AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1963 (8) TMI 2
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....in Civil Appeal No. 101 of 1961 are as follows : The appellant is the manager of a joint Hindu family firm carrying on business in bidis. He is registered as a dealer under section 8 of the Act. Every registered dealer under the Act is required to furnish quarterly returns of his turnover within one month from the end of the quarter. For the year 1949-50, i.e., for the period from October 22,1949, to November 9, 1950, he submitted a return of his turnover on October 5, 1950, for one quarter only and made a default in respect of the other quarters. The Assistant Commissioner of Sales Tax, Nagpur, issued a notice to the appellant on August 13, 1954, in Form No. XI under section 11(1) and (2) of the Act in respect of the turnover of the firm for the said period. The appellant thereafter filed the returns for the three quarters in respect of which he had made default, but in the assessment proceedings be contended, inter alia, that the Assistant Commissioner could not assess his escaped turnover as he could only do so within three years from the expiry of the period in respect whereof his turnover had escaped assessment. The Sales Tax Commissioner rejected the said contention, proceede....
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....oceedings were pending be fore the appropriate authority the said authority could only make the assessment within three years from the date of the commencement of the said proceedings, which, according to him, would start from the date of issue of notice by the said authority in the manner prescribed by the Central Provinces and Berar Sales Tax Rules, 1947, hereinafter called the Rules. (3) In the present case no proceedings in respect of the said assessments were pending before the said authority. And (4) as only a part of the fourth quarter in Civil Appeal No. 102 of 1961 falls within three years, the proceedings in respect of the said entire quarter would be barred under section 11-A of the Act and, in any view, only the turnover escaped in respect of the period between October 16, 1951, and October 31, 1951, could be assessed. Mr. B. Sen, learned counsel for the respondent, controverted the said arguments and contended that in the case of registered dealers there was a statutory obligation to make a return and, therefore, the proceedings must be deemed to be pending from the date an assessee was bound to make his return and that as the proceedings in the present case were pend....
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....ction 14 of the Business Profits Tax Act, 1947, reviewed the law on the subject and came to the following conclusion : "All these cases show that the words ' escaping assessment ' apply equally to cases where a notice was received by the assessee but resulted in no assessment at all and to cases where due to any reason no notice was issued to the assessee, and, therefore, there was no assessment of his income." It is true that the said decisions were given with reference to either section 34(1) of the Income-tax Act or section 14 of the Business Profits Tax Act, but so far as the present enquiry is concerned the said sections are in pari materia with section 11-A of the Act. In construing the meaning of the expression " escaped assessment " in section 11-A of the Act there is no reason why the said expression should bear a more limited meaning than what it bears under the said two Acts. All the three Acts are taxing statutes and the three relevant sections therein are intended to gather the revenue which has improperly escaped. A Division Bench of the Madras High Court in State of Madras v. Balu Chettiar, following the decision of a Full Bench of that court, held that where an as....
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....sessment to tax after the expiry of the year for which the tax was charged except in the cases provided for under section 34 of the Income-tax Act. It was held by the Judicial Committee that the income of Burn and Co. had not escaped assessment within the meaning of section 34 of the Income-tax Act. It was observed therein : " If an assessment is not made on income within the tax year then that income, they submit, has escaped assessment within that year, and can be subsequently assessed only under section 34 with its time limitation. This involves reading the expression ' has escaped assessment ' as equivalent to ' has not been assessed '. Their Lordships cannot assent to this reading. It gives too narrow a meaning to the word ' assessment ' and too wide a meaning tothe word 'escaped '. That the word ' assessment ' is not comfined in the statute to the definite act of making an order of assessment appears from section 66, which refers to ' the course of any assessment '. To say that the income of Burn and Co., which in January, 1928, was returned for assessment and which was accepted as correctly returned, though it was erroneously included in the assessment of Martin and Co., ha....
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.... the Act on all sales effected by him. Under section 8 no dealer shall, while being liable to pay tax under the Act, carry on business as a dealer unless he has been registered as such and possesses a registration certificate. Part IV of the Rules prescribes the manner in which a dealer shall get himself registered under the Act. Under section 8, if the dealer satisfies the requirements prescribed in that regard, the Sales Tax Officer grants him a registration certificate in Form II, which specifies the particulars, such as the location of the business, the nature of the business, etc. The said officer enters the name of every dealer registered in a ledger maintained under section 9 and issues copies of registration certificates for exhibition in the places of their business. Under one of the columns in that Form the period for which and the date on which the return has to be furnished has to be mentioned. A list of such registerd dealers is also published under rule 17. Under the Act, no dealer, who is liable to pay tax thereunder, shall carry on business unless he has been registered as such and possesses a registration certificate. It is, therefore, clear that registration is ma....
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....prescribed manner, assess him to the best of his judgment. Rule 32 also governs the procedure for making the said assessment. Rule 33 prescribes the maintenance of a register of cases instituted under section 11. Rule 34 gives the form of the order to be made and rule 39 provides for the preparation of assessment record. At this stage an argument advanced by learned counsel for the appellant, namely, that under section 10(1) of the Act the Commissioner has to give notice in the prescribed manner to a registered dealer, may be considered. Section 10(1) reads : "Every such dealer as may be required so to do by the Commissioner by notice served in the prescribed manner and every registered dealer shall furnish such returns by such dates and to such authority as may be prescribed." The word " dealer ", unless there is anything repugnant in the subject or context, means any person who carries on the business of selling or supplying goods and in its wide meaning it certainly takes in both a registered dealer and a dealer who has not registered himself under the Act. The question, therefore, is whether there is anything repugnant in the subject or context of section 10 to limit the wor....
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....iod, has wilfully failed to apply for registration, he shall at any time within three calendar years from the expiry of such period, after giving the dealer a reasonable, opportunity of being heard, proceed in the manner as may be prescribed to assess to the best of his judgment the amount of tax due from the dealer in respect of such period and of subsequent periods. He may also direct the dealer to pay, by way of penalty, in addition to the amount of tax so assessed a sum not exceeding 11/2 times that amount. So in the case of a dealer liable to pay tax, but who has failed to register himself under the Act, the Commissioner may issue a notice to him under rule 22 and assess him under section 11 ; and in the case of evasion, on subsequent information, the Commissioner can assess him within three calendar years from the expiry of the period in respect of which he was liable to pay tax and for subsequent years and also impose a penalty on him. It is clear from this provision that in the case of such a dealer the assessment can be made only within three calendar years from the expiry of the period in respect whereof he has been liable to pay tax under the Act. If the contention of le....
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....the Act. The acceptance of the contention that the statutory obligation to file a return initiates the proceedings is to invoke a fiction not sanctioned by the Act. The obligation can be enforced by taking a suitable action under the Act. Taking of such an action may have the effect of initiating proceedings against the defaulter. The default may be the occasion for initiating the proceedings, but the default itself proprio vigore cannot initiate proceedings. Proceedings in respect of the assessment of the turnover for the relevant period cannot, therefore, be said to be pending before the Commissioner. Learned counsel for the respondent contends that the certificate of registration is itself a notice to the registered dealer to furnish his returns within the prescribed time. Reliance is placed upon Form II wherein under the appropriate column the particulars in regard to a dealer's return and the date within which he should submit it are given. The main purpose of the registration certificate is to localize dealers with taxable turnovers and to facilitate the collection of taxes. The registration certificate enables the dealer to carry on the business. Neither section 8 which enjo....
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....tinction between sub-sections (1) and (2) of section 11 and came to the conclusion that in the former case it was only a formal appropriation of the amounts paid towards the tax due and therefore it could be done even after three years, but in the latter case the issue of notice under section 11(2) was in a substantial sense an initiation of proceedings by the Commissioner and his failure to tax these turnovers would constitute " escaped assessment " within the meaning of section 11A of the Act and, therefore, it could be reopened, only within the 3 years prescribed thereunder. The learned judges, if we may say so with respect, did not consider the question, in what circumstances assessment proceedings could be held to be pending ? As we have held that the submission of a statutory return would initiate the proceedings and that the proceedings would be pending till a final order of assessment was made on the said return, no question of limitation would arise. A Division Bench of the same High Court in Ramkrishna Ramnath v. Sales Tax Officer, Nagpur made a distinction between proceedings under section 11(4)(a) and those under section 11(2) of the Act in that proceedings under sectio....
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....otice to him on October 15, 1954, in Form XII purporting to be under section 11(4) of the Act. The said notice was within 3 years from October 16, 1951, which fell within the 4th quarter of the concerned year. Under section 11A of the Act the period of 3 years has to be calculated from the expiry of the period in regard whereto any turnover has escaped assessment. As the unit of assessment is a quarter, the period in section 11A can only mean a quarter and it cannot be further split up into months, weeks and days. The said period is the fourth quarter and it expired on October 31, 1951. If so, it follows that the Commissioner has to assess the turnover in respect of the entire fourth quarter as the notice was issued within three years from the expiry of the said quarter. But in this case the Commissioner assessed the appellant in respect of the turnover of the entire year without showing separately the assessment of tax payable in respect of each quarter. We cannot, tberefore, confine the relief to be given to the appellant in these appeals to the period barred under section 11A of the Act. We would, therefore, set aside the assessments in both the appeals giving liberty to the re....
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....on 11(1). If he be not so satisfied be has to serve a notice under sub-section (2) of section 11 on the registered dealer to take the various steps he requires for satisfying him about the correct amount of the turnover and, on his computing this amount, he has to assess the tax in accordance with sub-section (3) of section 11 of the Act. The Sales Tax Officer can also require an unregistered dealer to furnish returns by a certain date, in view of the provisions of sub-section (1) of section 10 and, if the dealer submits such returns, he can make the assessment on the basis of the returns if satisfied with their correctness, or be may serve another notice under section 11(2) on the dealer to take steps to satisfy him about the correct amount of the turnover and, if the dealer responds to the second notice, he assesses him, after necessary inquiry, to tax under section 11(3). So far the procedure for assessment of tax is the same, both for the registered dealer and the ordinary dealer, in case both of them furnish the returns of the turnover as required by the provisions of sub-section (1) of section 10 and also comply, if required, with the provisions of sub-section (2) of sectio....
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....me, but can be finished at any later period. It may also be noticed here that the " period of three years " in sub-section (5) of section 11 was substituted by the Amending Act XX of 1953 in place of the expression " from the commencement of this Act and thereafter within twelve months " and that section 11-A which deals with the assessment of the turnover escaping assessment was also introduced by the same Act and that these amendments were given retrospective effect from the 1st of June, 1947, the date when the Act originally came into force. Section 11-A empowers the Sales Tax Officer to proceed to assess or reassess turnover, including turnover which escaped assessment, within three years from the expiry of that period. The procedure to be followed against the registered dealer, in case he does not furnish the return in respect of any period by the prescribed date which he is required to do by sub-section (1) of section 10---or, having furnished such returns, failed to comply with the notice issued under sub-section (2) of section 11, is different. Sub-section (4) of section 11 empowers the Sales Tax Officer, in such circumstances, to assess the registered dealer to the best ....
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....f a notice by the Sales Tax Officer would have initiated the proceedings against the ordinary dealer. The failure of the registered dealer to furnish the return enables the Sales Tax Officer to assess the tax to the best of his judgment, of course, after giving an opportunity to the registered dealer of being heard. It would be incongru ous if the Sales Tax Officer, be held not to have initiated the assessment proceedings against the registered dealer and yet, on the failure of such a dealer to furnish the returns, to proceed in the very first instance to assess tax on the dealer to the best of his judgment. Such a power of taxing to the best of his judgment is an indication of the fact that the dealer had defaulted in respect of some proceedings connected with the assessment of tax and thus has made himself liable to tax on the best judgment basis instead of a tax on the computed amount of turnover according to the records. His default lies in his not submitting the return of turnover and not depositing the tax due on the turnover shown in the return. The payment of tax as a result of the statutory notice under section 10(1) and rule 19 well points to the conclusion that the statu....