1967 (10) TMI 48 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of assessment by best judgment ignoring belatedly filed return.
2. Interpretation of provisions regarding assessment under the Madras General Sales Tax Act, 1959.
3. Comparison with previous court orders on the consideration of belatedly filed returns in assessments.
4. Implications on the levy of penalty based on the quashed assessment.

Analysis:
The judgment by the High Court of Madras addressed the issue of the validity of an assessment made by the Joint Commercial Tax Officer based on best judgment, which ignored a belatedly filed return by a private limited liability company for the assessment year 1965-66. The petitioner contended that the assessment was flawed as it did not take into account the belatedly filed return. The Court found merit in the petitioner's argument, emphasizing that the Madras General Sales Tax Act, 1959, does not prohibit considering a return filed after the prescribed time in assessment proceedings. The Court interpreted the Act to require the assessing officer to consider any return, even if belated, to determine the true chargeable turnover accurately. The judgment highlighted that the purpose of assessing by best judgment arises when a return is not filed within the prescribed time or is deemed incorrect or incomplete, but this does not justify ignoring a belatedly filed return before making the assessment order.

The Court referred to a previous order by the same Court, which held a contrary view regarding the consideration of belatedly filed returns. However, the Court disagreed with that view and cited another judgment to support its interpretation that a correct and complete return, even if filed late, must be taken into account by the assessing officer before making the assessment order. The judgment emphasized that the concept of best judgment assessment presupposes the absence of a return or a flawed return, but a belatedly filed correct return cannot be disregarded solely based on its timing. Consequently, the Court quashed the assessment order and allowed the petition, indicating that the assessing officer should reassess while considering the return filed by the petitioner.

Regarding the levy of penalty, the Court concluded that since the main assessment order was quashed due to the failure to consider the belatedly filed return, the question of the propriety of the penalty did not arise and should fall in line with the quashed assessment. The Court directed that the assessing officer could proceed with the assessment, taking into account the return filed by the petitioner, without imposing any costs on the petitioner.