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Issues: (i) whether section 11(4)(a) of the Central Provinces and Berar Sales Tax Act, 1947, became discriminatory and void under Article 14 because, after insertion of section 11A(3), registered dealers proceeded against under section 11(4)(a) were denied the limitation available under section 11A(1); (ii) whether the notices issued under section 11(4)(a) were valid and whether assessment of the earlier period was barred by limitation.
Issue (i): whether section 11(4)(a) of the Central Provinces and Berar Sales Tax Act, 1947, became discriminatory and void under Article 14 because, after insertion of section 11A(3), registered dealers proceeded against under section 11(4)(a) were denied the limitation available under section 11A(1).
Analysis: The majority held that a registered dealer who failed to furnish returns could, on the facts, also be proceeded against under section 11A(1), because non-assessed turnover amounted to escaped assessment and the information requirement was satisfied by the authority's knowledge of the defaults. Once section 11A(3) excluded proceedings under section 11(4)(a) from the limitation under section 11A(1), the same class of defaulting registered dealers was exposed to different procedural treatment without a reasonable basis. The classification between registered and unregistered dealers, for this purpose, lacked a sufficient nexus with the object of dealing with escaped assessments.
Conclusion: section 11(4)(a) was held to be violative of Article 14 and liable to be struck down, in favour of the assessee.
Issue (ii): whether the notices issued under section 11(4)(a) were valid and whether assessment of the earlier period was barred by limitation.
Analysis: The majority held that notices under section 11(4)(a) were machinery notices intended to afford a reasonable opportunity of being heard, and irregularities in form, the wrong assessment year, or short time for response did not by themselves invalidate them where no prejudice was shown. However, the turnover for the period up to 31 January 1953 was beyond the permissible time for reassessment and could not be validly proceeded with. For the remaining period, the notices were treated as effective and the proceedings were not barred.
Conclusion: assessment for the earliest period was barred, while the notices and proceedings for the remaining period were upheld, partly in favour of the assessee.
Final Conclusion: the appeals succeeded only to the extent that assessment of the barred initial period was disallowed and section 11(4)(a) was invalidated on the constitutional challenge, while the balance of the proceedings remained undisturbed.
Ratio Decidendi: where two statutory routes cover the same escaped-assessment default, denial of a limitation safeguard to one class without a rational basis offends Article 14, and procedural irregularities in a statutory notice do not invalidate the proceeding absent prejudice.
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