Provisional assessment limits under sales tax rules: dealer may pay admitted tax, and liability disputes cannot be examined at that stage.

Rule 41 of the U.P. Sales Tax Rules limits provisional assessment to the statutory contingencies where no return is filed or tax is not paid in the prescribed manner. At that stage, the assessing authority may not test the legal correctness of the dealer's denial of liability or claim to a lower rate, because the dealer is required only to deposit the tax admitted by him to be due on the turnover shown in the return. The scheme, read with the Act, separates provisional assessment from regular assessment, and a disagreement on the dealer's legal view of liability does not by itself justify provisional best-judgment assessment.

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Issues: Whether, under rule 41 of the U.P. Sales Tax Rules, a dealer is entitled to deposit only the tax admitted by him to be due and whether the assessing authority can enquire, at the stage of provisional assessment, into the legal correctness of the dealer's denial of liability or claim to tax at a lower rate.

Analysis: Rule 41(2) requires the dealer to deposit the amount of tax calculated by him on the turnover shown in the return, and rule 41(3) permits provisional best-judgment assessment only where no return is filed or where the return is filed without payment of tax in the prescribed manner. Reading rule 41 with section 7 of the U.P. Sales Tax Act and the definition of "prescribed" in section 2(f), the scheme distinguishes provisional assessment from regular assessment. The authority's jurisdiction at the provisional stage is limited to the two contingencies stated in rule 41(3), and it cannot expand that jurisdiction by examining whether the dealer's view of liability was correct in law. The dealer's own calculation of tax may include a claim of no liability or liability at a lower rate, and compliance with rule 41(2) is not defeated merely because the assessing authority disagrees with that legal position. The earlier contrary observations were treated as obiter and not binding.

Conclusion: The dealer is entitled to deposit the tax admitted by him to be due, and the assessing authority has no power, while making a provisional assessment, to enquire whether the dealer's assumed position as to liability is legally justified.

Final Conclusion: The reference was answered in favour of the dealers, holding that provisional assessment under rule 41 cannot be made merely because the department disputes the dealer's legal view of tax liability.

Ratio Decidendi: At the stage of provisional assessment, the assessing authority's power is confined to the statutory contingencies expressly mentioned in the rule, and it cannot determine the legality of the dealer's claimed liability or rate of tax.

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