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PETITIONER: MODI SUGAR MILLS LTD.

       Vs.

RESPONDENT: COMMISSIONER OF SALES TAX, U.P., LUCKNOW

DATE OF JUDGMENT: 16/11/1965

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. SUBBARAO, K. SHAH, J.C.

CITATION:  1966 AIR  841            1966 SCR  (2) 607

ACT:       U.P. Sales Tax Act, (15 of 1948), s. 7 and U.P.  Sales Tax Rules, rr. 39 and 40--Submission of returns on basis  of previous  year--Election  to submit turnover  of  assessment year--Sanction of commissioner if necessary.

HEADNOTE:       For the assessment years 1948-49, 1949-50 and 1950-51, the appellant was assessed on the-basis of returns filed for the  turnover  of  each relevant  previous  year.   For  the assessment  year 1951-52, the appellant, purporting to  make an  election  under r. 39(1) of the U.P.  Sales  Tax  Rules, filed returns of his turnover of the assessment year instead of  the previous year.  The Judge (Revision) Sales Tax  held that  without  the sanction of the  Sales  Tax  Commissioner under r. 39(2), the appellant was not entitled to do so, and the  High  Court  also, on a  reference,  held  against  the appellant.        In appeal to this Court,        HELD : The answer of the High Court should have  been in favour of the appellant. [610 HI        Under  r.  39(1), the dealer makes a choice  that  he will  be  assessed  in respect of the turnover  not  of  the previous year, which is the normal position under s. 7,  but in  respect  of the turnover of the assessment  year.   Rule 39(2), requiring the sanction of the Sales Tax  Commissioner covers  only  the, case where such election  has  been  made under r. 39(1), that is, where the election has been made by a  dealer to be assessed in respect of the turnover  of  the assessment  year, and the dealer wishes to exercise a  fresh option.  Even assuming that, when a dealer submits a  return in respect of the previous year under r. 40 be is treated to have  elected within that rule, yet, there is  no  provision like  r. 39 (2) which debars him from exercising the  option under r. 39(1).  In the absence of an express provision like r.  39(2), general principles cannot debar an assessee  from exercising a statutory right given to him. [611 A-E]

JUDGMENT:

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     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 535  of 1964.       Appeal  by special leave from the judgment  and  order dated July 25, 1961 of the Allahabad High Court in Sales Tax Reference No. 460 of 1954.       A.  V. Viswanatha Sastri and K. K. Jain for appellant.       C.  B. Agarwala and 0. P. Rana, for respondent.       The Judgment of the Court was delivered by       Sikri,  J.  This appeal by special leave  is  directed against  the  judgment of the High Court  of  Judicature  at Allahabad passed 608 in a reference made to it under s. II of the U.P. Sales  Tax Act,  1948 (U.P. Act XV of 1948)-hereinafter referred to  as the  Act.   In  this reference the  following  question  was referred by the Judge (Revision), Sales Tax at the  instance of  the appellant,Modi Sugar Mills Ltd., hereinafter  called the assessee:                    "Whether  a dealer who has been  assessed               to  tax on the turnover of the  previous  year               according  to  his  election  can  change  his               option and elect the assessment year by filing               quarterly   returns   without   the   previous               sanction of Sales Tax Commissioner The High Court answered the question in the negative.       The   answer  to  this  question  depends   upon   the interpretation of S. 7(1) of the Act, and rr. 39, 40 and  41 of  the U.P. Sales Tax Rules, and form IV  prescribed  under these rules.  These provisions are as under:                     "S. 7-(1).  Subject to the provisions of               section 18, every dealer whose turnover in the               previous year is Rs. 12,000 or more in a  year               shall  submit  such return or returns  of  his               turnover  of  the previous year  within  sixty               days  of  the commencement of  the  assessment               year in such form and verified in such  manner               as may be prescribed :                     Provided that the Provincial  Government               may  prescribe  that any dealer  or  class  of               dealers  may submit, in lieu of the return  or               returns specified in this section, a return or               returns of his turnover of the assessment year               at  such intervals, in such form and  verified               in  such  manner  as may  be  prescribed,  and               thereupon all the provisions of this Act shall               apply  as if such return or returns  had  been               duly submitted under this Section.                      Provided  further  that  the  assessing               authority  may in his discretion  extend the               date  of the submission of the return  by  any               person or class of persons.                      Rule  39 : Election of Assesment  year.               (1) Any dealer may elect to submit returns  of               his turnover of the assessment year in lieu of               the  returns of the turnover of  the  previous               year,  and shall signify such election in  the               return filed by him in Form IV. 609       Provided  that a dealer who did not carry on  business during the whole of the previous year shall elect to  submit his returns of the assessment year.       (2) A dealer who has once signified his election under sub-rule  (1) shall not again exercise his option so  as  to vary the basis of assessment       Provided  that  the Sales Tax  Commissioner  may,  for

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reasons to be recorded in writing and on such conditions  as he deems fit permit a dealer to exercise a fresh option. Rule 40.  Submission of returns       Every  dealer  who  elects to  submit  return  of  his previous  year shall, within sixty days of the  commencement of  the assessment year, submit to the Sales Tax  Officer  a return in Form IV showing his turnover for the previous year        Provided  that  no  dealer  whose  turnover  in   the previous year was less than Rs. 15,000 shall be required  to furnish such returns.         Rule  41.   Returns of assessment  year.  (1)  Every dealer  whose estimated turnover during the assessment  year is not less than Rs. 15,000 and who elects to submit returns of  such  year shall before the last day of  July,  October, January and April submit to the Sales Tax Officer, a  return of  his  gross  turnover for the quarters  ending  June  30, September  30,  December 31 and March 31,  respectively,  in Form IV         Provided that every dealer or firm, to whom the pro- visions  of  sub-section (3) of Section  18  are  applicable shall submit such returns within seven days of the expiry of each  month  during  the  year  in  which  the  business  is commenced."         Before  we  deal  with  the  interpretation  of  the section and the rules it is necessary to give a few relevant facts.   It  appears that for the assessment  year  1948-49, 1949-50 and 1950-51, the assessee was assessed on the  basis of  returns  filled for the turnover of  the  previous  year relev ant  to  each  of these  assessment  years.   For  the assessment year 1951-52, however, the assessee purporting to make  an election under r. 39 of the rules filed returns  of his  turnover of the assessment year instead of the  returns of the turn- 610 over  of the previous year.  The Judge (Revision) held  that without sanction of the Sales Tax Commissioner the  assessee was not entitled to do so.     Mr.  Sastri,  the  learned  counsel  for  the  assessee, submits that the    above  rules  should be  interpreted  as follows : Under sub-rule (1)  of r. 39 the election is to Me returns  of the turnover of the assessment year  instead  of returns  of the turnover of the previous year and  not  vice versa.   Sub-rule  (2) also deals with  the  same  election, i.e.,  the election to file returns of the turnover  of  the assessment  year  instead of the turnover  of  the  previous year.  Rule 40 does not displace the above reading of r.  39 because  it  covers the case of every dealer who  wishes  to submit a return of the turnover of the previous year.  There is no other rule which deals with such a dealer, and he says that  the  word ’elects’ may perhaps have reference  to  the election  mentioned  in  form IV  which  we  will  presently consider.  At any rate, he says that sub-r. (2) of r. 39 has nothing to do with the election mentioned in r. 40.  He then submits  that  r. 41 is concerned with the  dealer  who  has elected under r. 39(1) to submit returns of the turnover  of the  assessment year and this rule provides various  matters in this connection.      The learned counsel for the State, Mr. C. B. aggarwala, on the other hand, contends that S. 7 of the Act, read  with the  rules,  gives  a dealer an option to  file  returns  in respect  of the turnover of the previous year or returns  of the  turnover of the assessment year, and he says that  this option is and can only be exercised in the first year when a dealer becomes taxable under the Act, and it is this  option or  election that is covered by sub-rule (2) of r.  39.   He

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relies  strongly  on form IV in which  the  following  lines occur                     "I  have elected to submit return of  my               turnover of the previous year ending/month  or               months of the assessment year". In the alternative he contends that even if r. 3 9 (2)  does not  cover the filing of the returns of the  previous  year, according   to  general  principles  the   assessee   having exercised  an  option  to  be assessed  in  respect  of  the turnover of the previous year cannot now change the basis of assessment. In our opinion the Judge (Revision) was in error in holding that the assessee was not entitled to make an election under r. 39 (1) without   the   sanction   of   the   Sales    Tax Commissioner, and the answer to the question referred to the High Court should be in favour of the assessee.  Rule  39(2) specifically mentions an elec- 611 tion under sub-r. (1) and there is only one kind of election under  r. 39(1) and that is for a dealer to elect to  submit returns of his, turnover for the assessment year in lieu  of the returns of the turnover of the previous year.  In  other words,  under  r. 39(1) the, dealer makes a choice  that  he will  be  assessed  in respect of the turnover  not  of  the previous year, which is normally the rule under s. 7, but in respect  of  the return of the turnover  of  the  assessment year.   It  seems to us that r. 39(2) covers only  the  case where: election has been made by a dealer to be assessed  in respect of the turnover of the assessment year.  It is  true that  r.  40 also uses the word ’elects’ but this  may  have reference  to  the lines in form IV which  we  have  already reproduced above.  But assuming that when a dealer submits a return in respect of the previous year under r. 40 and he is treated  to  have  elected within r. 40,  yet  there  is  no provision like r. 39(2) which debars him from exercising the option under r. 39(1).  In our opinion an express  provision like  r.  39(2)  was  necessary to  prevent  a  dealer  from exercising  the option given to him under r. 39(1).   We  do not express any opinion whether such a rule could validly be made under s. 7 (1). We are not impressed by the argument of Mr. Aggarwal that general principles debar the assessee from exercising  the option under r. 39 (1).  It is  a  statutory right  given to the assessee and the general principles,  if applicable, cannot displace- the statutory right..      We may mention that the reasoning in the judgment under appeal  has  been doubted in an unreported judgment  of  the Allahabad  High  Court  in M/s Mahesh  Company  Kahoo  Kothi Kanpur v.The Commissioner of Sales Tax, Uttar Pradesh(1).      In  the  result we accept the appeal,  and  answer  the question.referred to the High Court in the affirmative.  The appellant will have his costs here and in the High Court.                             Appeal allowed.. (1) Sales Tax Reference No. 1623 of 1956; judgment delivered on March 13, 1963 612