# M/S. JAIPURIA BROTllERS CO v. STATE OF UTIAR PRADESH & OTHERS

- **Citation:** [1965] 1 S.C.R. 780
- **Court:** Supreme Court of India
- **Decided:** 1964-10-21
- **Case number:** Civil Appeal No. 830 of 1963
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-jaipuria-brotllers-co-v-state-of-utiar-pradesh-others-3253
- **Pages:** 8

## Headnote

780
M/S. JAIPURIA BROTllERS CO.
v.
STATE OF UTIAR PRADESH & OTHERS
October 21, 1964
(K. SUBBA RAo, J. C. SHAH ANDS. M. SIKRI JI.)
U.P. Sales Tax Act (U.P. Act 15 of 1948)", s. 21-B Btfor• and aft•r
amendment by U.P. Act 19 of 195~Scopt of.
The sales tax officer made a best judgment assessment with respect to
rhe turnover of the appellant under s. 21 of the U.P. Sales Ta1 Act, 1948.
The order was set aside by the lppellale au1horicy.
The revisional authority revised the appellale order and remanded lhe case to the sal<11 tax
officer for making a fresh assessment.
When 1he officer issued a notioe for
assessment, in pursuance of that order, the assessee contended that as the
original assessment had been set aside, no proceeding in connection with
it was pending, and that reassessment was barred because, more than
three years had elapsed since the end of the year of assessment. The officer
rejected the contentions.
The assessee filed a writ petition in the High
Court and ii was allowed by a Single Judge. The S1a1e appealed to the
Division Bcilch.
While the appeal was pending, s. 21 was extemively
amended in 1956 and the legislature gave retrospective operation to the
amended section.
As a result of the amendment, it was provided that when
the officer proceeded in pursuance of a direction given by the revisional
authority, no period of limitation applied.
The Division Bench, however, relied upon the unamended section and set aside the order of the
Single Judge, holding, that even under the unamended section, no period
of limitalion applied when the assessing officer was directed to proceed by
an order of the revisional au1hori1y.
The assessee appealed to the Supreme
Court.
HELD : The appeal should be dismissed.
A
B
c
D
E
Though the High C<lurt wa.• in error in ils interpretation of the unamended section on the principle of Commissionr.r of Income-ttu, Bombay
Prrsid,ncy and Adrn v. Khemclrand Ramdas, (LR. 65 I.A. 236) still the
order of ·the High Court must be confirmed because of the amendment of
1956.
The words used by the legislature in the amended section are
F
precise and admit of only one interpretation, namely, that nothing contained
in the section limits thC time from the year of assessment within which proceedings should be taken for assessment or reassessment in consequence
of or to give effec1 to an order of 1he revision'! aulhorily, (783 E-G; 78<1
D-E; 785 H; 786. BJ
Even assuming that the amendctl section applied only to pending proceedings. when the rcvisional authority made an order after examining the
record directing the assessing officer to make a fresh assCM111ent. there was
G
a proceeding pending before such officer in pursuance of such direction.
[786 EJ
C!VIL APPELLATE JuR1smcnoN : Civil Appeal No. 830 of
1963.
Appeal by special leave from the judgment and decree dated
March 3, 1960 of the Allahabad High Court in Special Appeal
H
No. 3 of 1956.
G. S. Pathak and S. P. Varma, for the appellants.
'
I
A
B
.YAIPURIA BROS. v. STATE (Shah /.)
781
0. P. Rana, for the respondents,
K. Srinivasan and R- Govalakr/shnan, for the intervener.
'

## Text

780
M/S. JAIPURIA BROTllERS CO.
v.
STATE OF UTIAR PRADESH & OTHERS
October 21, 1964
(K. SUBBA RAo, J. C. SHAH ANDS. M. SIKRI JI.)
U.P. Sales Tax Act (U.P. Act 15 of 1948)", s. 21-B Btfor• and aft•r
amendment by U.P. Act 19 of 195~Scopt of.
The sales tax officer made a best judgment assessment with respect to
rhe turnover of the appellant under s. 21 of the U.P. Sales Ta1 Act, 1948.
The order was set aside by the lppellale au1horicy.
The revisional authority revised the appellale order and remanded lhe case to the sal<11 tax
officer for making a fresh assessment.
When 1he officer issued a notioe for
assessment, in pursuance of that order, the assessee contended that as the
original assessment had been set aside, no proceeding in connection with
it was pending, and that reassessment was barred because, more than
three years had elapsed since the end of the year of assessment. The officer
rejected the contentions.
The assessee filed a writ petition in the High
Court and ii was allowed by a Single Judge. The S1a1e appealed to the
Division Bcilch.
While the appeal was pending, s. 21 was extemively
amended in 1956 and the legislature gave retrospective operation to the
amended section.
As a result of the amendment, it was provided that when
the officer proceeded in pursuance of a direction given by the revisional
authority, no period of limitation applied.
The Division Bench, however, relied upon the unamended section and set aside the order of the
Single Judge, holding, that even under the unamended section, no period
of limitalion applied when the assessing officer was directed to proceed by
an order of the revisional au1hori1y.
The assessee appealed to the Supreme
Court.
HELD : The appeal should be dismissed.
A
B
c
D
E
Though the High C<lurt wa.• in error in ils interpretation of the unamended section on the principle of Commissionr.r of Income-ttu, Bombay
Prrsid,ncy and Adrn v. Khemclrand Ramdas, (LR. 65 I.A. 236) still the
order of ·the High Court must be confirmed because of the amendment of
1956.
The words used by the legislature in the amended section are
F
precise and admit of only one interpretation, namely, that nothing contained
in the section limits thC time from the year of assessment within which proceedings should be taken for assessment or reassessment in consequence
of or to give effec1 to an order of 1he revision'! aulhorily, (783 E-G; 78<1
D-E; 785 H; 786. BJ
Even assuming that the amendctl section applied only to pending proceedings. when the rcvisional authority made an order after examining the
record directing the assessing officer to make a fresh assCM111ent. there was
G
a proceeding pending before such officer in pursuance of such direction.
[786 EJ
C!VIL APPELLATE JuR1smcnoN : Civil Appeal No. 830 of
1963.
Appeal by special leave from the judgment and decree dated
March 3, 1960 of the Allahabad High Court in Special Appeal
H
No. 3 of 1956.
G. S. Pathak and S. P. Varma, for the appellants.
'
I
A
B
.YAIPURIA BROS. v. STATE (Shah /.)
781
0. P. Rana, for the respondents,
K. Srinivasan and R- Govalakr/shnan, for the intervener.
'
The Judgment of the Court was delivered by
Shah".J,
Th~ appellant-a public limited Compimy-having
its registered office at Calcutta, was, with effect from October 5,
1946, appointed sole agent for sale of goods manufactured· by the
Swadeshi Cotton Mills Company ]:.,td. On March 20, 1952, the
Sales Tax Officer, Kanpur issued a notice under s. 21 of the
U.P. Sales Tax Act, 1948 calling upon the appellant Company
to file a return of its turnover for the assessme11t year 1948-49 on
the ground that rhe turnover had escaped assessment.
On March
c
31, 1952, the Sales Tax Officer made a "best judgment" assessment and determined the taxable turnover of the appellant Company at Rs. 50 lakhs for the year 1948-49 and determined the·
appropriate tax liability.
In the appeal to the Judge (Appeals) Sales Tax, the order passed;
D by the Sales Tax Officer, was set aside, that authority holding that
the appellant Company was not a dealer within the meaning of
s. 2(c) of the Act.
But the order of the appellate authority was
set aside by the Judge (Revisions) Sales Tax, by order dated
March 28, 1955 and the case was remanded to the Sales Tax
Officer for "fresh assessment". In the view of the Jlldge (ReviE sions) .Sales Tax, it was necesary to determine "the ownership of
the goods at the time of their sale",
The Sales Tax Officer then issued a notice calling upon the
appellant Company to produce its books of account and other
relevant documents on July 23, 1955 for the purpose of assr.ssF ment for the year 1948-49. The appellant Company contended
that as the original assessment under s. 21 had been set aside by
the Judge (Revisions) Sales Tax, no proceeding in connection
with that assessment was pending and re-assessment was barred
because more than three years had elapsed since the end of the
year of assessment.
The Sales Tax. Officer rejected the contention
G of the appellant Company and insisted that the books of account
and other documents be produced as directed earlier.
The appellant Company then petitioned on September 2, 1955 to the High
Court of Allahabad under Art. 226 of the Constitution for a writ
in the nature of prohibition restraining the Sales Tax Officer,
H
Kanpur, from proceeding with the assessment. of the appellant
Company for the assessment year 1948-49 and for a writ of
certiorari quashing the order dated September 2, 1955 of the
Sales Tax Officer, Kanpur and the proceeding taken for re-assess-
782
SUPREME COURT REPORTS
(1965] l S.C.K.
ment in pu~suance thereof.
Chaturvedi J., held that ao.sessment
:.ou;;ht to b~ made by the Sales Tax Office:· pursuant to the order
of tJ1e Judge (Revisions) Sales Tax "was clearly ba,red by the
law of limitation"' prescribed in that behalf by s. 21 of the U.P.
Sales Tax Act.
It wa' in the view of the learned Judge immaterial whether assessment was being made by the Sales Tax Officer
.mo motu or under the direction of a superior authority if at the
time of making the re-assessment the period prescribed bys. 21
had expired.
The order passed by Chaturvedi J., wa' reversed in
appeal by a Division Bench of the High Court.
The High Court
held that the Sales Tax Officer was competent in view of the order
of remand which directed "fresh ·assessment" to commence fresh
assessment proceedings against the appellant Company and in
commencing and continuing those procecdin~s he was acting in
·compliance with the directions given under ss. 9 and 10 of the
Act which he was bound to carry out and to such assessment pro-
·Cecdings the period of limitation prescribed by s. 21 of the Act
did not apply.
Against the order passed by the High Court
reversing the order passed by Chaturvedi J., this appeal ha' been
preferred with special leave.
The material provhions of the U.P. Sales Tax Act are briefly
these : s. 9 conferred a power upon the designated authority to
er.te-tain an appeal against the order passed by the Sales Tax
au•.hority, and by suh-s .. (3) of s. 9 it was provided:
"The a:iriellatc authority may, after giving the nppdlant a reasonable opportunity of being heard,
(a) confirm, reduce, enhance or annul the assessment. or
(b) set.aside the assessment and direct the assessing
authority to pass a fresh order after such further inquiry
ai; may be directed, or
(c)
By sub-s. ( 3) of s. I 0 as it stood at the relevant time, it was
provided:
"The Revising Authority may in his discretion at
any time .mo motu or on the application of the Commis-
.sioner of Sales Tax or the person aggrieved, call for and
examine the record of any order made by any Appellate or Assessing Authority under this Act, for the purpose of satisfying himself a~ to the legality or propriety
of such order and may pass such order as he thinks fit:
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JAIPURIA BROS. V. StATE (Shah /.)
78:J.
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Provided that no such application shall be enterB
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tained in any case where an appeal Jay against the order,
but was not preferred."
Section 21 as it stood at the relevant time provided:
"Where the whole or ,any part of the turnover of a
dealer has, for any reason, escaped· assessment to tax in
any year, the Assessing Authority "may, at any time
within three years from the expiry of such years, and
after issuing notice to the dealer and making such
enquiry as may be necessary, assess the tax payable on
such turnover."
In the view of the High Court s. 21 which imposed upon the
Assessing Authority duty to exercise his power to assess turnover which escaped assessment within three years from the end
of the year of assessment applied only to the order which the
Assessing Authori:y made suo motu : where, he was directed to
proceed by an order of the appellate or revisional authoritv under
D ss. 9 and 10 of the Act to re-assess, the period of limitation has
no application.
In our view the High Court was in error in so limiting the
operation of s. 21.
That section imposes a restriction upon the
power of the Sales Tax Offictrr: that officer is competent within
E
three years next succeeding the date to which the tax relates to
assess tax payable on the turnover which has escaped assessment.
But the section does not provide expressly, nor is there any implication, that the period within which re-assessment may be made
applies only to those cases where the Sales Tax Officer acts on
his own initiative and not pursuant to the directions of the appelF
!ate or the revisional authority. In our view the principle of the
judgment of the Privy Council in Commissioner of Income-tax,
Bombay Presidency and Aden v. Khemchand Ramdas (a firm) (1)
applies to this case.
In Khemchand's case(') the tax-payer was
assessed as a registered firm to income-tax by order dated January
17, 1927 for the year 1926-27 under 'S. 23(4) of the Inccme-tax
(;
Act.
Under the Act as it then stood, a registered firm was not
liable to pay super-tax and was liable to income-tax at the maximum rate. On January 9, 1928 the Commissioner of Income-taic
in exercise of powers of revision under s. 33 of the Act issued a
notice to the assessee requiring him to show cause why the order
of the Income-tax Officer granting registration of the firm
and
H assessing it on that footing should not be 'et <es;de, and by order
dated February 13, 1928, ordered cancellation of registration and
(1) <1933)[.R. 6.o !.A. 2~5.
SUPREME COURT -REPORTS
(1965] l S.C.R.
.directed the Income-tax Officer to take necessary action thereupon.
A
· On May 4, 1929, the Income-tax Officer assessed to super-tax .
the assessee on the footing that its registration was cancelled. The
authority of the Income-tax Officer to assess was challenged. It
was held by the Judicial Co=ittee that as the Income-tax Offii:er
,.had made the order imposing super-tax on the assessee more than
one year after the earlier demand in respect of income-tax, the B
.-Order was without jurisdiction. The Judicial Coinmittee pointed
-·out that once a final assessment has been made, ii cannot be
. reopened by the Income-tax Officer of his own motion, or at the
.direction of the Co=issioner exercising his powers under s. 33
of the Indian Income-tax Act, 1922, except in the circumstances c
.and within the time prescribed by ss. 34 and 35 of the Act. They
-observed that ss. 34 and 35 were exhaustive and prescribed the
. only circumstances in which; and the only time in which, such fresh
assessments could be made and fresh notices of demand could be
issued. ·As the Income-tax Officer took no fresh step within one
·year under the statute, he was "hopelessly out of time whichever D
·of the two sections was applicable".
But the order of the High· Court must still be confirmed,
because during the pendericy of the proceeding iii the High Court
: s. 21 was extensively amended.
The section as amended by Act
. .19 of 1956 from May 28, 1956 reads as follows:
"(1) If the assessing l\Uthority has reason to believe
that the whole or any part of the turnover of 1a dealer
has, for any reason1 escaped assessment to tax for any
.-year, the assessing authority may, after issuing notice
to the dealer, and making such enquiry as may be necessary, assess or re-assess him fo tax:·
Provided that the tax shall be charged at the rate at
:which it would have been charged had the turnover not
escaped assessment, or full assessment, as· the case may .
"be.
Explanation.-·-Nothing in this sub-section shall be
deemed to prevent the assessing authority from making
-an assessment to the best of its judgment.
(2) No order of assessment under sub-section (1) or
under any other provision of this Act shall be made for
· any assessment year after the expiry of four years from
· the end of such year.·
Provided that where the notice under sub-section
(1) has been served within such four years the assess-
' ment or re-assessment to be made in pursuance of such
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JAIPURIA Bii.OS. V. STATE (Shah !.)
notice may be made within one year of the date of the
service of the notice even if the period of four years is
thereby exceeded:
Provided further that nothing
contained in this
section limiting the time within which any assessment or
re-assessment may be made, shall apply to an assessment
or re-assessment made in consequence of, or to give effect
to, any finding or direction contained in an order under
section 9, 10, or 11.
Explanation.-
"
785
Under the terms of s. 21 ( 1) a~ amended where the assessing
authority has reason to believe that any part of the turncver has
for any reason escaped assessment to tax for any year, he may make
assessment within four years from the end of the year in which the
turnover has escaped assessment.
The rule is, however, subject
to two exceptions: ( i) when notice under sub-s. ( 1) has been
served within four years the assessment or re-assessment to be
D made in pursuance of. s:ich notice raay be made within one year of
the date of the service of the notice even if the period of four
years is thereby exceeded; and (ii) that nothing contained in
s. 21 which limits the time within which any assessment or reassessment is . to be made applies to assessment or re-assessment
E made in consequence of, or to give effect to, any finding or direction contained in an order under ss. 9, 10 or 11.
Therefore
where the Sales Tax Officer proceeds in pursuance of a direction
given by the appellate or revising authority or under an order
made by the High Court in a- reference under s. 11, the period of
limitation prescribed by sub-s. (2) of s. 21 does not apply. This
F
section was incorporated in the Act by s. 15 of the amending
Act, which enacted:
"For section 21 of the Prin<Hpal Act the following
shall be and be always deemed to have been substi·
tuted:"
The amended section was therefore to be deemed to be in operaG μon at all material times since the enactment of the U .P. Sales
Tax Act 15 of 1948: The Legislature has given a clear retrospective
operation to the amended section as from the date on which the
Principal Act came into operation, and correctness of the order of
the Sales Tax Officer holding that there was no bar of limitation
·to the making of a fresh assessment pursuant to the order of the
H appellate or revising authority had to be adjudged in the light of
s.. 21 as amended by Act 19 of 1956.
The words use4 by the
Legislature are precise and admit of only one interpretatlOil that
786
SUPREME COURT REPORTS.
(1965] I S.C.R.
proceedings taken for assessment or re-assessment in consequence
of, or to give effect to an order of the appellate or revising authority or an order passed by the High Court under s. 11 may be
talc.en notwithstanding the expiry of the period prescribed by
sub-s. (2) of s. 21.
Mr. Pathak on behalf of the appellant Company pleaded that
even if that be the true interpretation of s. 21 as amended, the
>ection could only apply to proceedings which were pending at
the date on which the Act was amended, but in law no proceeding
was pending because the Judge (Revisions) Sales Tax had no
rower to direct after the expiry of the period prescribed under s. 21
a:; it originally stood to make a fresh assessment in respect of the
'ear 1948-49. There are two clear answers to this plea, either of
which is sufficient to reject it. The revisional authority had under
s. IO: 3) power to make such order as he thought fit Jftercalling for
and c::.amining the record of any order made hy an appellate or an
a"essing authority and after satisfying himself as to the legality
or propriety of such order.
Even assuming that the revisional
authority came to a conclusion which was erroneous in law,
it
was still an order which he had jurisdiction to make and that
order unless set aside in a proper proceeding could not be ignored
on the g:ound of lack of jurisdiction.
There was, therefore, a
;J' ocxding pending before the Sales Tax Officer in pursuance of
1~.e direction given by the Judge (Revisions) Sales Tax who had
ct:rccted the
Sales
Tax Officer to
make a fresh
assessment.
Whether in pursuance of this direction, a fresh assessment could
be made under s. 21 before it w~s amended, need not detain us.
We arc concerned with the jurisdiction of the revising authority to
make the order that he did under the section as it stood amended,
and not with the competence of the assessing authority to pass an
order for assessment under the statute before it was amended. The
other ground is also equally decisive.
By s. 15 of Act 19 of
1956, s. '21 of the Act as amended, must be deemed to have been
on the statute book on the date on which the revising authority
pJssed his order, and under that amended provision the power of
the as\essing authority !o as<ess or re-assess pursuant to an order of
the revising authority w:•s not !0st when the period prescribed by
~ub-s. 2 of s. 21 for c:ssessment or r~-a-s~"men! expired. Under
s. 21. before it was amended. there could be no nrder of assessment
cir re-assessment eithec bv !h~ Sal" Ta\ Officer s110 mo•u, or nm5u:mt to the direction of the appellate or revising authority after the
c11piry of the period of three years prescribed by the statute, hut
under s. 21 as amended, the power may be exercised by the
Sales Tax Officer s110 motu within four years for assessment or
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JA!PURIA BROS. v. STATE (Shah J.)
787
re-assessment.
That power could be exercised under the first
proviso within a further period of one year if a notice under
~ub-s. ( 1) was served within four years of the end of the year
of assessment and without limit of time when it was made in
consequence of, or to give effect to, any finding or direction
contained in an order of the appell11te or revisional authority or
under an order of the High Court under s. 11.
In initiating
proceeding for assessment, pursuant to the direction of the revising authority, the Sales Tax Officer was, by virtue of s. 21 as
amended, subject to no restrictions as to the period within which
the order of assessment could be made.
The order passed by
C
the High Court must therefore be confirmed.
The appeal fails and is dismissed with costs.
Appeal dismissed.
L2Sup,/65-7