1967 (2) TMI 66 - SC - VAT and Sales Tax

Assessment order upheld: Timely notice served, proceedings valid. Appeal allowed, writ petition dismissed.

The State of Punjab and Others Versus Tara Chand Lajpat Rai

The State of Punjab and Others Versus Tara Chand Lajpat Rai - [1967] 19 STC 493 (SC)   Issues Involved:1. Whether the assessment order was time-barred and without jurisdiction.2. The applicability of Section 11(3), Section 11(4), or Section 11(5) of the Punjab General Sales Tax Act, 1948.3. Commencement and validity of assessment proceedings.Detailed Analysis:Issue 1: Whether the assessment order was time-barred and without jurisdiction.The primary question raised in this appeal was whether an assessment order finalized after three years from the termination of the period for furnishing returns, but initiated within the three-year period, could be considered time-barred and without jurisdiction. The court examined the facts and legal provisions to determine the validity of the assessment order. The High Court had previously held that the order was time-barred, following its decision in M/s. Rameshwar Lal Sarup Chand v. The Excise and Taxation Officer, as it was made after three years from the close of the assessment year.Issue 2: The applicability of Section 11(3), Section 11(4), or Section 11(5) of the Punjab General Sales Tax Act, 1948.The court discussed various sub-sections of Section 11, which outline different scenarios for assessment:- Section 11(1): If the returns are deemed correct and complete without requiring the dealer's presence.- Section 11(2): If the returns are not satisfactory, a notice is issued to the dealer for further evidence.- Section 11(3): Assessment is made after considering the evidence presented.- Section 11(4): Best judgment assessment if the dealer fails to comply with the notice within three years.- Section 11(5): Best judgment assessment if the dealer fails to furnish returns within three years.- Section 11(6): Best judgment assessment if the dealer fails to apply for registration.The court noted that the mere mention of best judgment assessment by the Assessing Authority does not conclusively categorize the order under Section 11(4) or Section 11(5).Issue 3: Commencement and validity of assessment proceedings.The court referenced previous judgments, particularly Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, to elucidate when assessment proceedings are considered to commence. It was established that:- Assessment proceedings commence either when the dealer files returns or when a notice is issued under Section 11(2).- If proceedings are initiated within the prescribed period, the final assessment can be made even after the expiry of that period without being time-barred.In the present case, the dealer filed returns, and the notice under Section 11(2) was issued within the three-year period. Therefore, the assessment proceedings commenced within the prescribed time. The final assessment order, although made after three years, was valid as the proceedings were pending from the date of the notice.Conclusion:The Supreme Court concluded that since the notice dated January 11, 1957, was served within three years from the respective dates for furnishing the returns, the assessment proceedings commenced within time and remained pending until terminated by the assessment order. Therefore, the assessment order could not be considered time-barred or without jurisdiction. The appeal was allowed, and the writ petition was dismissed without any order as to costs.