1967 (11) TMI 100 - SC - VAT and Sales Tax

Best judgment assessments under sub-sections (4), (5) and (6) of section 11 of Punjab General Sales Tax Act, 1948 challenged - Held that - Appeal allowed. There is considerable force in the second point urged on behalf of the respondent, viz., that the assessment of the respondent was made by the assessing authority without giving him an adequate opportunity of being heard. The first notice of 8th March, 1961, was held by the assessing authority himself not to have been properly served, and the second notice of 23rd March, 1961, was also obviously not properly served. The service which was accepted by the assessing authority was affixation at a shop which used to be visited by the respondent. The shop was not his own and his place of residence was known. No attempt was made to serve the notice on him at his residence. In these circumstances, the proceedings taken ex parte against the respondent were not justified.

Summary

Issues:
- Best judgment assessments under Punjab General Sales Tax Act, 1948 challenged in High Court.
- Validity of assessments completed after the expiry of three years.
- Distinctive feature in one appeal where the respondent was not a registered dealer.
- Adequate opportunity of being heard in assessment proceedings.

Analysis:
The Supreme Court delivered a judgment in response to six appeals involving dealers assessed to sales tax under the Punjab General Sales Tax Act, 1948. The High Court had quashed the assessment orders made by the Excise and Taxation Officer after the expiry of three years from the relevant periods. The High Court's decision was based on the premise that assessments completed after the three-year period were without jurisdiction. However, the Supreme Court referred to previous decisions and established that if returns were filed or notices given before the three-year limit, assessments could be made even after the expiry of the period. The Court emphasized that once proceedings were initiated by filing returns, assessments could continue beyond the three-year mark. Consequently, the High Court's decision to quash the assessment orders was deemed unjustified in these cases.

In one appeal, the respondent was not a registered dealer and had not voluntarily filed a return within three years. The assessing authority issued a notice within the limitation period, initiating proceedings against the respondent. Despite arguments that the assessment proceedings were time-barred, the Court held that the initiation of proceedings through the notice within the prescribed time rendered the assessment valid. The Court distinguished this case from a previous judgment, highlighting that the notice for best judgment assessment was issued within the limitation period, thus upholding the assessment order on this ground.

However, the Court acknowledged the respondent's argument regarding inadequate opportunity to be heard in the assessment process. The notices issued were not properly served, with one notice being affixed at a shop the respondent visited, instead of serving it at his known residence. Due to the lack of proper service and the proceedings being taken ex parte against the respondent, the Court upheld the High Court's decision to quash the assessment on the basis of inadequate opportunity to be heard.

Consequently, the Court allowed four appeals, setting aside the High Court's orders and dismissing the petitions filed by the respondents. In one appeal, the High Court's decision to quash the assessment was upheld due to the lack of adequate opportunity for the respondent to be heard. The parties were directed to bear their own costs in these cases.