# The Judgment of the Court was delivered by z96r Com.missionilr of I11come-la~. Bombay v. Scindia Stea·m Navigation Co. Ltd. Venkatarama Aiyar, ]. . ' Apnl 7

- **Citation:** [1962] 1 S.C.R. 823
- **Court:** Supreme Court of India
- **Decided:** 1959-08-18
- **Case number:** Writ Petition No. 120 of 1959
- **Bench:** P. B. Gajendragadkar, A. K. Sarkar K. N. Wanchoo, K. C. Das Gupta, N. Rajagopala Ayyangar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-judgment-of-the-court-was-delivered-by-z96r-com-missionilr-of-i11come-la-2095
- **Pages:** 4

## Headnote

' •
Sales Tax-Return furnished-Assessee called upon to produce
evidence in support of return-Period of limitation for such demand
from when to run-Punjab General Sales Tax Act, I948, (Punj.
46 of r948), s. II, r. 20 .
. Under the Punjab General Sales Tax Act, 1948, a dealer had
to furnish his return every quarter according to the Rules and
• •
was also required to furnish evidence in support of the return if
called for, and if he failed to do so the assessing authority could
proceed to make an assessment to the best of his judgment, but
this power could be exercised "within three years after the expiry of the period".
Held, that three years within which tbe authority could
proceed to make the best judgment assessment had to be com-
,~
f
puled rom the end of such quarter in respect of which return
had been filed.
ORIGINAL JURISDICTION:
Writ Petition No. 120 of
1959.
Writ Petition under Art. 32 of the Constitution
of India for enforcement of Fundamental Rights.
Bhagirath Das and B. P. Maheshwari, for the petitioner.
N. S. Bindra and D. Gupta, for the respondent.
1961.
April 7.
The Judgment of the Court was
delivered by
z96r
Com.missionilr of
I11come-la~.
Bombay
v.
Scindia Stea·m
Navigation
Co. Ltd.
Venkatarama
Aiyar, ].
. '
Apnl 7.
824
SUPREME COURT REPORTS
[1962]
i96i
SARKAR, J.-The petitioner is a dealer registered
M d -L-l A
under the Punjab General Sales Tax Act.
He filed
a an
a
rora
,
v.
returns of hie. sale turnovers for the four quarters of
Excise & Taxation the financial year ending on March 31, 1955, and likeOfficer, Amritsar wise, for the four quarters of the financial year ending
on March 31, 1956. In respect of each year the Sales
Sarkar J.
Tax Assessing Officer served three successive notices
on him on March 7, 1958, April 4, 1958, and August
18, 1959, requiring him to attend with the documents
and other evidence in support of his returns. In the
last of the notices mentioned above it was stated that
on failure to produce the documents and other evidence
mentioned, the case would be decided "on best judgment assessment basis". The petitioner did not comply
with any of the notices, but after the receipt of the
last notice he presented this petition under Art. 32 of
the Constitution challenging the right of the authorities to make a best judgment assessment.
The question raised by the petitioner turns on s. 11
of the Punjab General Sales Ta~ Act, relevant provisions of which are set out below.
S. 11. (1) If the Assessing Authority is satisfied
without requiring the presence of registered dealer
or the production by him of any evidence that the
returns furnished in respect of any period are correct
and complete, he shall assess the amount of tax due
from the dealer on the basis of such returns.
(2) If the Assessing Authority is not satisfied
without requiring the presence of a registered dealer
who furnished the returns or production of evidence
that the returns furnished in respect of any period
are correct and complete, he shall serve on such
dealer a notice in the prescribed manner requiring
him, on a date and at a place specified therein,
either to attend in person or to produce or to cause
to be produced any evidence on which such dealer
may rely in support of such returns .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(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-section (2), the
I
'
1 S.C.R. StJPRtt:ME COUR1' R:gPoRrs.
825
,_.
}
)
J
,...,. l
Assessing Authority shall within three years after
I96r
the expiry of such period, proceed to. assess to the
-
best of his judgment the amount of the tax due Madan Lal Arora
from the dealer.
.
Excise &v Taxation
·The contention of .the petitioner is that at the Officer, Amdtsar
date of the notice last mentioned the Sales Tax
authorities had no right to proceed to make any best
Sa,ka. J.
judgment ass

## Text

I
, , 1 S.C.R.
SUPREME COURT REPORTS
823
• •
ordinary grammatical construction of that expression."
For the reasons already set out, in my view, the
interpretation placed by Chagla, C. J. on the expression "arising out of such order" is the correct one.
Appeal dismissed.
MADAN LAL ARORA
v.
EXCISE &. TAXATION OFFICER, AMRITSAR
(P. B. GAJENDRAGADKAR, A. K. SARKAR
K. N. WANCHOO, K. C. DAS GUPTA and
N. RAJAGOPALA AYYANGAR, JJ.)
' •
Sales Tax-Return furnished-Assessee called upon to produce
evidence in support of return-Period of limitation for such demand
from when to run-Punjab General Sales Tax Act, I948, (Punj.
46 of r948), s. II, r. 20 .
. Under the Punjab General Sales Tax Act, 1948, a dealer had
to furnish his return every quarter according to the Rules and
• •
was also required to furnish evidence in support of the return if
called for, and if he failed to do so the assessing authority could
proceed to make an assessment to the best of his judgment, but
this power could be exercised "within three years after the expiry of the period".
Held, that three years within which tbe authority could
proceed to make the best judgment assessment had to be com-
,~
f
puled rom the end of such quarter in respect of which return
had been filed.
ORIGINAL JURISDICTION:
Writ Petition No. 120 of
1959.
Writ Petition under Art. 32 of the Constitution
of India for enforcement of Fundamental Rights.
Bhagirath Das and B. P. Maheshwari, for the petitioner.
N. S. Bindra and D. Gupta, for the respondent.
1961.
April 7.
The Judgment of the Court was
delivered by
z96r
Com.missionilr of
I11come-la~.
Bombay
v.
Scindia Stea·m
Navigation
Co. Ltd.
Venkatarama
Aiyar, ].
. '
Apnl 7.
824
SUPREME COURT REPORTS
[1962]
i96i
SARKAR, J.-The petitioner is a dealer registered
M d -L-l A
under the Punjab General Sales Tax Act.
He filed
a an
a
rora
,
v.
returns of hie. sale turnovers for the four quarters of
Excise & Taxation the financial year ending on March 31, 1955, and likeOfficer, Amritsar wise, for the four quarters of the financial year ending
on March 31, 1956. In respect of each year the Sales
Sarkar J.
Tax Assessing Officer served three successive notices
on him on March 7, 1958, April 4, 1958, and August
18, 1959, requiring him to attend with the documents
and other evidence in support of his returns. In the
last of the notices mentioned above it was stated that
on failure to produce the documents and other evidence
mentioned, the case would be decided "on best judgment assessment basis". The petitioner did not comply
with any of the notices, but after the receipt of the
last notice he presented this petition under Art. 32 of
the Constitution challenging the right of the authorities to make a best judgment assessment.
The question raised by the petitioner turns on s. 11
of the Punjab General Sales Ta~ Act, relevant provisions of which are set out below.
S. 11. (1) If the Assessing Authority is satisfied
without requiring the presence of registered dealer
or the production by him of any evidence that the
returns furnished in respect of any period are correct
and complete, he shall assess the amount of tax due
from the dealer on the basis of such returns.
(2) If the Assessing Authority is not satisfied
without requiring the presence of a registered dealer
who furnished the returns or production of evidence
that the returns furnished in respect of any period
are correct and complete, he shall serve on such
dealer a notice in the prescribed manner requiring
him, on a date and at a place specified therein,
either to attend in person or to produce or to cause
to be produced any evidence on which such dealer
may rely in support of such returns .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(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-section (2), the
I
'
1 S.C.R. StJPRtt:ME COUR1' R:gPoRrs.
825
,_.
}
)
J
,...,. l
Assessing Authority shall within three years after
I96r
the expiry of such period, proceed to. assess to the
-
best of his judgment the amount of the tax due Madan Lal Arora
from the dealer.
.
Excise &v Taxation
·The contention of .the petitioner is that at the Officer, Amdtsar
date of the notice last mentioned the Sales Tax
authorities had no right to proceed to make any best
Sa,ka. J.
judgment assessment as the three years within which
pnly such assessment could be made had expired
before then. It seems to us that the contention of the·
petitioner is well founded. 'The learned counsel for
the respondent, the assessing authority, also frankly
conceded that he found it 'difficult to contend to the
contrary.
Sub-section ( 4) of s. 11 deals.with the case of a dealer
who has furnished returns in respect of a period and
has thereafter been asked to produce evidence to
support the returns but has failed to do so. The subsection provides that in such a case the assessing
authority may proceed to make an assessment which
to the best of his judgment should be made irrespective of the returns. The. reason for this provision is
that the correctness of the returns having been doubted by the assessing authority, the dealer has not availed .
himself of the opportunity afforded to him to remove
these doubts. I The sub,section however provides that
the power can be exercised within the . three years
mentioned in it. Quite plainly, the power cannot be
exercised after these three years. have gone by. ·
··
The question is, how to compute the three years?
The sub-section says ·"within three years after the
expiry of such period". So the three years have to be
counted from the expiry of the period mentioned.
W,ha,t. then is that period? The words. are "such
f>eriOd ". The period referred therefore is the period
mentioned earlier in the sub-section, and that is the
period in respect of whfoh'returns had been furnished
by the dealer. This is also made clear by sub-s. (1) of'
s. 11. That deals with a case where the returns are
accepted. Both sub-ss. (1) and (4) deal with returns
for the same period. Now s. 10(3) provides that
104
826
SUPREM:h: ; \\TTRT REPORTS
[1962]
'96'
"every registered dealer shall famish such returns by
-
such dates and to such authority as may be prescriJ',fadan Lal ho'a bed". "Prescribed" means prescribed by rules framed
r.·xci" c,vraxatipn under the Act. Under r. 20 of these rules, a registered
Oific"· Am•itrn' dealer like the petitioner, had to furnish returns rJ1nrterly. The rules define "return period" as "the per iud
5• 11'"' J.
for which returrrn are prescribed to be furnished by a
dealer". It wotild therefore appear that when subs. (4) of s. 11 talks of "returns in respect of a period",
that refers in the ca.~e of the petitioner to the quarters
in respect of which he submitted the returns.
We
then come to this that the three years within which
the authority could proceed to make the best judgment assessment had to be counted from the end of
each quarter in respect of which returns had been
filed.
Now the last of the quarters in respect. of whir·h the
petitioner filed his returns ended on March 31, 1956.
So the assessing authority could not proceed t'J rr•ake
a best judgment assessment in respect of this 41mrtcr
after March 31, 1959. In the case of the earlier
quarters, of course, the three years had expirPd
even prior to this date. It is not in dispute that
the assessing officer had not proceeded to make any
assessment on the petitioner at the date of any of the
notices.
In the present case therefore the notices
given on August 18, 1959, that best judgment assessments would be made in respect of the quarters constituting the financial years 1955 and 1956, the last of
which expired on March 31, 1956, were futile.
No
such assessments could be made in respect of any of
these quarters after March 31, 1959.
The petit.ion must, therefore, be allowed.
A writ
will issue restraining the respondent from making
any best judgment assessment on the petitioner for
sales tax for any quarter of the financial years 1955
and 1956. The petitioner will get the costs of this
petition.
Petition allowed.