1967 (2) TMI 66 - SC - VAT and Sales Tax

Where the sales tax authority is not satisfied with the returns filed by a registered dealer and issues a notice under section 11(2) of the Punjab General Sales Tax Act, 1948, before the expiry of three years from the termination of the period for furnishing returns but finalises the assessment order after three years from the aforesaid date, whether such an assessment order can be said to be time-barred and, therefore, without jurisdiction? Held that - Appeal allowed. Since the said notice dated January 11, 1957, was served on the respondent-firm before the expiry of three years from the respective dates for furnishing the returns, the assessment proceedings must be held to have commenced from that date which was within time and thus the assessment proceedings remained pending until they were terminated by the assessment order. Though that order was finalised after the expiry of three years from the said period, it could not be attacked on the ground of its being beyond limitation and therefore without jurisdiction. The order passed by the High Court allowing the respondent s writ petition has, therefore, to be set aside.

Issues Involved:
1. Whether the assessment order was time-barred and without jurisdiction.
2. The applicability of Section 11(3), Section 11(4), or Section 11(5) of the Punjab General Sales Tax Act, 1948.
3. Commencement and validity of assessment proceedings.

Detailed Analysis:

Issue 1: Whether the assessment order was time-barred and without jurisdiction.
The primary question raised in this appeal was whether an assessment order finalized after three years from the termination of the period for furnishing returns, but initiated within the three-year period, could be considered time-barred and without jurisdiction. The court examined the facts and legal provisions to determine the validity of the assessment order. The High Court had previously held that the order was time-barred, following its decision in M/s. Rameshwar Lal Sarup Chand v. The Excise and Taxation Officer, as it was made after three years from the close of the assessment year.

Issue 2: The applicability of Section 11(3), Section 11(4), or Section 11(5) of the Punjab General Sales Tax Act, 1948.
The court discussed various sub-sections of Section 11, which outline different scenarios for assessment:
- Section 11(1): If the returns are deemed correct and complete without requiring the dealer's presence.
- Section 11(2): If the returns are not satisfactory, a notice is issued to the dealer for further evidence.
- Section 11(3): Assessment is made after considering the evidence presented.
- Section 11(4): Best judgment assessment if the dealer fails to comply with the notice within three years.
- Section 11(5): Best judgment assessment if the dealer fails to furnish returns within three years.
- Section 11(6): Best judgment assessment if the dealer fails to apply for registration.

The court noted that the mere mention of best judgment assessment by the Assessing Authority does not conclusively categorize the order under Section 11(4) or Section 11(5).

Issue 3: Commencement and validity of assessment proceedings.
The court referenced previous judgments, particularly Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, to elucidate when assessment proceedings are considered to commence. It was established that:
- Assessment proceedings commence either when the dealer files returns or when a notice is issued under Section 11(2).
- If proceedings are initiated within the prescribed period, the final assessment can be made even after the expiry of that period without being time-barred.

In the present case, the dealer filed returns, and the notice under Section 11(2) was issued within the three-year period. Therefore, the assessment proceedings commenced within the prescribed time. The final assessment order, although made after three years, was valid as the proceedings were pending from the date of the notice.

Conclusion:
The Supreme Court concluded that since the notice dated January 11, 1957, was served within three years from the respective dates for furnishing the returns, the assessment proceedings commenced within time and remained pending until terminated by the assessment order. Therefore, the assessment order could not be considered time-barred or without jurisdiction. The appeal was allowed, and the writ petition was dismissed without any order as to costs.

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