Court invalidates assessment not compliant with section 18(4) & rule 39. Reassessment under section 21 must adhere to statutory rules.

State of Uttar Pradesh Versus Manohar and Company, Bareilly  

State of Uttar Pradesh Versus Manohar and Company, Bareilly   - [1971] 28 STC 606 (SC)   Issues:
1. Whether a dealer can elect assessment year basis from previous year basis under rule 39 in a case where section 18(4) applies warranting assessment on previous year basis.
2. Whether the election made and the resulting original assessment on assessment year basis would act as a bar necessitating subsequent assessment to be completed on assessment year basis.

Analysis:

The case involved an appeal arising from the High Court of Allahabad regarding the interpretation of the U.P. Sales Tax Act, 1948. The appellant, a dealer in imported vanaspati oil and kirana, had its turnover assessed for the year 1952-53 under section 18(3) of the Act. Subsequently, a notice under section 21 was issued as some turnover had escaped assessment, resulting in a reassessment based on best judgment assessment. The appellant challenged this reassessment, arguing non-compliance with section 18(4) of the Act. The Judge (Appeals) rejected the appeal on the grounds that the original assessment was not challenged. The Board of Revenue also dismissed the revision petition on similar grounds, leading to the reference of two questions to the High Court.

The High Court, through different judges, provided conflicting answers to the referred questions. The Supreme Court examined the relevant provisions of the Act, including sections 3, 7, and 18, along with rule 39. The Court relied on a previous decision to conclude that an assessment contrary to section 18(4) but in line with rule 39 is invalid. Regarding the second question, the Court held that an illegal original assessment, not contested, does not authorize the continuation of that illegality in reassessment proceedings under section 21. The application of section 18(4) to assessments under section 21 was emphasized, and the Court highlighted that no separate procedure is outlined for assessments under section 21. Additionally, the Court clarified that there can be no estoppel against a statute.

In conclusion, the Court dismissed the appeal, emphasizing that the validity of the original assessment was not under consideration in the appeal, but rather the reassessment proceedings. The Court held that the reassessment must comply with the statutory requirements, and the appeal was consequently dismissed with costs.