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PETITIONER: TAX OFFICER-CUM-REGIONAL TRANSPORT OFFICER & ORS.

       Vs.

RESPONDENT: DURG TRANSPORT COMPANY (PVT.) LTD.  DURG

DATE OF JUDGMENT30/07/1971

BENCH: [K.  S. HEGDE AND A. N. GROVER, JJ.]

ACT: Madhya Pradesh Motor Vehicles (Taxation of Passengers)  Act. 1959  ss. 6, 7 and 8-Assessee not filing  return-Proceedings under  s.  7  have  to  be  taken  within  one  year-Escaped assessment, meaning of.

HEADNOTE: Where  an  assessee liable to pay passenger  tax  under  the Madhya Pradesh Motor Vehicles (Taxation of Passengers)  Act, 1959  submits  no return as required by s. 5 nor  makes  the required deposit under s. 6 the assessee escapes  assessment and proceedings under s. 7 will have to be taken within  the period of one year mentioned in s. 8. [991A] When  the  liability to tax is evaded by one method  or  the other  there  is an escaped assessment.   The  term  escaped assessment  includes both non. assessment as well  as  under assessment. [990G]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2289  of 1968. Appeal from the judgment and order dated August 18, 1967  of the Madhya Pradesh High Court in Misc.  Petition No. 640  of 1966. I. N. Shroff, for the appellants. M, N. Phadke, and K. L. Hathi, for the respondent. The Judgment of the Court was delivered by Hegde, J.-This is an appeal by certificate arising from  the decision   of   the  High  Court  of   Madhya   Pradesh   in Miscellaneous  Petition  No. 640 of 1966 on its  file.   The assessee  is  a Transport Operator.  It was  liable  to  pay passenger tax under Madhya Prakash Motor Vehicles  (Taxation of  Passengers)  Act, 1959-hereinafter referred to  as  "the Act".  It is said that it failed to pay the tax due from  it for  the  period  from  October 1,  1961  to  May  6,  1962. Admittedly  it submitted no return as required by section  5 of  the  Act,  nor did it make the  required  deposit  under section 6 of that Act.  No action appears to have been taken against  it  till  November 6, 1963 on which  date  the  Tax Officer  issued to it a notice under section 7 of  the  Act. Thereafter   he  proceeded  to  assess  it.   The   impugned assessment order was made on June 19, 1965.  That order  was challenged before the Madhya Pradesh                             589 High  Court by means of a writ petition under  sections  226

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and  227 of the Constitution.  The High Court accepted  that petition and quashed the impugned order. The  question before this Court is whether the order of  the High  Court is sustainable’.  The only question  that  calls for  decision  in  this appeal is  whether  the  proceedings initiated  by  the Tax Officer by means of  a  notice  under section  7  of the Act was beyond the  time  prescribed  and therefore  the  proceedings  taken  were  not   maintainable against the assessee.  In order to answer this question,  we shall read sections 5, 6, 7 and 8 of the Act. Section  (5) Submission of returns.-(1) In respect  of  the stage  carriage or stage carries held by him,  the  operator shall deliver or cause to be delivered to the Tax Officer or to such prescribed officer as the Tax Officer may specify  a return in the prescribed form and manner, either daily or at such intervals as may be prescribed Provided that different rules may be prescribed for the pur- pose  of  this sub-section in relation to  fleet-owner  from those in relation to other operators. (2)When any return is received by a prescribed officer  he shall  forward it to the Tax Officer within  the  prescribed period and in the prescribed manner. Section (6) Tax to be paid every month into Government Trea- sury.-The  tax payable during any month in  accordance  with the  returns submitted under section 5 shall be paid into  a Government   treasury  by  the  operator  and  the   receipt evidencing such payment forwarded to the Tax Officer, on  or before   such  date  or  dates  of  the  month   immediately succeeding as may be prescribed in the case of  fleet-owners and other operators. Section (7) Procedure where no returns are submitted,  etc.- In the following cases, that is to say-               (a)Where no returns have been submitted, by               the operator in respect of any stage  carriage               for any month or portion thereof, or               (b)where  the  returns  submitted  by   the               operator in respect of any stage carriage  for               any month or portion thereof appear to the Tax               Officer to be incorrect or incomplete; the   Tax  Officer  shall,  after  giving  the  operator   a responsible  op.  opportunity,  in case (a)  of  making  his representation  if any, and in case (b) of establishing  the correctness and correctness of 990 the  returns submitted by him, determine the sum payable  to the  State Government by the operator by way of  tax  during such month or portion thereof : Provided  that  the sum so determined shall not  exceed  the maximum  tax  which  would have been payable  to  the  State Government  if  the  stage carriage  had  carried  its  full complement  of  passengers  during  such  month  or  portion thereof. Section  (8) Fares escaping assessment.-If, for any  reason, the whole or any portion of the tax leviable under this Act, for  any month has escaped assessment, the Tax Officer  may, at any time within, but not beyond, one year from the expiry of that month, assess the tax which has escaped  assessment, after  issuing  a  notice to the operator  and  making  such inquiry as the officer may consider necessary. It may be noted that the expression "escaped assessment" has not been defined in the Act.  Therefore we have to  consider whether  an assessment that was not made as a result of  the assessee  not submitting his return can be considered as  an escaped  assessment.   According  to  Mr.  Shroff,   learned counsel   for   the  State  of  Madhya   Pradesh,   "escaped

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assessment"  means  an amount that had  escaped  from  being included  in the tax assessed.  According to him  no  amount can  be considered as "escaped assessment" unless there  has been an assessment anterior to the finding out of the amount that had escaped from being included in the assessment made. He  submitted that only such cases come within the scope  of section 8. According to his submission when a return is  not submitted as a consequence of which there was no  assessment the  tax  thus evaded does not  become  escaped  assessment. This contention does not appeal to us.  In our opinion, when the  liability to pay tax is evaded by one method  or  other there  is  an escapement of assessment.  The  term  "escaped assessment"  includes both non-assessment as well as  under- assessment.  When a person is not assessed to tax though  he is liable to be taxed he escapes assessment. We are unable to agree with Mr. Shroff that while the legis- lature  fixed one year time within which a reassessment  has to be made it fixed no time limit for making the assessment. This is a prima facie unacceptable argument.  The provisions of  the Act are somewhat similar to the Madhya Bharat  Sales Tax Act, 950.  While considering the meaning to be given  to the  expression "escaped assessment" this Court in  Regional Assistant  Commissioner  of  Sales  Tax,  Indore  v.   Malwa Vanaspati & Chemical                             991 Company  Ltd.(1) held that where a dealer has not filed  the prescribed return of his turnover at all, it would be a case of  "escaped assessment" and the proceedings for  assessment must  be  commenced in respect of that turnover  within  the period  of three years prescribed by s. 10.  We are  of  the opinion  that the ratio of decision apply to the  facts  in the present case.  Reading sections 6 to 8 together, we come to  the conclusion that the proceedings under section  7  or section  8  will have to be taken within the period  of  one year mentioned in section 8. For  the reasons mentioned above, this appeal fails and  the same is dismissed.  Under the circumstances we make no order as to costs. K.   B.   N.                                          Appeal Dismissed. (1) [1968]2 S.C.R. 431. GIPN--S4-1 S. C. India/71-14-10-72-2500.