Return-based assessment under sales tax law remains pending; notice under section 8(2) was not time-barred as escaped assessment.

Under the Madhya Bharat Sales Tax Act, 1950, once a dealer files returns and assessment proceedings begin, a notice under section 8(2) is a step in completing a pending assessment and is not treated as initiation of escaped-assessment proceedings. Section 10 therefore does not impose a general three-year limit on completion of a properly commenced return-based assessment. The distinction is that where no return is filed, section 10 governs the commencement of proceedings for escaped turnover, but where returns are filed the assessment remains pending until completed. The Court explained that Ghanshyamdas was confined to its own statutory scheme and did not bar such a notice after three years.

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Issues: Whether, after a dealer has filed returns and assessment proceedings have commenced under the Madhya Bharat Sales Tax Act, 1950, a notice under section 8(2) can be issued after expiry of the three-year period mentioned in section 10, or whether such notice is barred as relating to escaped assessment.

Analysis: The assessment machinery under sections 7 and 8 of the Madhya Bharat Sales Tax Act, 1950, distinguishes between a case where no return is filed and a case where returns are filed. Where no return is filed, the case may fall within escaped assessment and the period in section 10 applies to the initiation of proceedings for bringing the turnover to tax. Where returns are filed, assessment proceedings commence with the filing of the return, and a notice under section 8(2) is only a step in completing that pending proceeding. Section 10 does not impose a general time limit for completion of a properly commenced assessment. The decision in Ghanshyamdas was confined to the statutory scheme there involved and did not support the view that a return-based assessment becomes barred merely because a notice under section 8(2) is issued after three years. The Court also explained that the reference in that decision to section 10(3) or section 11(2) was a typographical error and should be read in the context of the provisions governing pending assessment proceedings.

Conclusion: The notice under section 8(2) was not barred by section 10, the assessment proceeding remained validly pending, and the objection based on limitation failed.

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