Reasonable classification in tax notice limitation upheld where pending assessment proceedings differ from escaped-assessment proceedings.

Proceedings under section 11(2) of the C. P. and Berar Sales Tax Act stand apart from proceedings under section 11A because a notice under section 11(2) is only a step in a pending assessment and does not start a fresh proceeding. On that basis, the absence of a limitation period for notices in pending proceedings was held to rest on a rational classification and not to violate Article 14. The earlier decision in Ghanshyamdas was treated as settling the overlap and equality challenge. The constitutional challenge failed, and the differential treatment was upheld as valid.

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Issues: Whether section 11A(3) of the C. P. and Berar Sales Tax Act, 1947, in its application to proceedings under section 11(2), violates Article 14 of the Constitution of India by creating an unreasonable classification and by denying limitation to notices issued in pending assessment proceedings.

Analysis: The Court held that proceedings under section 11(2) stand on a different footing from proceedings under section 11A. A notice under section 11(2) is only a step in a pending proceeding and does not initiate a fresh proceeding, whereas section 11A deals with matters not already pending. On that basis, cases under the two provisions do not occupy the same field, and there is a rational distinction for the legislative treatment of limitation. The earlier decision in Ghanshyamdas was treated as conclusively answering the challenge to the supposed overlap between the two provisions and to the alleged inequality. The concurring judgment also agreed that section 11(2) is not governed by any limitation period and that the differential treatment is constitutionally permissible.

Conclusion: The challenge under Article 14 failed. Section 11A(3) and the notices under section 11(2) were upheld as valid, and the assessee's contention that the classification was discriminatory was rejected.

Ratio Decidendi: A notice issued in a pending assessment proceeding is materially distinct from a notice initiating a new escaped-assessment proceeding, and reasonable classification based on that distinction does not offend Article 14.

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