  with  any  of the terms  of  a  notice               issued under subsection (2), or               (c)   has not regularly employed any method of               accounting, or if the method employed is  such               that,  in  the opinion  of  the  Commissioner,               assessment  cannot  properly be  made  on  the               basis thereof,               the   Commissioner  shall in  the,  prescribed               manner  assess the dealer to the best  of  his               judgment:               Provided  that he shall not so assess  him  in               respect of the default specified in clause (a)               unless  the  dealer  has been  first  given  a               reasonable opportunity of being beard.               680               (5)   If upon information which has come  into               his possession, the Commissioner is  satisfied               that  any  dealer has been liable to  pay  tax               under  this Act in respect of any  period  and               has nevertheless wailfully failed to apply for               registration,  the Commissioner shall, at  any

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             time within three calendar years from the  ex-               piry of such period, after giving the dealer a               reasonable opportunity of being heard, proceed               in such manner as may he prescribed to  assess               to the best of his judgment the amount of  tax               due from the dealer in respect of such  period               and    all    subsequent    periods:and    the               Commissioner may direct that the dealer  shall               pay  by  way  of penalty in  addition  to  the               amount of tax so assessed a sum not  exceeding               one and a half times that amount.               11-A. (1) If in consequence of any information               which  has  come  into  his  possession,   the               Commissioner is satisfied that any turnover of               a  dealer  during any period has  been  under-               assessed or has escaped assessment or assessed               at  a  lower rate or any  deduction  has  been               wrongly made therefrom the.  Commissioner may,               at  any time within three calendar years  from               the  expiry of such period, after  giving  the               dealer a reasonable opportunity of being heard               and after making such inquiry as he  considers               necessary,  proceed in such manner as  may  be               prescribed  to  re-assess or. assess,  as  the               case  may  be,  the tax payable  on  any  such               turnover; and the Commissioner may direct that               the dealer shall pay, by way of penalty in ad-               dition to the amount of tax so assessed, a sum               not exceeding that amount.               (2)   The  assessment  or  reassessment   made               under  subsection (1) shall be at the rate  at               which it would have been made, had there  been               no under-assessment or escapement."               The   Bombay  Sales  Tax   Laws,   (Validating               Provisions  and Amendment) Act, 1959  inserted               the following sub-section (3) in s. 11A:               "(3)(a) Nothing in sub-sections (1) and (2)-               (i)   shall apply to any proceeding (including               any notice issued) under section 11, or 22A or               22B, and               (ii)  notwithstanding any judgment, decree  or               order of a court or Tribunal, shall be  deemed               ever   to   have  been  applicable   to   such               proceeding or notice.               (b)   The  validity of any such proceeding  or               notice shall not be called in question  merely               on  the ground that such proceeding or  notice               was   inconsistent  with  the  provisions   of               subsections (1) and (2)." 681 The  appellant  is a registered dealer.  It failed  to  file returns for the periods 1-5-1952 to 31-10-1952, 1-11-1952 to 31-10-1953, 1-11-1953 to 31-10-1954 and 1-11-1954 to  31-10- 1955.   The Sales Tax Officer, Non-resident  Circle,  Nagpur issued four notices to the appellant initiating  proceedings under  ss. 10(3), 11(4), 11A(1) and 22C(1) of the Act.   The appellant   filed  a  writ  petition  in  the   High   Court challenging the notices and asking for an order  restraining the  respondents  from taking steps under  the  notices  and making  assessments or levying penalties in respect  of  the aforesaid   periods.    The   High   Court   dismissed   the application.   From this order, the appellant has  preferred the present appeals. Notices under s. 22C(1) can be issued only in course of  any proceedings  under the Act.  As no proceedings were  pending

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against  the appellant, no notice under s. 22C(1)  could  be issued to it. We shall presently show that no notice can  be issued to a registered dealer under s. 11A(1) for  assessing the  turnover which has escaped assessment by reason of  his not  filing a return.  The impugned notices so far  as  they were  issued under ss. 22C(1) and 11A(1) may be  treated  as surplusage and rejected. Under s. 10(3), if a registered dealer fails to furnish  his return for any period within the prescribed time without any sufficient  cause,  the Commissioner may  after  giving  him reasonable  opportunity of being heard direct him to pay  by way of penalty a sum not exceeding one-fourth of the  amount which  may be assessed on him under s. 11. If no  assessment can  be made under s. 11, no penalty can be levied under  s. 10(3).   Therefore, the point for determination  is  whether the  impugned  notices so far as they were issued  under  s. 11(4) are valid. The contention of the appellant is that the notices under s. 11 (4)    are  invalid as they were not issued within  three years from the expiry  of the aforesaid periods.  We see  no force in this contention.  Section 11(4) does not  prescribe a  period of limitation for the issue of a notice under  it. In Ghanshyam Das v. Regional Assistant Commissioner of Sales Tax,  Nagpur(1),  the  Court  by  a  majority  decided  with reference  to s. 11.(4) and s. 11A, as it stood before  its- amendment   by  the  Bombay  Sales  Tax   Laws   (Validating Provisions and Amendment) Act, 1959, that a notice under  s. 11(4) initiates new proceedings and it also decided or to be more  accurate,  assumed  that  the  period  of   limitation prescribed  by s. 11A(1) should be imported into  s.  11(4). The case was decided without reference to s. 11A(3) inserted by   the   Amending  Act  and  is  no   authority   on   the interpretation  of  that sub-section.   Section  11A(3)  now expressly provides that nothing in s. 11A(1) shall apply  to any proceeding including any notice issued under s. 11.  The section is retrospective in operation.  It follows that  the period of (1)  [1964] S.C.R. 436, 682 limitation  prescribed by s. 11A(1) cannot be applied  to  a proceeding  or a notice issued under s. 11(4).  There is  no period of limitation prescribed for a notice or a proceeding initiated  under  s.  11(4).   Consequently,  the   impugned notices issued under s. 11 (4) are not barred by  limitation and are not invalid. The argument then is that s. 11(4)(a) offends Art. 14 of the Constitution  in two ways.  Firstly, it is said that  it  is open to the sales tax authorities to proceed at their  sweet will  either under s. 11(4)(a) or under s. IIA(1) against  a registered  dealer for his failure to file returns  and  the principle  of  Shree  Meenakshi  Mills Ltd.  v.  Sri  A.  V. Viswanatha  Sastri  and Another(1) is invoked.  We  find  no merit  in this contention.  Section 11(4)(a) specially  pro- vides for the initiation of proceedings against a registered dealer  who  has  not furnished returns in  respect  of  any period  by  the prescribed date.  Having made  this  special provision,  the legislature must be taken to  have  intended that  in  a  case falling under s. 11(4)(a)  the  sales  tax authorities must proceed against the registered dealer under S. 11(4)(a) and not under s. IIA(1).  The special  provision must  be taken silently to exclude all cases failing  within it   from  the  purview  of  the  more  general   provision. Moreover. if a statute is capable of two constructions, that construction  should  be given which will uphold  it  rather than  the  one  which will invalidate  it.   Construing  ss.

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11(4)(a) and 11A(1) together we should, therefore, hold that the  cases falling within s. 11(4)(a) are excluded from  the purview  of  s. 11 A(1).  The point that there is  no  over- lapping  of  ss.  11(4)(a) and 11A(1)  is  made  clearer  by s.11A(3).   The  decisions under s. 34(1)(b) of  the  Indian Income-tax  Act, 1922 such as Maharaj Kumar Kamai  Singh  v. Commissioner of Incometax, Bihar and Orissa(2) and under  s. 14   of  the  Business  Profits  Tax  Act,  1947   such   as Commissioner  of  Income Tax v. Narsee Nagsee &  Co.(2)  are distinguishable.   In  those  Acts,  there  was  no  special provision  corresponding to s. 11(4) for proceeding  against registered  dealers  who  have not filed  returns,  and  the question how far the special provisions would exclude  cases within it from the purview    of the more general  provision could not arise.  In Ghanshyam     Das’s  case(3),  none  of the notices in question was issued under     s. 11A, and the Court  did  not  say  that  a  registered  dealer  could  be proceeded  against  under s. 11 A for not filing  a  return. Nor did the Court consider the effect of s. 11 A(3).  It  is true  that  the  majority  decision  held  that  the  phrase "escaped  assessment" in s. 11A includes that of a  turnover which  has  not been assessed at all because  no  assessment proceedings  were  initiated.   But  having  regard  to  the special  provisions  of s. 11(4) read with  S.  11A(3),  the power  under  s. 11 A(1) as interpreted in  Ghanshyam  Das’s case(4)  to  assess  turnover which  escaped  assessment  by reason of non-filing of returns must be confined to cases of (1) [1955] 1 S.C.R. 787.   (2) [1959] Supp. 1 S.C.R. 10. (3) [1960] 3 S.C.R. 988,   (4) [1964] 4 S.C.R. 436. 683 unregistered  dealers.   As pointed out  already,  cases  of registered dealers falling within s. 11(4) are excluded from the purview of s. 11A(1). It  is  next  said that s. 11 (4) offends  Art.  14  of  the Constitution  because no period of limitation is  prescribed for  a  notice under it, whereas periods of  limitation  are prescribed  for notices under ss. IIA(L) and 11(5).  We  see no   merit  in-  this  contention.   The  Act  ’deals   with registered  and  unregistered dealers  differently  in  many ways.  The classification and differential treatment of  re- gistered  and unregistered dealers are based on  substantial differences having reasonable relation to the object of  the Act.   A registered dealer unlike an unregistered dealer  is under  a  statutory obligation to file returns  without  any notice  being served upon him and to pay the full amount  of tax  due from him before furnishing the return (ss.  10  and 12).   A  dealer who has registered himself  under  the  Act admits his liability to furnish returns whereas a dealer who has  not  registered  himself makes no  such  admission.   A registered dealer has certain advantages under the Act which are  denied to an unregistered dealer.  Section  2(1)(a)(ii) exempts  from  tax  sales of a registered  dealer  of  goods specified  in  his  certificate  of  registration  as  being intended for use by him as raw materials in the  manufacture of  goods  for  sale by actual delivery  in  the  State  for consumption therein.  An unregistered dealer cannot get  the benefit  of  this  exemption.   Moreover,  s.  2(j)  (a)(ii) exempts  from tax sales to a registered dealer of goods  de- clared  by him in the prescribed form as being intended  for resale   by  him  by  actual  delivery-in  the   State   for consumption  therein.  The sales to an  unregistered  dealer are  not so exempt.  Consequently, a registered dealer  call buy  his  goods  from the producer or the  wholesaler  at  a cheaper  price and has thus ail economic advantage  over  an unregistered dealer.  In the matter of penalties, ss.  10(3)

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and  22C(1)  treat the two classes of dealers  on  the  same footing,  but  ss.   11 (4), 11(5) and 11  A(1)  treat  them differently.   No  penalty  can be levied  on  a  registered dealer  under s. 11(4) but heavy penalties may be levied  on an  unregistered dealer under ss. 11(5) and  11A(1).   While prescribing periods of limitation for proceedings against an unregistered   dealer  under  ss.  11(5)  and  11A(1),   the legislature has wisely not prescribed a period of limitation for  a  proceeding  initiated under s.  11(4)(a)  against  a registered dealer considering that (1) the registered dealer is  under a statutory obligation to file the return, (2)  no penalty  is leviable under s. 11(4). and (3) the  registered dealer  is  given many advantages under the  Act  which  are denied to an unregistered dealer.  The bar of limitation  in the case (if an unregistered dealer and the absence of  such a bar in the case of a registered dealer cannot be  regarded as unjust or discriminatory.  Questions of policy are not to be  debated  in this Court.  There is no compulsion  on  the legislature  to  prescribe a period of limitation  in  every case.   In  taxing  statutes the  legislature  has  a  large measure of discretion.  We cannot strike 684 down  s. 11(4)(a) because of some preconceived  notion  that the  same  period  of limitation should  be  prescribed  for proceedings   against  both  registered   and   unregistered dealers.  In Ghanshyam Das’s case(1), Raghubar Dayal, J.  at p.  459 clearly held that s. 11(4) is not violative of  Art. 14.   The  majority did not dissent from this  opinion.   We hold  that  s.  11 (4) is not violative of Art.  14  and  we uphold it. It follows that the notices issued on July 8, 1959 under  s. 11(4)  are valid in respect of the entire period  from  1-11 1952  to 31-10-1955.  As regards the alternative  contention of  the respondent, that the notices issued in 1955  validly initiated, proceedings under s. 11(4) for the period from 1- 2-1953  to 31-10-1955 we are glad to find that the  majority has  accepted this contention.  The irregularities, if  any, in  the  notices do not invalidate them.  However,  for  the reasons  already  mentioned,  we are  of  opinion  that  the impugned notices issued on July 8, 1959 are valid. In   the result, the appeals are dismissed with costs.                            ORDER In accordance with the opinion of the majority these appeals are  partly allowed with respect to turn-over from  1-5-1952 to 31-1-1953.  In other respects the appeals are  dismissed. No order as to costs. V.P.S. (1) [1964] 4 S.C.R. 436. 685