1991 (4) TMI 374 - HC - VAT and Sales Tax

Issues Involved:
1. Limitation period for completing fresh assessments.
2. Authority to frame "best judgment assessment" under the Central Sales Tax Act, 1956.

Detailed Analysis:

1. Limitation Period for Completing Fresh Assessments:
The primary issue was whether the assessment orders passed on 10th May 1974 were within the period of limitation as prescribed under section 11(2a) of the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi. The relevant provision states that no assessment under sub-section (1) shall be made after the expiry of four years from the end of the year in respect of which or part of which the assessment is made. The second proviso further provides that when a fresh assessment is required to be made in pursuance of an order under section 20 or any other court order, such fresh assessment may be made at any time within four years from the date of such order.

The dealer contended that the period of four years for completing the fresh assessments should be reckoned from the close of each assessment year, arguing that the original assessment proceedings were void ab initio. The dealer relied on the Patna High Court decision in Shree Ganesh Stores of Deoghar v. State of Bihar and a Delhi High Court decision in Narinder Singh Dhingra v. Commissioner of Income-tax to support their argument that the assessments were barred by time.

However, the court held that the order of the Financial Commissioner had become final and the assessment had to be framed within four years from the date of the said order, as prescribed in the second proviso to section 11(2a). The court concluded that the assessments made on 10th May 1974 were not barred by limitation.

2. Authority to Frame "Best Judgment Assessment" under the Central Sales Tax Act, 1956:
The second issue was whether the assessing authority had the power to frame a "best judgment assessment" under the Central Sales Tax Act, 1956. Section 9 of the Central Act was examined, which prescribes that the tax payable by any dealer under this Act shall be levied and collected by the Government of India and the authorities empowered to assess, reassess, collect, and enforce payment of any tax under the general sales tax law of the appropriate State shall do so on behalf of the Government of India.

The court noted that if an assessing authority has the power to make a "best judgment assessment" under the general sales tax law of the State, it has a similar power under the Central Act. The term "best judgment assessment" was explained as an assessment based on the facts and circumstances brought on the record by the assessing authority's effort. The court emphasized that a "best judgment assessment" does not cease to be an assessment under section 11(1) of the Act.

The court also considered the practical implications of the dealer's contention, noting that if the dealer's argument were accepted, it would allow dealers to escape liability by not filing returns or producing books of accounts. The court found this position untenable.

In conclusion, the court held that the Tribunal was correct in holding that the assessments made on 10th May 1974 were not barred by limitation and that there is no bar to framing a "best judgment assessment" under the Central Act. Both questions were answered in the affirmative, in favor of the department and against the dealer, with no order as to costs.

References Answered:
Both questions were answered in the affirmative, i.e., in favor of the department and against the dealer. The court left the parties to bear their own costs in all five references.

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