1964 (10) TMI 80 - HC - VAT and Sales Tax

Time Limit Set for Tax Assessments; Clarity Urged to Avoid Delays

The court concluded that best judgment assessments under the Punjab General Sales Tax Act must be finalized within three years. The court emphasized the ... - Issues Involved:1. Whether the best judgment assessment under the Punjab General Sales Tax Act must be finalized within three years.2. Whether the High Court should interfere with assessment on the writ side without the aggrieved party utilizing the remedies provided by the statute.3. The impact of conflicting judicial opinions and Supreme Court decisions on the interpretation of Section 11 of the Punjab General Sales Tax Act.Issue-wise Detailed Analysis:1. Finalization of Best Judgment Assessment within Three Years:The primary issue was whether the best judgment assessment under Section 11 of the East Punjab General Sales Tax Act must be completed within the period of limitation prescribed under sub-sections (4), (5), and (6). The Full Bench decision in Rameshwar Lal Sarup Chand v. Shri U.S. Naurath held that a best judgment assessment must be completed within the period of limitation, and any assessment beyond three years must be quashed for being without jurisdiction. This was supported by D.K. Mahajan, J., and Capoor, J., who emphasized that best judgment assessments had to be made within three years. However, Pandit, J., dissented, arguing that there was no need to import the three-year limitation for finalizing the assessment from sub-sections (4), (5), and (6) into sub-section (3).2. High Court's Interference with Assessment on Writ Side:The question also arose whether the High Court should interfere with assessment on the writ side without the aggrieved party utilizing the statutory remedies. The court noted that the petitioner had approached the High Court under Articles 226 and 227 of the Constitution, challenging the assessment made after the expiry of three years. The court observed that in matters of taxation, it is crucial to remove legal uncertainties promptly to avoid undue delays in tax realization. Therefore, the court decided to refer the matter to a larger Bench to settle the conflicting judicial opinions.3. Conflicting Judicial Opinions and Supreme Court Decisions:The court discussed the conflicting decisions on the true scope of the Supreme Court's decision in Madan Lal Arora v. Excise and Taxation Officer. The Supreme Court in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax observed that proceedings duly initiated in time could be completed without a time limit. This was followed by a Bench of the Punjab High Court in Khushi Ram Behari Lal and Co. v. The Assessing Authority and Madan Mohan, Kot Kapura v. The District Excise and Taxation Officer. However, Shamsher Bahadur, J., in Murli Mal Ram Nath v. Shri Darvyo Singh, Assessing Authority, opined that the three-year limitation did not apply to ex parte orders of assessment where the assessee failed to respond to the notice.Conclusion:The court concluded that the legal position on the point raised was far from settled or certain. It emphasized the need for a larger Bench to resolve the conflict, preferably by a Bench of five Judges, to consider the effect of the latest Supreme Court decision on the earlier Full Bench decision. The court directed that the papers be placed before the Chief Justice for suitable orders and prompt disposal of the petition.Subsequent Orders:The petition was finally heard by Mahajan, J., who quashed the impugned assessment orders for being without jurisdiction as no steps were taken within three years for assessment under Section 11(4). However, the department could proceed to assess the petitioner under Section 11(3) in accordance with law. The petitions were allowed with no order as to costs.