Best judgment assessment limitation starts with timely return or notice, but defective service can still invalidate an ex parte assessment

Under the Punjab General Sales Tax Act, best judgment assessment proceedings are initiated when a registered dealer files returns within time or when a notice is issued before expiry of the limitation period; completion of the assessment after that period does not by itself make it time-barred. The limitation objection therefore fails where initiation was timely. An ex parte assessment, however, cannot stand if service of hearing notices is defective and the dealer is denied a real opportunity to be heard. Proper service and fair hearing remain essential before assessment can be sustained.

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Issues: (i) Whether best judgment assessment proceedings under section 11(4), (5) and (6) of the Punjab General Sales Tax Act, 1948 were barred by limitation when returns were filed or notices were issued within three years but the assessments were completed later; (ii) whether the assessment in one appeal could stand where the notice of hearing had not been properly served and the dealer was denied an adequate opportunity of being heard.

Issue (i): Whether best judgment assessment proceedings under section 11(4), (5) and (6) of the Punjab General Sales Tax Act, 1948 were barred by limitation when returns were filed or notices were issued within three years but the assessments were completed later.

Analysis: Once a registered dealer files returns within the prescribed period, proceedings for assessment stand initiated. Likewise, where a notice for best judgment assessment is issued before expiry of the three-year period, the initiation of proceedings is within time. The actual completion of the assessment may occur after the expiry of the period, and the assessment is not thereby rendered without jurisdiction. This principle governed the appeals in which the dealers had filed returns or notices had been issued within time.

Conclusion: The limitation challenge failed, and the assessments in those appeals were upheld in favour of the Revenue.

Issue (ii): Whether the assessment in one appeal could stand where the notice of hearing had not been properly served and the dealer was denied an adequate opportunity of being heard.

Analysis: The first notice was not satisfactorily served, the second notice was also not properly served, and the mode of affixation adopted did not constitute adequate service where the place of residence was known and no attempt was made to serve the dealer there. In these circumstances, ex parte assessment without a real opportunity of hearing was not justified.

Conclusion: The assessment in that appeal was rightly quashed for denial of an adequate opportunity of being heard, in favour of the assessee.

Final Conclusion: The limitation-based challenge to best judgment assessments was rejected, but one assessment was invalidated for defective service and denial of hearing, so the batch of appeals was disposed of with mixed results.

Ratio Decidendi: For best judgment assessments, proceedings are initiated by a timely return or timely notice for assessment, and the assessment may be completed after the limitation period; however, an assessment cannot stand if it is made ex parte without proper service and a real opportunity of hearing.

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