# GHANSHYAM DAS v. REGIONAL ASSIST ANT COMMISSIONER OF SALES TAX, NAGPUR

- **Citation:** [1964] 4 S.C.R. 436
- **Court:** Supreme Court of India
- **Decided:** 1964
- **Bench:** S. K. DAs, AcTING C.J, K. SuBBA RAO, Raghubar Dayal, N. Rajgopala Ayyangar, J. R. Mudholkar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ghanshyam-das-v-regional-assist-ant-commissioner-of-sales-tax-nagpur-3162
- **Pages:** 25

## Headnote

•
Sales
Tax-Assessnient of
turnover
escaping
assessment-
"Escaped Assesstnent"-Meaning of-Assessment proceedings in respect of a registered dcaler-Comn1encen1ent of-Central Provinces and Berar Sales Tax Act, 1947 (XX/ of 1947), ss. 10(1), 11-A.
The appellant was a registered dealer carrying on business
in bidis.
For the year 1949-50, i.e., for the period from October 22, 1949 to November 9, 1950 he submitted only one return on October 5, 1950 for one quarter and defaulted in respect of the other quarters.
He \Vas served a notice on August
13, 1954 under s. 11(1) and (2) of the C.P. and Berar Sales
Tax -Act, 1947, in respect of the turnover for the said period. There
after, he filed the returns, but in the assess1nent proceedings
he contended inter alia, that the proceedings before the sales tax
commissioner \Vere barred by time.
This contention was rejected
and his tax liability was detern1ined.
Then.
the
appellant
moved t'ne I-Iigh Court in writ petition.
In the other appeal
No. 102/1961, .the appellant had not filed
:1ny return for the
year 1950-51 i.e. for "the period from November 10, 1950 to Oc·
tober 31., 1951.
He was served a notice on October 15, 1954,
under s. 11 ( 4) of the Act,
The said notice was within 3 years
from October 16, 1951 which fell within the 4th quaner of the
concerned year.
The appellant then, filed his returns under protest
and contended that the assessment proceedings were barred ·by limitation under s. il(A) of' the Act.
This plea was rejected and his tax liability was
detennined.
The appellant
then, filed another writ petition for a si.milar relief.
Both the
writ petitions were heard together and the learned single Judge
relying on a decision in Firm Sheonarayan Matadin v. Sales Tax
Officer, Raipur, quashed the said assessrrients.
The respondent
then, filed Letters Patent Appeals before the
Division
Bench
and by a common
judgn1ent
the orders of the learned
single
Judge· were set aside. In this Court, the appellant contended : (I)
the expression "escaped assessment" in s. '11-A of the Act would
apply also to a case where there was no assessment at all ;
(2) even if the first assessment proceedings were pending before tbe appropriate authority, ·it could only nlake the assessment
within three years fi:-om the date of the commencement of the
said proceedings, which would start only after the appropriate
authority issued a notice under s. 10( 1) or s; 11(2) or s. 11 (5)
<_?f the Act; (3) in the present case no proceedings in respect
of the said assessment were pending and ( 4) as only a part of
the· fourth quarter in the second appeal falls within three years,
i
,;'I
-
4 S.C.R.
SUPREME COURT REPORTS
437
the proceedings in respect of the said entire quarter would be
barred under s. 11-A of the Act and, in any view only the turnover escaped in respect of the period between November 10, 1950
to
October
31,
1951
could
be
assessed.
The
respondent
mainly contended that whatever inay be
said in the case of an
unregistered dealer, in the case of a registered dealer the proceedings commence fro1n the date fixed in the registration certificate within \vhich the said dealer has a statutory obligation to furnish his return.
Held; (Raghubar Dayal, J. dissenting) ; The expression
"escaped assessment" in s. 11-A of the Act includes that of a
turnover \vhich has not been assessed at all, because for one
reason or other no assessn1ent
proceedings
\Vere
initiated
and
therefore, no assessment was n1ade in respect thereof.
Comn1issioner of Income-tax, Bon1bay v. Pirojbai "l'l. Contractor, (1937) 5 I.T.R. 318, Maharaj Kumar Kamal Singh v. Com1nissioner of Income-tax, Bihar and Orissa, [1959] Supp. - S.C.R. 10
Mahnrajadhira1 Sir Kameshwar Singh v. State of Bihar, [ 1960]
1 S.C.R. 332,
Commissioner of Income-tax,
Bombay v. 1Varset!
Nagsee Ct Co. [19601 3 S.C.R. 988 and State of Madras v. Balu
Chettiar, (1956) 7 S.T.C. 519, relied on.
The assess1nent proceedings ' under the sales tax must he
held to be pending from the time

## Text

_Characters 0–39,949 of 61,031. This is a partial read: ask again with offset=39949 for what follows._

1963
August 16
436
SUPREME COURT REPORTS
[1964] .
GHANSHYAM DAS
v.
REGIONAL ASSIST ANT COMMISSIONER OF SALES
TAX, NAGPUR
(S. K. DAs, AcTING C.J., K. SuBBA RAO, RAGHUBAR DAYAL,
N. RAJGOPALA AYYANGAR AND J. R. MUDHOLKAR, JJ.)
•
Sales
Tax-Assessnient of
turnover
escaping
assessment-
"Escaped Assesstnent"-Meaning of-Assessment proceedings in respect of a registered dcaler-Comn1encen1ent of-Central Provinces and Berar Sales Tax Act, 1947 (XX/ of 1947), ss. 10(1), 11-A.
The appellant was a registered dealer carrying on business
in bidis.
For the year 1949-50, i.e., for the period from October 22, 1949 to November 9, 1950 he submitted only one return on October 5, 1950 for one quarter and defaulted in respect of the other quarters.
He \Vas served a notice on August
13, 1954 under s. 11(1) and (2) of the C.P. and Berar Sales
Tax -Act, 1947, in respect of the turnover for the said period. There
after, he filed the returns, but in the assess1nent proceedings
he contended inter alia, that the proceedings before the sales tax
commissioner \Vere barred by time.
This contention was rejected
and his tax liability was detern1ined.
Then.
the
appellant
moved t'ne I-Iigh Court in writ petition.
In the other appeal
No. 102/1961, .the appellant had not filed
:1ny return for the
year 1950-51 i.e. for "the period from November 10, 1950 to Oc·
tober 31., 1951.
He was served a notice on October 15, 1954,
under s. 11 ( 4) of the Act,
The said notice was within 3 years
from October 16, 1951 which fell within the 4th quaner of the
concerned year.
The appellant then, filed his returns under protest
and contended that the assessment proceedings were barred ·by limitation under s. il(A) of' the Act.
This plea was rejected and his tax liability was
detennined.
The appellant
then, filed another writ petition for a si.milar relief.
Both the
writ petitions were heard together and the learned single Judge
relying on a decision in Firm Sheonarayan Matadin v. Sales Tax
Officer, Raipur, quashed the said assessrrients.
The respondent
then, filed Letters Patent Appeals before the
Division
Bench
and by a common
judgn1ent
the orders of the learned
single
Judge· were set aside. In this Court, the appellant contended : (I)
the expression "escaped assessment" in s. '11-A of the Act would
apply also to a case where there was no assessment at all ;
(2) even if the first assessment proceedings were pending before tbe appropriate authority, ·it could only nlake the assessment
within three years fi:-om the date of the commencement of the
said proceedings, which would start only after the appropriate
authority issued a notice under s. 10( 1) or s; 11(2) or s. 11 (5)
<_?f the Act; (3) in the present case no proceedings in respect
of the said assessment were pending and ( 4) as only a part of
the· fourth quarter in the second appeal falls within three years,
i
,;'I
-
4 S.C.R.
SUPREME COURT REPORTS
437
the proceedings in respect of the said entire quarter would be
barred under s. 11-A of the Act and, in any view only the turnover escaped in respect of the period between November 10, 1950
to
October
31,
1951
could
be
assessed.
The
respondent
mainly contended that whatever inay be
said in the case of an
unregistered dealer, in the case of a registered dealer the proceedings commence fro1n the date fixed in the registration certificate within \vhich the said dealer has a statutory obligation to furnish his return.
Held; (Raghubar Dayal, J. dissenting) ; The expression
"escaped assessment" in s. 11-A of the Act includes that of a
turnover \vhich has not been assessed at all, because for one
reason or other no assessn1ent
proceedings
\Vere
initiated
and
therefore, no assessment was n1ade in respect thereof.
Comn1issioner of Income-tax, Bon1bay v. Pirojbai "l'l. Contractor, (1937) 5 I.T.R. 318, Maharaj Kumar Kamal Singh v. Com1nissioner of Income-tax, Bihar and Orissa, [1959] Supp. - S.C.R. 10
Mahnrajadhira1 Sir Kameshwar Singh v. State of Bihar, [ 1960]
1 S.C.R. 332,
Commissioner of Income-tax,
Bombay v. 1Varset!
Nagsee Ct Co. [19601 3 S.C.R. 988 and State of Madras v. Balu
Chettiar, (1956) 7 S.T.C. 519, relied on.
The assess1nent proceedings ' under the sales tax must he
held to be pending from the time the said proceedings were initiated
until they \Vere terminated by a final order of assessment. Before
the final order of assessment, it could not be said that the entire
turnover or a part thereof of a dealer had escaped assessinent,
for, the assessment was not completed and, if completed, it might
be that the entire turnover \Vould be caught in the net.
Jn re Lachhiram Basantlal, (1930) l.L.R. 58 Cal. 909
and
Rajendra Nath Mukherjee
v.
Income-tax Commissioner, (1938)
L.R. 61 I.A. 10, referred to.
Under sub-section (1) of s. 10, the Commissioner need not
issue a notice to a registered dealer for furnishing the relevant
returns, but a statutory obligation is imposed on the said deaier
to do so by such dates and to such authority as may be prescribed.
In the case of a registered dealer there are four
vanations
in the matter of assessn1ent of
his turnover :
( 1) He .submits
a return by the date prescribed and pays the tax due in terms
of the said return; the con1missioner accepts the correctness of
the return and appropriates the amount paid towards the tax due
for the period covered by the return.
(2) The Comn1issioner is
not satisfied with the correctness of the return ; he issues a
notice to him under s. 11 (2), and makes an enquiry as provided
under the Act, but does not finalize the assessment. (3) The registered dealer does not submit a return ; the Commissioner issues a notice under s. 10(3) and s. 11(4) of the Act.
(4) The
registered dealer does not submit any return for any period and
the Commissioner issues notice to him beyond three years.
1963
Ghanshyam Das
v.
Regional Assis·
tant Commissioner of Sales
Tax, Nagpur
1963
Chanshyam Das
v.
Regional Assistant Commissioner of Sales
Tax, Nagpur
438
SUPREME COURT REPORTS
[1964]
In the case of a registered dealer the proceedings before the
Commissioner starts factually when a return is made or when a
notice is issued to him either under s. 10(3) or under s. 11(2)
of the Act.' '"fhe acceptance of the contention that the statutory
obligation !o file a return initiates the proceedings is to invo~<e
a fiction not sanctioned by the Act.
Bisesm· House v. State of Bombay (1958) 9 S.T.C. 654 ac1d
Ramakrishna Ramnath v. Sales Tax Officer, Nagpur, (1960) 11
S.T.C. 811, distinguished.
A statutory obligation to make a return within a prescribed
time does not proprio vigore initiate the assessment proceedings
before the Commissioner; but the proceedings would commence
after the return was submitted and would
continue till a final
.order of assessn1ent was made in regard to the said return.
In the first case, therefore, the tribunal had no jurisdiction
to issue a notice under s. 11-A with respect to the quarters other
than that covered by return made by the appellant.
In the second case, the Comn1issioner had jurisdiction
to
assess the
turnover in respect of the entire fourth quarter, but as it ·was
done without showing separately the assessment of tax
payable
in respect of each quarter, this Court cannot confine the relief
to be given to the appellant in these appeals to the period barred under s. 11-A of the Act.
The appeals, therefore n1ust
be allowed.
Per Raghubar Dayal, ).-The turnover for the years 1949-50
and 1950-51 could not be said to be turnover which csca·
ped assessment, within the meaning of that expression in s.
11-A of the Act and therefore, the notices issued by the Assistant
Commissioner of Sales Tax in 1954 under s. 11(2) cannot be said to
be notices issued under s. 11-A beyond the period within which
they could have been issued.
The
proceedings for the
assessment
commence against. the
registered dealer from the prescribed date for his submitting the
return \vhich he is required to submit by sub-section (1) of s. 10.
No notice is necessary to be issued to him for the submitting of
the return for the purpose of assessment. The statute, by the provisions of sub-section, (1) of s. 10, gives him the required notice to the effect that he is to submit the necessary returns by
the dates prescribed
by
the
rules.
The registration certificate
issued. to him mentions the period of the dealer's year, the prescribed return period ·and the dates by \vhich the dealer had to
furnish the returns.
The registered d~aler is, in this way, in no
worse position than an ordinary dealer who receives a notice for
submitting the returns by a certain date.
In the case of the unregistered dealer, the proceedings commence by the issue
of a
notice under sul>-seetion (!) of s. 10.
There is no time limit fixed for the sales tax officer to take
action against the registered dealer under sub-sections (2) and ( 4)
<if '· 11.
He does not contravene
Art. 14, if he takes
action
-
·•
>
..
'
4 S.C.R.
SUPREME COURT REPORTS
439
against a registered dealer under sub-section (2) or sub-section 4
of s. 11 even after the expiry of three years from the period whose
turnover is to be assessed.
Crv1L APPELLATE JuR1smcnoN : Civil Appeals Nos.
101 and 102 of 1961.
Appeals from the order dated December 13, 1957, of
the Madhya Pradesh High Court in Letters Patent Appeals Nos. 208 and 207 of 1956 respectively.
/. M. Thakar, H. M. Thakar, 0. C. Mathur, /. B.
Dadachanii _and Ravinder Narain, for the appellants.
B. Sen and I. N. Shroff, for the respondents.
August 16, 1%3. The Judgment of S. K. Das, Acting
C.J., K. Subba Rao, N. Rajagopala Ayyangar and J. R.
Mudholkar, JJ. was delivered by Subba Rao, J. Raghubar
Dayal, J. delivered a dissenting Opinion.
SuBBA RAo J.-These two appeals by certificate raise
the question of the true interpretation of the meaning of
the expression "escaped assessment" .in s. 11-A of the Central Provinces & Berar Sales Tax Act, 1947 (XXI of 1947),
hereinafter called the Act.
The facts 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 s. 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. 11 under s. 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 he 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 re1963
Ghanshyam Das
v .
. Regional Assistant Commis~
sioner of Sales
Tax, Nagpu_r
Subba Rao/.
1963
Ghanshyam DRS
v.
Regional Assistant Commissioner of Sales
Tax, Nagpur
Subba Rao /.
440
SUPREME COURT REPORTS
[1964]
jected the said contention, proceeded with the assessment and determined the tax liability at Rs. 15,846.00.
Aggrieved by the said order, the appellant filed a petition under Art. 226 of the Constitution in the High Court
of Judicature at Nagpur mainly on the ground that the
proceedings before the Sales-tax Commissioner were barred by time under s. 11-A of the Act.
Civil Appeal No. 102 of 1961 is in respect of assessment of sales-tax on the turnover of the appellant for the
year 1950-51. The appellant had not filed any return for
the whole year.
The Assistant Commission'er of Sabtax, Nagpur, served a notice on the appellant on October 15, 1954 under s. 11 ( 4). of the Act. The appellant
filed his returns and produced the account-books under
protest and also raised objections that the assessment proceedings were barred by limitation under s. 11-A 0£ the
Act.
The Assistant Commissioner rejected his plea
of
limitation and
determined his
tax
liability
at
Rs.
16,537-5-0.
The appellant filed another petition under
Art. 226 of the Constitution in the said High Court for a
similar relief.
Both the petitions were heard together by
Kotwal
J. The learned Judge, following the decision of a division Bench of that Court in Firm Sheonarayan Matadin
v. Sales-tax Officer, Raipur('), held that, as the notices
were issued beyond three years from the expiry of the relevant periods, the Sales-tax Commissioner had no juri'-
diction to make the assessments.
On that ground
he
quashed the said assessments.
The respondent filed Letters Patent Appeals
to
a
division Bench of the said High Court. On the formation of the State of Madhya Pradesh, the above appeals were
transferred to the Madhya Pradesh High Court and were
heard by a division Bench consisting
of
Hidayatullah
C.J. and Chaudhuri J. The Division Bench held that s.
11-A of the Act could apply only to a case where there
was a final assessment and that in the instant cases
the first assessment proceedings were pending and therefore, the said section had no application thereto.
In
the result, by a common judgment, they set aside
the
orders of Kotwal J. Hence the present appeals.
(1) 1956 S.T.C. 623.
>
4 S.C.R.
SUPREME COURT REPORTS
441
Mr. J. M. Thakar, learned counsel for the appellant
raised before us the following four points : (I) The expression "escaped assessment" in s. 11-A of the Act would
apply also to a case where there was no assessment
at all.
(2)
Even if the first assessment proceedings
were pending before the appropriate authority, the said
authority could only make the as:.cssment w'th:n 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
&
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 s. 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 a>sessed.
Mr. B. Sen learned counsel for the re<pondent, controverted the said argument 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 pending by statutory force, there was
no
scope for invoking the provisions of s. 11-A of the Act.
In Civil Appeal No. 102 of 1961 he raised the point that
a calendar year in s. 11-A must be calculated from January
to December and if so calculated no part of the fourth
quarter would be beyond three years, but he did not pursue the Ii ne of argument.
The main question in the appeals is the true construction of the provisions of s. 11-A of the
Act. The
material provisions thereof may be set out. They read :
Section 11-A (!) : If in consequence of any information which has come into his possession, ·,he Commissioner is satisfied that any turnover of a dealer
dui ing any period . . . . . . . . has escaped
asse5'ment
. . . . . . . . the Commissioner may, at any time within
three calendar years from the expiry of such period
29-2 S. C. lndia:64
1963
Ghanshyam Das
v.
Regional Assistant Commissioner of Stdes
Tax, Nagpur
Subba Rao/.
1963
Ghanshyam Das
v.
Regional Assistant Commissioner of Sales
Tax, Nagpur
Subba Rao /.
442
SUPREME COURT REPORTS
[1964]
proceed in such manner as may be prescribed
to ...... assess ........ the tax payable on any such
,,
'
turnover ..................... .
Under this section if the turnover of a dealer during
any period has escaped assessment,
the
Commissioner
may at any time within three calendar years from the expiry of such period proceed in the manner prescribed
to assess the tax payable on the said turnover. The crucial expression for the present purpose is "escaped assessment".
What does it mean?
Does it include, as learned counsel for the appeliant contends, a case where no
assessment has been made at all or, as learned
counsel
for the respondent contends, take in only the post-assessment detection of evasion of tax? This problem has received the attention of Courts in different contexts.
In Commissioner of Income-tax, Bombay v. Pirojbai
N. Contractor(1) the words "escaped assessment" in the
Indian Income-tax Act were defined. It was held therein that the said words were wide enough to include cases
where no notice under s. 22(2) of the Income-tax Act
had been issued to the assessee and therefore his income
had not been assessed at all under s. 23
thereof. The
said view, has been assumed to be correct by this Court
in Maharaj Kumar Kamal Singh v. Commissioner of
Income-tax, Bihar & Orissa( 2 ) and Maharajadhiraj Sir
Kameshwar Singh v. State of Bihar(3) and extended to
cover a case where the first assessment was made in due
course but a part of the income escaped thereform.
This Court, in Commissioner of Incomectax, Bombay
v. Narsee Nagsee & Co.( 4), construing the provisions
of s. 14 of the Business Profits Tax Act, 1947, reviewed
the law on the subject and came to the following conclus10n :
r
"All these cases show that. ,the ~ords "escaping assessment" apply equally to cases where a notice was
received by the assessee bl)t resulted in no assessment
at all and to cases where ~ue to any reason no notice
was issued to the assessee; · and, therefore, there
W<\S
--( 1 ) -(1937)5 I.T.R. 338.
(') [1959] Supp. 1 S.C.R. 10.
(') f 1960] 1 S.C.R. 332.
)-~
(4) [1960] 3 S.C.R. 988.
r
-
,.
4 S.C.R.
SUPREME COURT REPORTS
443
no assessment of his income."
It . is true that the said decisions were given with
reference to either s. 34(1) of tb.e Income-tax Act or
s. 14 of the Business Profits Tax Act, but so far as
the
present enquiry is concerned the said sections are
pari
materia with s. 11-A of the Act. In construing the meaning of the expression "escaped assessment" in s. 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 The State
of Madras
v.
Balu Chettiar('), following the decision of a Full Bench of that Court, held that where an
assessee did not file at any time a return of his turnover for a year and, therefore, there was no assessment
made, the turnover escaped assessment.
It was observed
therein:
"Whether it was a case of omission or of deliberate
concealment on the part of the assessee, he did not
submit anv return. It was his default that led
to
the escape. of the turnover for 1951-52 from
assessment to the tax lawfully due. It was the whole of
the turnover for that year that escaped assessment."
It is not necessary to multiply citations.
We, th,:refore, hold that the expression "escaped assessment" in
s. 11-A of the Act includes that of a turnover which has
not been assessed at all, because for one reason or other
no assessmq1t proceedings were initiated and therefore,
no assessment was made in respect thereof.
The next question is whether a turnover could be said
to escape assessment if proceedings in respect of the first
assessment were pending and no final order of assessment
was made therein.
In In re Lachhiram Basantlal(') Rankin C.J. tersely
observed:
"Income has not escaped assessment if there are pending at the time proceedings for the assessment of
the assessee's income which have not yet terminated
( 1 ) (1956) 7 S.T.C. 519, 522.
!") (1930) l.L.R. 58 Cal. 909.
1963
Ghanshyam Das
v.
Regional Assistant Commissioner of Sales
Tax, Nagpur
Subba Rao f.
1963
Ghanshyam Das
v.
Regional Assistant Cotnmissioner of Sales
Tax, Nagpur
Subba Rao/.
444
SUPREME COUR1 REPORTS
[1964J
m a final assessment thereof".
This dictum laid down a clearly understandable principle.
How can an escape of a turnover from assessment be
predicated before the assessment is completed?
The
Judicial Committee in Rajendra Nath Mukherjee v. [n ..
come-tax Commissioner(') relied upon this dictum in rejecting the contention to the contrary raised by the asses--
see before them, and endorsed the said view.
That
decision turned upon the interpretation of s. 34 of the
Indian Income-tax Act. . There, Burn & Co., an unregistered firm, made a return of their total income on J anuary 13, 1928.
On February 25,
1928,
the
Income-tax
Officer made an assessment on Martin & Co., the partners whereof purchased the business of Burn & Co., in
respect of the combined incomes returned by Martin &
Co. and Burn & Co. The High Court held that under the
income-tax Act the income of the
said
firms could
not be aggregated and that the income of each must be
separately assessed. Thereafter, on November 8, 1930, an
assessment was made on Burn & Co. on their income
as returned by them on January 13, 1928. It was contended that under the Income-tax Act it was not competent to make any assessment to tax after the expiry of
the year for which the tax was charged except in the cases
provided for under s. 34 oE the Income-Tax Act.
It
was held by the Judicial Committee that the income of
Burn & Co. had not escaped assessment within the meaning
of s. 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, ha·s escaped
assessment within that year, and can be subsequently assessed only under s. 34 with its time limitation.
This involves reading the expression "has escaped
t
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 to the word
"escaped". That the word "assessment" is not confined in the statute to the definite act of making an
order of assessment appears from s. 66, which refers to
( 1 ) (1933) 61 I.A. 10, 15-16.
'f S.C.R.
SUPREME COURT REPORTS
445
"the course of any assessment". To say that the income of Burn & 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 & Co., has escaped assessment in 1927-28 seems to t11eir Lordships an
inadmissible reading. The fact that s. 34 requires a
notice to be served calling for a return of income
which has escaped assessment strongly suggests that
income which has already been duly returned for assessment cannot be said to have "escaped" assessment
within the statutory meaning."
As s. 34 of the Income-tax Act had no application
and as there was no other time limit prescribed or necessarily implied under that Act, it held tl1at the assessment
was not out of time. This decision is a clear authority
for the position that if a return was duly made, the
assessment could be made at any time unless the statute
prescribed a time limit.
This can only be for
the
reason that the proceedings duly initiated in time will
be pending and can,
therefore, be completed
without
time limit. A proceeding is said to be pending as soon
as it is commenced and until it is concluded. On the
said analogy, the assessment proceedings under the Salestax Act must be held to be pending from the time the
said proceedings were initiated until they were terminated by a final order of assessment. Before the final order
of assessment, it could not be said that the entire turnover or a part thereof of a dealer had escaped assessment,
for the assessment was not completed and if, completed, it might be that the entire turnover would be caught
in the net.
But the more difficult question is, when do the assessment proceedings under the Act in respect of registered dealer commence and when do they terminate?
While learned counsel for the appellant contends that the
said proceedings under the Act start only after the appropriate authority issued a notice under s. 10(1) or s.
11(2) or s. 11(5) of the Act, learned counsel for the respondent contends that whatever may be sait.1 in the
case of an unregistered dealer, in the case of a registered dealer the proceedings commence from the date iix1963
Ghanshyam Das
v.
Regional Assistant Commissioner of Sales
Tar, Nagpur
Subba Rao/.
1963
Ghanshyam Das
y~
Regional Assistant Commissioner of Sales
Tax, Nagpur
Subba Rao/.
446
·SUPREME· COURT REPORTS
' [1964]
ed in the registration certificate within which ·the said
dealer has a statutory obligation to furnish his return.
To appreciate the rival contentions it is necessary
to notice the relevant provisions of the Act and the Rules.
Under s. 4 of the Act, every dealer whose turnover
exceeds the specified limits prescribed under sub-section
(5) thereof shall be liable to pay tax in accordance with
the provisions of the Act on all sales effected by
him.
Under s. 8 no dealer shall, while being liable to pay tax
under the Act, carry on business as a dealer unless he
had 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 s. 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 s. 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 registered
dealer is also published under r. 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 mainly conceived in the interest of revenue,
to facilitate collection of taxes and to prevent the evasion
thereof.
·
Next we come to the provisions dealing with the
manner in which a registered dealer will be assessed to
tax.
Under s. 10 every registered dealer shall furnish
such returns by such dates to such authority as may be
prescribed. Rule 19 prescribes the manner in which such
a return has to be furnished. Thereunder every registered dealer shall furnish to the appropriate
Sales-tax
Officer quarterly returns within one calendar month from
the expiry of the quarter to which the return relates and
in case he has more than one place of business in the
Provi nee, he shall submit a consolidated return for all the
·' /
4 S.C.R. \
SUPREME'COURT REPORTS-.
'
447
"-.
.
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_,' .
.
~--
.
-
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places of business aiid also a return separately for each
·
1963 ··
of the places of -business within two calendar months ·
-
from the. said date. _ It also says that each of.'sueh reGhansh~~m Dos
Y
turns submitted shall be accompanied -by. a treasury re-
&gional Assis-.
ceipted chalan in Form V in respect of ·t1i_e tax due actant Commis-
.
cording to the return.
In short he has to file a resioner of Sales
_ -- turn or ·returns in the prescribed form within the prescri- -. Tar, Nagpur
bed time and--also pay the tax payable by him along . Subba· Rao 1- ~:"
with the returns. Under s. Il(l) ·if the Commissioner
;
is satisfied that the return. furnished by the dealer in~ res-
.
pect of a period is correct and complete, he assesses the -
dealer on it. If, he_ does not accept it, under cl. (2)
thereof•-he shall serve the dealer with a notice appointing
the place and date for enquiry ; _ and after . enquiry he
shall assess him to tax under .r. 3. Rule 31 prescribes ,
that the notice under s. 11 (2) shall be served on the deal- · •
er in Form II.
It may be stated that the mention of
sub-section (1) in that rule appears to be a mistake for _
no notice "is contemplated _under· that sub-section. If'the -
registered dealer fails to furnish his return under s.
10(1) of the Act in the manner prescribed within the
time prescribed under sub-section (3) -thereof,' the Com-
-mis~ioner, after giving a reasonable opportunity of_ being
heard, -may impose on him by way of peria lty a sum not
exceeding one-fourth of the ;mount of the tax which
may be assessed on him under s. 11. Rule 32, which
is an_ omnibus provision, says that in such -an event,
a notice in Form .XII has to be issued on- him. Under -
sub-S::ction (4) of s. 11, if a registered dealer makes the
· > defaults mentioned therein the Commissioner sh"ll, in the
preseribed 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 rej:(ister of cases instituted under s. 11. Rule
34 gives -the form of the order to be made and .. r. 39 ·
provides for the preparation of assessment record.
·
_
At this stage an argument advanced by learned coun_. -sel for the appellant, namely, that under s. )0(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
/.
1963
Ghanshyam Das
v.
Regional Assistant Commissioner of Sales
Tax, Nagpur
Subba Rao/.
448
SUPREME COURT REPORTS
(1964]
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 s. 10
to limit the word "dealer" in the first part of sub-section
(1) to a dealer other than a registered dealer. Sub-section
( 1) is in two parts : the first part speaks of a dealer
and the second part of a registered dealer and the subsection says that both of them shall furnish the returns.
If the dealer in the first part includes a registered dealer,
the mention of "every registered dealer" in the
second
part will become redundant, for a registered dealer
is included in the expression "dealer". A
construction
which would attribute redundancy to a Legislature shall
not be accepted excqJt for compelling reasons. This redundancy disappears if the expression "dealer" in the first
part exc:udes a regislertd dealer mentioned in the
second part.
This legislative intention is further made
clear by the provisions of ss. 14 and 17 of the Act.
Section 14 imposes a duty on every registered dealer or
every dealer on whom notice has been served to furnish
returns under sub-section (1) of s. 10 to keep a true account of the value of goods bought and sold by him ; and
s. 17 imposes a duty on the said two categories of
dealers
to inform the prescribed authority regarding
changes of business.
The distinction between the two
categories of dealers is maintained not only in s. 10
but also in ss. 14 and 17.
It is, therefore, clear that
' under sub-section (1) of s. 10, the Commissioner need
not issue a notice to a registered dealer for furnishing the
relevant returns, but a statutory obligation is impvsed on
the said dealer to do so by such dates and to such anthority as may be prescribed.
Now coming to the case of a dealer who did not register himself under the Act, the position is
different.
-<
I
•
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>-
"-.J
4 S.C.R.
SUPREME COURT REPORTS
449
There is no statutory obligation cast on him by any section to submit a return.
His is really a case of evasion from his obligation to get himself registered under
the Act. Section 10 (I) enables the Commissioner to issue
a notice to him requiring him to furnish a return
in the prescribed manner.
In his case also the same
procedure as prescribed in ss. 10(3), 11(1) and 11(2)
has to be followed in the matter of assessment. But subsection (5) of s. 11 introduces a stringent provision
to
prevent evasion of tax.
Under that sub-section if upon
information the Commissioner is satisfied that any such
dealer, who is liable to pay tax under the Act in respect
of any period, has wilfully failed to apply for registration, he shall at any time within three calender 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: 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 r. 22 and assess him under s. 11 ; and
in the case of e\•asion, 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 learned
counsel for the respondent should prevail, in the case of
a registered dealer there would be no limitation in the
matter of assessment, whereas in the case of a dealer who
evaded law, he would have the benefit of three years' limitation.
·
From the foregoing discussion it is seen that in the
case of a registered dealer there are four variations in the
matter of assessment of his turnover : ( l) He submits a
1!163
Ghanshyam Das
v.
Regional Assistant Commissioner of Sales
Tax, Nagpur
Subba Rao/.
.1963
Ghanshyam Das
v.
Regional Assistant Commissioner of Sales
Tar, Nagpur
Subba Rao[.
450
-SUPREME .COURT REPORTS
[1%4]
return by the date prescribed and pays the tax due in
terms of the said return ; the Commissioner accepts the
correctness of the return and appropriates
the amount
paid towards the tax due for the period covered by the
return.
(2) The Commissioner is not satisfied with the
correctness of the return ; he issues a notice to him under s. 11(2), and makes an enquiry as provided under the
Act, but does not finalize the assessment.
(3) The registered dealer does not submit a return ; the Commissioner issues a notice under s. 10(3) and s. 11 ( 4) of the
Act. And ( 4) the registered dealer does not submit any
return for any period and the Commissioner issues notice to him beyond three years. If the return was accepted and the amount paid was appropriated towards
the tax due for the relevant period, it means that there
has been a final assessment in regard to the said period .
If any turnover escaped assessment, clearly it can be reopened only within the period prescribed in s. 11-A. In
the case where a return has been made, but the Commissioner has not accepted it, and has issued a notice for enquiry,
the
assessment proceedings will certainly be
pending till the final assessment is made. Even in a
case where no return has been made, but the Commissioner initiated proceedings by issuing a relevant notice
either under s. 1,0(3) or under s. 11(4), the proceedings
will be pending thereafter before the Commissioner till
the final assessment is made.
But where no return has
been made _and the Commissioner has not issued any
notice under the Act, how can it be held that some proceedings are pending before the Commissioner when
none existed as a matter of fact?
We are concerned in
this case with the last contingency.
It is manifest that in the case of a registered dealer
the proceedings before the Commissioner starts factually when a return is made or when a notice is issued
to him either under s. 10(3) or under s. 11(2) of 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 de-
.....
4 S.C.R.
SUPREME COURT REPORTS
451
fault may be the occasion for initiating the proceedings,
but the default itself proprio vi gore cannot initiate proceedings. Proceedings in respect of the assessment of the
turnover for the relevant period cannot, therefore, he said
to be pending before the Commissioner. Learned counsel
for the respondent contends that the certificate of registration is itself a notio' 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 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 s. 8 which enjoins
such registration on every dealer with taxable
turnover nor rule 8 which prescribes the particulars to be
incorporated in a certificate suggests that the certificate
itself is a statutory notice to a dealer. The objects of the
certificate and the statutory notices under the Act are different and the former cannot be equated with the latter.
Rule 33 provides that the assessing authority shall
maintain a register in Form XIII in which he shall enter the details of each case initiated under rr. 31 and 32.
Rule 31 says that on receipt of a return or returns required
under r. 19, 20 or 22 from any dealer, the assessing
authority shall serve on him a notice in Form XI. Rule
32 prescribes, inter alft2, the manner of assessment under
sub-section (3) of s. 10, cl. (a) of sub-section (4) of s. 11,
sub-section (5) of s. 11. Form XII gives the serial number,
name of the dealer, ·1ature of the business, gross turnover,
taxable turnover as determined for the relevant years and
the date of issue of notice in Form XI or Form XII. A
perusal of the said rules and the forms discloses that the
proceedings in the case of a registered dealer start
only on the receipt of a return or returns required to be
furnished under the rules. Under r. 33 a register is maintained giving the details of each case "instituted" . under
rr. 31 and 32. Rule 34 enacts that a case instituted would
be pending till an order of assessment was made. No
doubt it would be pending till a final order of assessment
was made by the highest tribunal or court under the Act.
1963
Ghanshyam Das
v.
Regional Assistant Commissioner of Sales
Tax, Nagpur
Subba Rao/.
1963
Ghanshyam Das
v.
Regi'onal Assistant ComrnissiQner of Sales
Tax, Nagpur
Subba Rao f.
452
SUPREME COURT REPORTS
[1964]
At this stage some of the decisions cited at the Bar
may conveniently be noticed. A Full Bench of the Bombay High Court in Bisesar House v. State of Bombay(')
held that a notice under sub-section (2) of s. 11 of the
C.P.