1986 (2) TMI 299 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the notice issued by the Excise and Taxation Officer under section 11(2) of the Punjab General Sales Tax Act, 1948.
2. Interpretation of the period of limitation for making best judgment assessment under sub-section (4) of section 11.
3. Comparison of the judgments in Madan Lal Arora v. Excise and Taxation Officer and Indian Aluminium Cables Ltd. v. Excise and Taxation Officer.

Analysis:
1. The High Court addressed the validity of the notice issued by the Excise and Taxation Officer to M/s. Hardit Singh Bhagat Singh under section 11(2) of the Punjab General Sales Tax Act, 1948. The notice required the respondent to produce accounts and documents and show cause why a penalty should not be imposed. The respondent challenged this notice through a writ petition under articles 226 and 227 of the Constitution of India. The single judge allowed the writ petition, quashing the notice. The High Court held that the power to make best judgment assessment under sub-section (3) of section 11 could only be exercised within a period of five years as specified in sub-section (4) of section 11. The Assessing Authority was not permitted to proceed with the assessment beyond the limitation period, as per the decision in Madan Lal Arora v. Excise and Taxation Officer.

2. The judgment delved into the interpretation of the period of limitation for making best judgment assessment under sub-section (4) of section 11. It was highlighted that prior to the amendment by Act No. 28 of 1965, the limitation period was three years, which was later extended to five years. The High Court referred to the decision in Madan Lal Arora's case, emphasizing that the power to make best judgment assessment could only be exercised within the specified time frame from the end of each quarter for which returns were filed. The Assessing Authority was restricted from making such assessments beyond the prescribed limitation period.

3. The High Court compared the judgments in Madan Lal Arora v. Excise and Taxation Officer and Indian Aluminium Cables Ltd. v. Excise and Taxation Officer to analyze the legal principles regarding best judgment assessment under section 11 of the Act. It was noted that the Final Court had held that effective steps, such as issuing a notice to the assessee within five years of the concerned period, were necessary for making best judgment assessments. The Court reiterated that the Assessing Authority must adhere to the statutory limitation period and take appropriate actions within the prescribed timeframe. The judgment concluded that the decision of the learned single judge aligned with the legal principles established by the Final Court, and no additional points were raised.

In conclusion, the High Court dismissed the appeal, affirming the decision of the learned single judge and upholding that the notice issued by the Excise and Taxation Officer was invalid due to exceeding the statutory limitation period for making best judgment assessments under section 11 of the Punjab General Sales Tax Act, 1948.