2024 (8) TMI 4 - HC - VAT and Sales Tax

Time limitation for issuance of notice for best judgment assessment - Necessity under the provisions of Section 28A of the Haryana General Sales Tax Act, 1973, to issue the notice for best judgement assessment u/s 28 (4) of Customs Act, 1962, within the period of five years - HELD THAT - Section 28 prescribes procedure of assessment to be framed by Assessing Authority. As per 1973 Act, every dealer has to file quarterly returns which are followed by annual return. If the Assessing Officer finds that returns furnished in respect of any period are not correct and complete, he shall serve on such dealer a notice in the prescribed manner either to attend in person or to produce or cause to be produced any evidence which such dealer may rely in support of such returns. He after considering the evidence, as the dealer may produce, assess the amount of tax due from the dealer. Sub-section (4) of Section 28 provides that if a dealer, having furnished returns in respect of a period, fails to comply with the terms of notice issued under sub-section (2), the Assessing Authority shall, within five years after the expiry of such period, proceed to assess to the best of his judgment, the amount of tax due from the dealer. It is apt to notice here that Section 28 (4) of 1973 Act provides that Assessing Authority shall, within five years after the expiry of such period proceed to assess to the best of his judgment. The Supreme Court in Indian Aluminium Cables Limited 1976 (9) TMI 144 - SUPREME COURT interpreting Section 11 (4) of 1948 Act which was para materia with Section 28 (4) of 1973 Act has held that Assessing Authority shall take effective steps after serving notice under sub-section (2) in case of best judgment assessment. The Court further clarified that effective steps include notice to dealer intimating him that he is proceeding to assess to the best of his judgment and opportunity of personal hearing. From the conjoint reading of Section 28A of 1973 Act and judgment of Supreme Court in Indian Aluminium Cables Limited, it is evident that Section 28A of 1973 Act, whereby requirement of second notice prior to proceeding with best judgment assessment and grant of opportunity of personal hearing has been dispensed with, was inserted to overcome judgment of Supreme Court. The Assessing Authority before proceeding to frame best judgment assessment is not required to intimate the basis for arriving at best of judgment assessment or to take any other step for proceeding to assess. The Assessing Authority after issuing first notice may proceed to assess the best of judgment without second notice, without taking any other step, without intimating basis for arriving at best of judgment assessment, however, Assessing Authority is bound to proceed within the period of five years which has been specified under Section 28 (4) of 1973 Act - The legislature has used word for which makes it clear that for proceeding to assess to the best of judgment within five years, it shall not be necessary to intimate the basis for arriving at best of judgment or to take any other step. Thus, Section 28A of 1973 Act has not obliterated requirement to proceed for best of judgment assessment within five years period as specified in Section 28 (4) of 1973 Act - The Assessing Authority is bound to issue notice within five years period prescribed under Section 28 (4) of 1973 Act for best judgment assessment. The reference is answered in above terms and matter is remitted back to Tribunal to pass appropriate orders.

Summary

Issues Involved:

1. Whether the Tribunal was correct in holding that under Section 28A of the Haryana General Sales Tax Act, 1973, it is unnecessary for the Assessing Authority to issue a notice for best judgment assessment under Section 28(4) of the Act within five years.

Issue-wise Detailed Analysis:

1. Background and Facts:

The applicant-assessee, a Central Government Undertaking engaged in the procurement and distribution of foodgrain, filed quarterly returns for the financial years 1977-78 and 1978-79. The Assessing Authority issued a notice dated 02.06.1986 for the assessment of the financial year 1978-79, directing the assessee to appear on 20.06.1986. The assessee objected, claiming the notice was barred by limitation. The Assessing Authority framed an ex-parte assessment on 28.11.1986, rejecting the declared turnover and re-determining it. The assessee's appeals were dismissed by the Tribunal, which held that the case fell within the extended latitude given to the Assessing Authority by Section 28A, inserted with retrospective effect.

2. Legal Question:

The Tribunal referred the following question of law to the High Court: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that under the provisions of Section 28A of the Haryana General Sales Tax Act, 1973, it is not necessary for the Assessing Authority to issue the notice for best judgment assessment under section 28 (4) of the Act within the period of five years?"

3. Arguments by the Petitioner:

The petitioner argued that Section 28A, inserted for assessments prior to 01.04.1978, dispenses with the need for the Assessing Officer to intimate the basis for arriving at a best judgment assessment or to proceed within the five-year period specified under Section 28(4). The petitioner contended that the Revenue and Tribunal misread Section 28A, upholding the orders of the adjudicating and Appellate Authority.

4. Arguments by the Respondent:

The respondent argued that a conjoint reading of Sections 28 and 28A indicates that it was unnecessary for the Assessing Authority to issue a notice for best judgment assessment within five years. Section 28A, starting with a non-obstante clause, should be given full effect, as per the Supreme Court's judgment in Indian Aluminium Cables Limited. The respondent also argued that Section 36 of the 1973 Act does not apply to best judgment assessments framed without books of account.

5. Court's Analysis:

The Court examined Sections 28 and 28A of the 1973 Act. Section 28 outlines the procedure for assessment, including the issuance of notices and the requirement to proceed within five years for best judgment assessments. Section 28A, inserted to dispense with the second notice, commences with a non-obstante clause, indicating its overriding effect on contrary provisions or judgments.

6. Interpretation of Section 28A:

The Court noted that Section 28A was inserted to overcome the Supreme Court's judgment in Indian Aluminium Cables Limited, which required a second notice and opportunity of hearing for best judgment assessments. Section 28A dispenses with the need for a second notice, opportunity of hearing, and disclosure of the basis for arriving at a best judgment assessment. However, it does not dispense with the requirement to proceed within the five-year period specified under Section 28(4).

7. Conclusion:

The Court concluded that Section 28A does not obliterate the requirement to proceed for best judgment assessment within the five-year period specified in Section 28(4). The reference made by the Tribunal was answered as follows: "The Assessing Authority is bound to issue notice within the five-year period prescribed under Section 28 (4) of the 1973 Act for best judgment assessment." The matter was remitted back to the Tribunal for appropriate orders.