# SALES TAX OFFICER & ANR v. SUDARSANAM IYENGAR & SONS

- **Citation:** [1970] 1 S.C.R. 859
- **Court:** Supreme Court of India
- **Decided:** 1969-08-13
- **Bench:** J. C. Shah, Acting <;.J, V. Ramaswami, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sales-tax-officer-anr-v-sudarsanam-iyengar-sons-4714
- **Pages:** 5

## Headnote

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Travancore-Cochin General Sales Tax Rules, 1950, Rule 33-Determination and assessment of escaped turnover-Limit of three years-Pro ..
ceedings !or assessment whether must be initiated or finally completed
within that period.
The respondent was assessed to sales tax in the State of Kerala for the
year 1962-63 in March, 1964. In December, 1965 the Sales Tax Officer
issued notice under R. 33 of the Travancore-Cochin General Sales Tax
Rules, 1950 in force at that time for reopening the original assessment on
the ground that c~rtain turnover had escaped assessment. According to
the relevant portion 0£ the snid rule the assessing authority "may at any
time within three years next succeeding that to which the tax ....... .
relates determine to the best of his judgment the turnover
which has
escaped asseissment and assess the tax payable. . . on such turnover aftgr
issuing a notice to the 1dealer . . . and after making such enquiry as he
considers necessary".
The respondent's objection to the notice having
failed it filed a writ petition in the High Court. The learned Single Judge
who heard the writ petition felt that it was due to the orders of the court
that the Sales tax authorities had been prevented from completing the
assessment within the time allowed by Rule 33.
While disposing of the
writ petifion he observed that the Sales Tax Authorities would be at liberty
to complete the proceedings initiated bv the notice within a further period
of 59 days.
The respondent preferred an appeal to the division bench
which s·et aside the dir~ction granting 59 days extension for completing the
asse·ssment.
The .Revenue appealed.
On behalf of the appellant it was
contended that on a ttue construction of Rule 33 it should be held that
the proceedings under that rule have to commence within three years next
succeeding that to wli.ich the tax relates and that it is not necessary that
the entire proceedinga relating to the escaped assessment should be completed within that period.. On behalf of the respondent it was urged that
the word 'determirte' ·in Rule 33 meant that the final determination of the
turnover which had e!caped assessment and the assessment of the tax have
to be done within ttn;ee years.
Allowing the appeal.
HELD : In vie\v Of the previous decisions of this Court in which provisions similar to Rule 33, namely, sub-clauses (2), (4) and (5) of s. 11
o'f the Punjab Genera! Sales Tax Act, 1948 came up for consideration, the
principle is firmly e.~ablished that assessment proceedings under the Sales
Tax Act must be taken to be pending from the time the proceedings are
initiated until they· ·fire terminated hy a final orJer of assessment.
In
these cases the initiation o( proceedings within the prescribed period was
considered sufficient, . -The fact that the word used in Rule 33 is 'determine'
whereas in ss. 11(4} and (5) of the Punjab Act the words 'proceed to
assess' are use_(!, canfiot, in the context of sales tax legislation lead to a
different result. f862 H-863 CJ
The words which follow the word 'detelrmine' in Rule 33 must be
accorded their due s;ignification.
The words 'assess the tax payable' cannot be ignored an,.d,. i~ is clearly meant that the assessment has to be made
within the petjod·-prescribed. ·~essmenf is a comprehensive word and can
860
SUPREME COURT REPORTS
[ 19701 I s.c.R.
denote the entirety of proceedings '-"·hich arc taken \vith rcg;nd to it.
It
canI'lot and does not mean a final order Of asseso;mcnt alone unless there is
$Omething in the context of a particular provision v.·hich compels such
a meaning being attributed to it.
Rule 33 mus.I not be so interpreted that
it may be defeated by taking certain collateral proceeding<; and obtaining
a stay order as was done in the present case or by unduly delaying a<.>.lcssmcnt proceedings beyond a period of three years.
It must he interpreted
like the analogous provisions considered in earlier cases. l'his must particularly be so when there is no provision

## Text

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SALES TAX OFFICER & ANR.
V.
SUDARSANAM IYENGAR & SONS
August 13, 1969
859
B
[J. C. SHAH, ACTING <;.J., V. RAMASWAMI AND A. N. GROVER, JJ.]
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Travancore-Cochin General Sales Tax Rules, 1950, Rule 33-Determination and assessment of escaped turnover-Limit of three years-Pro ..
ceedings !or assessment whether must be initiated or finally completed
within that period.
The respondent was assessed to sales tax in the State of Kerala for the
year 1962-63 in March, 1964. In December, 1965 the Sales Tax Officer
issued notice under R. 33 of the Travancore-Cochin General Sales Tax
Rules, 1950 in force at that time for reopening the original assessment on
the ground that c~rtain turnover had escaped assessment. According to
the relevant portion 0£ the snid rule the assessing authority "may at any
time within three years next succeeding that to which the tax ....... .
relates determine to the best of his judgment the turnover
which has
escaped asseissment and assess the tax payable. . . on such turnover aftgr
issuing a notice to the 1dealer . . . and after making such enquiry as he
considers necessary".
The respondent's objection to the notice having
failed it filed a writ petition in the High Court. The learned Single Judge
who heard the writ petition felt that it was due to the orders of the court
that the Sales tax authorities had been prevented from completing the
assessment within the time allowed by Rule 33.
While disposing of the
writ petifion he observed that the Sales Tax Authorities would be at liberty
to complete the proceedings initiated bv the notice within a further period
of 59 days.
The respondent preferred an appeal to the division bench
which s·et aside the dir~ction granting 59 days extension for completing the
asse·ssment.
The .Revenue appealed.
On behalf of the appellant it was
contended that on a ttue construction of Rule 33 it should be held that
the proceedings under that rule have to commence within three years next
succeeding that to wli.ich the tax relates and that it is not necessary that
the entire proceedinga relating to the escaped assessment should be completed within that period.. On behalf of the respondent it was urged that
the word 'determirte' ·in Rule 33 meant that the final determination of the
turnover which had e!caped assessment and the assessment of the tax have
to be done within ttn;ee years.
Allowing the appeal.
HELD : In vie\v Of the previous decisions of this Court in which provisions similar to Rule 33, namely, sub-clauses (2), (4) and (5) of s. 11
o'f the Punjab Genera! Sales Tax Act, 1948 came up for consideration, the
principle is firmly e.~ablished that assessment proceedings under the Sales
Tax Act must be taken to be pending from the time the proceedings are
initiated until they· ·fire terminated hy a final orJer of assessment.
In
these cases the initiation o( proceedings within the prescribed period was
considered sufficient, . -The fact that the word used in Rule 33 is 'determine'
whereas in ss. 11(4} and (5) of the Punjab Act the words 'proceed to
assess' are use_(!, canfiot, in the context of sales tax legislation lead to a
different result. f862 H-863 CJ
The words which follow the word 'detelrmine' in Rule 33 must be
accorded their due s;ignification.
The words 'assess the tax payable' cannot be ignored an,.d,. i~ is clearly meant that the assessment has to be made
within the petjod·-prescribed. ·~essmenf is a comprehensive word and can
860
SUPREME COURT REPORTS
[ 19701 I s.c.R.
denote the entirety of proceedings '-"·hich arc taken \vith rcg;nd to it.
It
canI'lot and does not mean a final order Of asseso;mcnt alone unless there is
$Omething in the context of a particular provision v.·hich compels such
a meaning being attributed to it.
Rule 33 mus.I not be so interpreted that
it may be defeated by taking certain collateral proceeding<; and obtaining
a stay order as was done in the present case or by unduly delaying a<.>.lcssmcnt proceedings beyond a period of three years.
It must he interpreted
like the analogous provisions considered in earlier cases. l'his must particularly be so when there is no provision in the Ruic in question analogous
to sub-s. (3) of s. 34 of the Income-tax Act, 1922 by v;hich the Income
Tnx authorities v.·crc deharred from completing the assessment beyond the
ptriod prescribed. [863 D-Gl
The State of Punjab v. Tera Chn11d Laipat Roi. 19 S.T.C. 493 and
The Stnte of Punjab v. !vf11rlidhnr Mahabir Prashad. ~I S.l·.c. 29 applied.
Glu.n.-.hyan1 Das v. Reginnal Assi.Hant ('on1111i5sio11er of Sales
Tax,
,\"oRpur, [1964] 4 S.C.R. 436, referred 10.
Civn. APPELLATE JURISDICTION : Civil Appeal No. 123'.? oi
1968.
Appeal by special leave from the judgmem and decrc~ da1ed
June 18, 1968 of the Kerala High Court in Writ Appeal l'\,1. 46
of 1967.
M. R. K. Pillai, for the appellant.
T. A. Ramachandran, for the respondent.
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The Judgment of the Court was delivered by
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Grover, J,
This is an appeal by speci:il leave from a judgment of the Kerala High Court. The facts may be firstly stated :
The respondent was a non-resident dealer carrying on business
in Quilon, Emakulam and Calicut in the State of Kerala.
When
the assessment in respect of sales tax for
the assessment y~ars
1961-62 and 1962-63 was pending the respondent had applied for
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a bifurcation of the assessment by treating his business at three
places mentioned above as separate units.
This request was acceded to by the Board of Revenue.
The orders of assessment
relating to the two years were made in April 1964 and JI.larch
l 9M respectively.
The Sales Tax Officer issued notices in December 1965 for
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reopening the original
assessment
on the ground that certain
turnover had escaped assessment.
The objection of the respon·
dent to these notices having
failed a writ petition seeking
to
quash the orders made by the Sales tax authorities was filed.
A
learned Single Jud~e held that in respect of the assessment year
1961-62 the Sales Tax Officer had no jurisdiction or authority to
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proceed under Rule 33 of the Travancore Cochin General Sales
tax Rules, 1950 which were in force a: the material time.
It was
found that the notice served in December 1965 relatin~ to that
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S.T.O. v. s. IYENGAR & SONS (Grover, J.)
861
assessment year was beyond the time limit of three years prescribed by the rule. As regards the assessment year 1962-63 the
learned judge held that the time limit would expire on March 31,
1966. Owing to the writ petition and the stay orders which had
been made the assessment could not be completed. The learned
judge felt that it was owing to the orders of the court that the
Sales tax authorities had been prevented from
completing
the
assessment within the time. While disposing of the writ petition
ib was observed that the Sales tax authorities would be at liberty
to complete the proceedings initiated by the notice within the
period of 59 days at the expiry of which the period prescribed
by. Rule 33 was to expire.
The respondent preferred an appeal
to a division bench which set aside the direction granting 59
days extension for completing the assessment on the ground that
the same was not justified under the law.
Counsel for the appellant has confined the appeal only to the
proceedings relating to the assessment year 1962-63. It is admitted that with regard to the other year 1961-62 the proceedings became barred. It is contended before us that on a true
construction of Rule 33 it should be held that the proceedings
under that Rule have to commence within three years next succeeding that to which the tax relates and that it is not necessary
that the entire proceedings relating to the escaped
assessment
should be completed within that period. In other words if such
proceedings under Rule 3 3 have been commenced within the
period prescribed by the rule they can be continued even beyond
the period of t\lree years till a final order of assessment is made.
Reliance has beein. placed on a number of decisions of this Conrt
some of which may be noticed.
In the State of Punjab & Ors.
v. Tara Chand Lajpat Rai(') the question which came up for consideration was that where the Sales tax Authority issued a notice
under s. 11(2) of the Punjab General Sales Tax Act, 1948 before the expiry of three years frnm the termination of the period
for furnishing returns but finalised the assessment order
after
three years from the aforesaid date, whether such an assessment
could be said to be barred by time. It was held that assessment
proceedings commenced in the case of a registered dealer either
when he furnished a return or when a notice was issued to him
under s. 11 (2) of the Punjab Act and if such proceedings were
taken within the prescribed time,
though the
assessment was
finalised subsequently even after the expiry of the prescribed
period no question of limitation wonld arise. In The State of
Punjab & Anr. v. Murlidhar Mahabir Prashad( 2 ) the
question
of law was whether on a proper interpretation of sub-ss. ( 4) and
( 5) of s. 11 of the Punjab Act the period of limitation was three
(I) 19 S.T.C. 493.
(2) 21 S.T.C. 29.
862
SUPREME COURT REPORTS
[ 1970] l S.C.R,
years for making the assessment from the last date on which the
return was to be filed or whether the order of assessment was
valid even after it W'.IS made after a period of three years provided the necessary notice had been issued within that period.
The aforesaid provision of the Punjab Act may be read :
"11 ( 4) If a registered dealer, having furnished returns in respect of a period fails to
comply with the
terms of a notice issued under sub-s. ( 2) the Assessing
Authority shall within three years after the expiry of
such period, proceed to assess to the best of his judgment the amount of the tax due from the dealer.
( 5) If a registered dealer does not furnish returns
in respect of any period by the prescribed date, the
Assessing Authority shall within three years after the
expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed to assess to
the best of his judgment, the amount of tax, if any, due
from the dealer".
Relying mainly on the observatiQ!l in Ghanshyam Das v.
·Regional Assistant Commissioner of Sales Tax, Nagpur( 1 )
this
Court held that the proceedings for assessment were valid because
the same had been initiated within the period prescribed
under
s. 11 (5). The principle laid down in Tara Chand LJjpat Rats
case(') was followed.
Rule 33 of the relevant rules is in these terms :
Rule 33(1) "If for any reason the whole or an>
part of the turnover of business of a dealer or lice1.see
has escaped assessment to tax in any year or if the
licence fee has escaped levy in any year, the assessing
authority or licensing authority as the case
may
be,
subject to the provisions of sub-rule (2) may at any
time within three years next succeeding that to which
the tax or licence fee relates determine to the best uf his
judgment the turnover which has escaped
assessment
and assess the tax payable or levy the licence fee in
such turnover after issuing a notice to the dealer or
licensee and after making such enquiry as he considers
necessary."
Now in view of the previous decisions the principle is
firmly
established that assessment proceedings under the Sales Tax Act
must be held to be pending from the time the proceedings are
initiated until they are terminated by a final order of assessment.
The distingui5hing feature on which emphasis has been laid by
(t) [1964) 4 S.C.R. 436.
(2) 19 S. T. C. 493.
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S.T.O. v. s. IYENGAR & SONS (Grover, J.)
8 63
the counsel for the respondent is that the language employed :n
rule 33 is such as to lead to only one conclusion that the final
determination of the turnover which has escaped assessment and
the assessment of the tax have to be done within three years. It
is pointed out that in the other Sales tax provisions which came
up for consideration in the cases mentioned above the words
employed were "proceed to ·assess" e.g., sub-ss. ( 4) and (5) of
s. 11 of the Punjab General Sales Tax Act. Our attention has
been invited to the appropriate dictionary meaning of the word
"determine" which is "to settle or decide-to come to a judicial·
decision-(Shorter Oxford English Dictionary). It is suggested
that the word "determine" was employed in Rule 33 with a definite intention to set the limit within which the final order in the
matter of assessment should be made, the limit being three years.
We find it difficult to accept that in the context of sales tax legislation the use Of the words "proceed to assess" and "determine"
would lead to different consequences or result. In this connection
the words which follow the word "determine" in Rule 33 must
be accorded their due signification.
The words "assess the tax
payable" cannot be ignored and it is clearly meant that the
assessment has. to he made within the period prescribed. Assessment is a comprehensive word and can denote the entirety of proceedings which are taken with regard to it.
It cannot and does
not mean a final order of assessment alone unless there is some
thing in the context of a particular provision which compels such
a meaning being attributed to it.
In our judgment despite the
phraseology employed in Rule 33 the principle which has be.~n
laid in other cases relating to analogous provisions in sales tax
statutes must be followed as otherwise the purpose of a provision
like Rule 33 can be completely defeated by taking certain collateral proceedings and obtaining a stay order as was done in
the present case or by unduly delaying assessment proceedi'lgs beyond a period of three years.
It is undoubtedly open to the legislature or the rule making
authority to make its intention quite clear that on the expiry of a
specified period no final order of assessment can be mad-. Then
taxing authorities would certainly be debarred from completing
the assessment beyond the period prcscribe.d as was the case in
sub-s. ( 3) of s. 34 of the Income tax Act, 1922, but such is not
the case here and we would hold that the assessment proceedings relating to the year 1962-.63 were within time.
The appeal is allowed and the judgment of the High Court is
set aside. The case shall go back to the High Court for disposal
of such points as were previously not decided.
In terms of the
previous order dated April 3, 1969, the respondents shall be en-·
titled to costs in this Court.
G.C.
Appeal allowed.
L!5S"p.Cl/-!1