1978 (1) TMI 176 - SC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the Assam Taxation (On Goods Carried by Road or on Inland Water-ways) Act, 1961.
2. Validity of the assessment orders dated June 19, 1969.
3. Requirement of payment of tax before submitting a return under Section 7(1) of the Act.
4. Necessity of issuing a notice under Section 7(2) or Section 11 of the Act for initiating assessment proceedings.

Detailed Analysis:

1. Validity of the Assam Taxation (On Goods Carried by Road or on Inland Water-ways) Act, 1961:
The Assam Taxation (On Goods Carried by Road or on Inland Water-ways) Act, 1961 was enacted by the Assam Legislature with the sanction of the President, following the invalidation of the 1954 Act by the Supreme Court due to non-compliance with Article 304 of the Constitution. The 1961 Act was intended to validate the tax imposed under the 1954 Act. The Supreme Court had previously upheld the validity of the 1961 Act in a judgment dated April 1, 1968, reversing the Assam High Court's decision that had declared the Act ultra vires.

2. Validity of the Assessment Orders Dated June 19, 1969:
The respondent company submitted returns for the quarters ending September 30, 1960, and December 31, 1960, without paying the required tax. The High Court held that the returns were invalid as they were either filed without the necessary tax payment or beyond the prescribed period. Consequently, the assessment orders dated June 19, 1969, were deemed beyond the competence of the authorities due to the absence of notices under Sections 7(2) and 11 of the Act.

3. Requirement of Payment of Tax Before Submitting a Return Under Section 7(1) of the Act:
Section 7(1) of the Act requires the return to be furnished in a prescribed form and to a prescribed authority. Section 20(2) mandates that the tax due must be paid before submitting the return. The High Court concluded that failure to pay the tax rendered the return non-est, meaning no further proceedings could be taken on such a defective return. The appellant argued that a return should be considered valid even if it was defective due to non-payment of tax or delayed submission, and the assessee would merely be liable to penalties under Section 13.

4. Necessity of Issuing a Notice Under Section 7(2) or Section 11 of the Act for Initiating Assessment Proceedings:
The High Court found that no notice under Section 7(2) or Section 11 was served on the respondent within two years from the expiry of the return period, making the assessment proceedings time-barred. The appellant contended that since the returns were submitted voluntarily, albeit defective, it was not necessary to issue a notice under Section 7(2). However, the Supreme Court had previously held that issuing a notice under Section 7(2) is mandatory before proceeding under Section 9(4).

Conclusion:
The Supreme Court dismissed the appeals, upholding the High Court's decision that the assessment orders dated June 19, 1969, were invalid due to the absence of required notices and the non-est nature of the returns. The Court refrained from deciding whether a return submitted without tax payment could be considered valid, noting that the tax authorities had treated the returns as invalid during the proceedings. The exercise of power under Article 136 of the Constitution was deemed discretionary, and the Court declined to interfere with the High Court's judgment.