TaxTMI 
TaxTMI 
1967 (4) TMI 175
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....r of Sales Tax has appealed to this Court with special leave. The respondents commenced business in cotton textiles at Bulandshahr in U.P. during the assessment year 1949-50 and they were assessed to sales tax under section 18(3) of the U.P. Sales Tax Act, 15 of 1948, on their turnover of that year. During the assessment year 1950-51 the respondents filed quarterly returns. The Sales Tax Officer, Bulandshahr, rejected the contention of the respondents that they were liable to be assessed on the turnover computed in accordance with section 18(4) of the U. P. Sales Tax Act, 1948, and computed the taxable turnover of the respondents at Rs. 1,15,711-11-3, and assessed them to pay tax on that turnover. In appeal to the Judge (Appeals), Sales Tax, the order was confirmed. But the Judge (Revisions) in exercise of power under section 10 of the Act set aside the order of the assessing authority and directed that taxable turnover of the respondents be calculated in accordance with the provisions of section 18(4) of the Act. The High Court of Allahabad agreed with the view of the Judge (Revisions). The Commissioner of Sales Tax contended in this appeal that the taxable turnover of the r....
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....the average monthly turnover is not less than Rs. 1,000 he shall assess the dealer on the total turnover shown in the returns. (c) If no returns are submitted by the dealer under clause (a) before the period specified, or if the returns submitted by him appear to the assessing authority to be incorrect or incomplete, the assessing authority shall, after such enquiry as he deems necessary, determine to the best of his judgment, the average monthly turnover and the total turnover for the period of the assessment year during which the business is carried on and, if the average monthly turnover is not less than Rs. 1,000 he shall assess the tax on the basis of the total turnover so determined by him. (4) The assessing authority shall fix the turnover of the dealer for the next succeeding assessment year at the amount of average monthly turnover determined by him in accordance with clause (b) or (c) of sub-section (3), as the case may be, multiplied by 12 and shall assess the tax thereon." In exercise of the powers conferred by section 24 of the Act, the State Government framed rules to carry out the purposes of the Act. Rules 39, 40 and 41 are relevant: "39. (1) Any ....
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..... The dealer may elect under rule 39(1) to return his turnover for the assessment year. Again a dealer who commences business as a dealer in the course of an assessment year is enjoined to submit monthly statements of his turnover during that year. If the dealer elects to make a return of the turnover for the assessment year, instead of the previous year, he will be assessed to tax under section 7(2) and (3) read with rule 41(5). If the dealer has commenced a new business during an assessment year, he is liable to be assessed under section 18(3)(b) and (c). He cannot in the year in which he has commenced business seek to submit the return of his turnover of the previous year, for he has no previous year qua his business dealings. So far the legal position is clear. But sub-section (4) of section 18 provides that on the basis of the average monthly turnover of a dealer who has commenced business during the course of any year, the assessing authority shall fix the turnover of the dealer for the next succeeding year, and shall tax him accordingly. The provision is mandatory, both as to the method of computation of the turnover and as to the assessment of tax on the turnover; it is ....
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....escaped liability to pay tax altogether, and even in respect of the next succeeding year he would have been liable to pay tax wholly unrelated to his true turnover of that year. In order to provide against these contingencies, section 18 was enacted. The scheme of the Act, as it stood originally enacted, was consistent and practical. But when the Legislature added the proviso to sub-section (1) of section 7 by Act 25 of 1948 giving an option to the dealer to submit in lieu of his return of the previous year the return of turnover of the current year, the significance of section 18(4) in the altered set up was apparently forgotten. Sub-section (4) of section 18 became inconsistent with the scheme of assessment of a dealer who exercised an option under rule 39(1) to submit his turnover of the assessment year. We may assume that it may not have been intended by the Legislature that a dealer who has exercised an option to submit his turnover for the year of assessment instead of the previous year, should still for the year immediately following the year in which he has commenced business be assessed to tax on a notional turnover. But if the Legislature has failed to make an adequate pr....