Escaped sales tax assessment limitation runs to initiation of proceedings, not necessarily final order, under rule 33(1).

The SC interpreted rule 33(1) of the Travancore-Cochin General Sales Tax Rules, 1950 to mean that the three-year limit governed the initiation and pendency of escaped assessment proceedings, not necessarily the making of the final assessment order. Assessment proceedings validly commenced within that period could continue until final disposal unless the statute clearly required completion within the same time. The Court applied the principle that a limitation provision should not be defeated by collateral delay or stay orders. The escaped assessment was therefore treated as within time, and the Revenue succeeded.

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Issues: Whether proceedings for escaped sales tax assessment under rule 33(1) of the Travancore-Cochin General Sales Tax Rules, 1950 had to be completed within three years, or whether it was sufficient if they were initiated within that period.

Analysis: The prescribed time limit was read in the context of the whole assessment process. The words used in rule 33(1), including the direction to determine escaped turnover and assess the tax payable after notice and enquiry, were held to govern the commencement and pendency of assessment proceedings rather than to require the final order itself to be made within three years in every case. The Court followed the principle applied in earlier sales tax decisions that assessment proceedings, once validly initiated within limitation, continue until terminated by a final order, unless the statute clearly provides otherwise. A contrary construction would permit the limitation provision to be defeated by collateral delay or stay orders.

Conclusion: Proceedings validly initiated within the three-year period were not barred merely because the final assessment order was made after expiry of that period. The assessment for the relevant year was held to be within time, in favour of the Revenue.

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