Escaped assessment under sales tax law includes non-assessed turnover, while assessment proceedings begin only on actual initiation.

"Escaped assessment" under section 11-A of the Central Provinces & Berar Sales Tax Act was construed broadly to include turnover not assessed at all, as well as turnover only partly assessed. For a registered dealer, assessment proceedings begin only when a return is actually filed or notice is issued in the prescribed manner; the statutory due date for filing a return does not by itself commence proceedings. On that construction, notices and assessments had to be tested against limitation period by period, and composite assessments covering barred and non-barred periods could not stand without segregation.

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Issues: (i) Whether the expression "escaped assessment" in section 11-A of the Central Provinces & Berar Sales Tax Act, 1947 includes turnover which has not been assessed at all. (ii) Whether assessment proceedings in the case of a registered dealer commence only on the filing of a return or issue of a notice, or whether they commence on the statutory due date for furnishing the return. (iii) Whether, on the facts of the two appeals, the impugned notices and assessments were barred by limitation under section 11-A.

Issue (i): Whether the expression "escaped assessment" in section 11-A of the Central Provinces & Berar Sales Tax Act, 1947 includes turnover which has not been assessed at all.

Analysis: The expression was construed broadly. The Court treated it as covering not only cases where an assessment had taken place but part of the turnover had not been brought to tax, but also cases where no assessment had been made at all because no assessment proceedings had been initiated. The reasoning drew support from analogous interpretations under income-tax and business profits tax enactments, where "escaped assessment" was understood to include cases of non-assessment as well as partial assessment.

Conclusion: Yes. Turnover which has not been assessed at all can fall within "escaped assessment" under section 11-A.

Issue (ii): Whether assessment proceedings in the case of a registered dealer commence only on the filing of a return or issue of a notice, or whether they commence on the statutory due date for furnishing the return.

Analysis: The majority held that a mere statutory obligation to file a return does not, by itself, set assessment proceedings in motion. For a registered dealer, proceedings commence when a return is actually filed or when notice is issued under the Act in the prescribed manner, and they continue until a final assessment order is made. A default in filing does not, by its own force, create pending proceedings. The dissent took the contrary view, but the majority ruled that the statutory due date alone does not initiate proceedings.

Conclusion: Proceedings commence only upon actual initiation under the Act, not merely by the expiry of the due date for filing the return.

Issue (iii): Whether, on the facts of the two appeals, the impugned notices and assessments were barred by limitation under section 11-A.

Analysis: Applying the above construction, the Court distinguished between the two appeals. In the first, only the quarter for which a return had been filed was pending; the remaining quarters were not protected by pending proceedings, so section 11-A could operate only in relation to the non-pending periods. In the second, the notice was within three years from the expiry of the relevant fourth quarter, so the entire quarter was within time. Since the assessments were made for the whole year without segregation of the non-barred periods, the proper course was to set aside the assessments and permit fresh assessments for periods not barred.

Conclusion: The impugned assessments could not stand as made; they were set aside with liberty to reassess only the periods not barred by section 11-A.

Final Conclusion: The majority adopted a broad meaning of "escaped assessment" but held that assessment proceedings for a registered dealer do not begin merely on the statutory due date for filing returns. On the facts, the assessments could not stand in their composite form and were set aside with liberty to make lawful reassessments for the permissible periods.

Ratio Decidendi: For a registered dealer, assessment proceedings begin only when they are actually initiated under the Act by a return or prescribed notice, and "escaped assessment" includes turnover not assessed at all where no proceedings were pending.

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