Deemed turnover and mid-year tax notifications can apply by apportionment when the assessment year rate changes.

A taxing statute that deems the previous year's turnover to be the turnover of the assessment year allows a notification issued during that assessment year to operate on that deemed turnover at the rate in force for the relevant period. The turnover may be apportioned between periods before and after the notification so that different rates apply according to when they were effective. The absence of an express reassessment or refund mechanism does not prevent the altered rate from operating. A dissent took the view that an enhanced rate could not be applied to sales already completed in the previous year.

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Issues: (i) Whether, for a dealer who elected to be assessed on the basis of the previous year's turnover, a notification issued during the assessment year altering the rate of tax could apply to that turnover and be given effect by apportioning the turnover between the periods before and after the notification.

Issue (i): Whether, for a dealer who elected to be assessed on the basis of the previous year's turnover, a notification issued during the assessment year altering the rate of tax could apply to that turnover and be given effect by apportioning the turnover between the periods before and after the notification.

Analysis: The charging scheme treated the turnover of the previous year as the taxable turnover of the assessment year by statutory fiction. On that footing, the applicable rate was the rate in force during the assessment year, not merely the rate existing on its first day. The Court held that the statute did not create any distinction in incidence between dealers assessed on previous-year turnover and those assessed on assessment-year turnover, and that the absence of an express mechanism for reassessment or refund did not prevent the altered rate from operating. The legal fiction of projecting the previous year's turnover into the assessment year could be worked out by proportioning the turnover according to the periods for which different rates prevailed.

Conclusion: The notification applied to the previous year's turnover and the higher rate was rightly levied on the relevant portion of that turnover. The issue was decided in favour of the Revenue.

Dissenting Opinion: Rajagopala Ayyangar, J., dissented and held that the notification could not be applied to sales already effected in the previous year for dealers who had opted for previous-year turnover assessment, because the enhanced rate could not be imposed without treating the notification as retrospectively affecting completed sales.

Ratio Decidendi: Where a taxing statute deems the previous year's turnover to be the turnover of the assessment year, a subsequent change in the rate of tax during that assessment year applies to that deemed turnover according to the period for which the altered rate is in force, unless the statute expressly provides otherwise.

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