1963 (5) TMI 54 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction under Section 11 of the Punjab General Sales Tax Act, 1948.
2. Limitation period for assessment completion.
3. Interpretation of "proceed to assess" vs. "assess".
4. Validity of assessment orders passed beyond the prescribed period.
5. Adequacy of alternative remedies.

Detailed Analysis:

1. Jurisdiction under Section 11 of the Punjab General Sales Tax Act, 1948:
The principal question in these petitions was whether the assessment of sales tax, except under section 11(1), must be completed within three years from the last date on which the return had to be filed. The petitioners contended that the period of three years had elapsed, and thus, the authorities had no jurisdiction to assess them to sales tax.

2. Limitation period for assessment completion:
The petitioners argued that the assessment must be completed within three years, as provided in sub-sections (4), (5), and (6) of section 11. They contended that even if section 11(3) does not explicitly prescribe a limitation, the three-year period should be imported into it. The State, however, argued that the assessments were not best judgment assessments and fell under section 11(3), which does not provide a limitation period.

3. Interpretation of "proceed to assess" vs. "assess":
The term "proceed to assess" in sub-sections (4), (5), and (6) was debated. The petitioners argued that it implied the assessment must be completed within three years. The State contended that "proceed to assess" merely required initiating a step towards assessment within three years, not completing it. The Supreme Court's decision in Madan Lal Arora's case was pivotal, indicating that the assessment must be completed within three years.

4. Validity of assessment orders passed beyond the prescribed period:
The assessment orders in question were passed beyond the three-year period. The court held that the assessments must be completed within three years from the last date on which the return could be filed. The Supreme Court's decision in Madan Lal Arora's case and the Full Bench decision of the Bombay High Court in Bisesar House supported this view. The court quashed the assessment orders as they were passed beyond the period of limitation.

5. Adequacy of alternative remedies:
The State argued that the petitions should be dismissed as the petitioners had not exhausted their remedies by way of appeal under the Act. However, it was conceded that if the assessment had to be completed within three years, the argument of alternative remedy would be moot. The Supreme Court in Ujjam Bai's case and The State Trading Corporation of India Limited's case established that the existence of an alternative remedy is no bar to the exercise of power under Article 226 if the action is without jurisdiction.

Conclusion:
The court concluded that the assessments must be completed within three years from the last date on which the return could be filed. The assessment orders in both cases were quashed as they were passed beyond the period of limitation. The petitions were allowed, and the parties were left to bear their own costs.