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TMI Blog1967 (2) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the High Court allowing the respondent's writ petition has, therefore, to be set aside. - Civil Appeal No. 1080 of 1965, - - - Dated:- 28-2-1967 - SHELAT J.M. AND MITTER G.K. JJ. Dipak Dutt Chaudhuri and R.N. Sachthey, for the appellants. C.D. Garg, amicus curiae, for the respondent. -------------------------------------------------- The judgment of the Court was delivered by SHELAT, J.- This appeal by certificate granted by the Punjab High Court raises the following question: "Where the sales tax authority is not satisfied with the returns filed by a registered dealer and issues a notice under section 11(2) of the Punjab General Sales Tax Act, 1948, before the expiry of three years from the termination of the period for furnishing returns but finalises the assessment order after three years from the aforesaid date, whether such an assessment order can be said to be time-barred and, therefore, without jurisdiction". A few facts for understanding this question may first be stated. The respondent is a partnership firm registered under the Act and was at the material time carrying on business in vegetable ghee, sugar and other commodities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder being time-barred would arise. These were the only contentions raised before the High Court and as no contention regarding the merits of the order was raised, the High Court did not enter into that question. We need not also go into the merits of the assessment and we will consider only the question whether the order was invalid on the ground taken by the dealer in the High Court. The High Court following its earlier decision in M/s. Rameshwar Lal Sarup Chand v. The Excise and Taxation Officer [1963] 65 P.L.R. 768; 15 S.T.C. 932., held that the order was an assessment on best judgment basis under section 11(4) and as it was made after three years after the close of the assessment year it was without jurisdiction. For the reasons which we shall presently set out, the question whether the assessment order was passed under section 11(3) or section 11(4) or (5) does not need any answer as it makes no difference so far as this case is concerned whether it was made under one or the other sub-section. However, the mere fact that the Assessing Authority mentioned that he made the order on the best judgment basis cannot be conclusive, for, merely calling it as the best judgment asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the returns or production of evidence that the returns furnished in respect of any period are correct or complete, he shall serve on such dealer a notice in the prescribed manner requiring him on a date and at place specified thereunder either to attend in person or to produce or to cause to be produced any evidence on which such dealer may rely in support of such returns. Sub-section (3) provides that on the day specified in the notice or as soon afterwards as may be, the Assessing Authority shall, after hearing such evidence as the Assessing Authority may require on specified points assess the amount of tax due from the dealer. Sub-section (4) provides that if a registered dealer having furnished returns in respect of a period, fails to comply with the terms of a notice issued under sub-section (2), the Assessing Authority shall within three years after the expiry of such period, proceed to assess to the best of his judgment the amount of tax due from the dealer. Sub-section (5) provides that, if a registered dealer does not furnish returns in respect of any period by the prescribed date, the Assessing Authority shall within three years after the expiry of such period, after g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he condition is that the dealer has failed to apply for registration. Prima facie, none of these conditions existed in the present case and there- fore though the Assessing Authority states that he had to assess the firm to the best of his judgment, the impugned order cannot be said to be either under sub-section (4) or sub-section (5) or sub-section (6). But as we have stated earlier this question need not be gone into in the present case and we do not, therefore, have to decide whether the order was one under sub-section (3) or sub-section (4) or sub- section (5). The question that falls for determination is whether it was one under sub-section (3) or sub-section (4), is it one which can be said to be time-barred. So far as sub-section (4) is concerned the question as to when an assessment order thereunder becomes barred arose in Madan Lal Arora v. Excise and Taxation Officer, Amritsar [1962] 1 S.C.R. 823; 12 S.T.C. 387. The petitioner, a registered dealer, filed his returns for the four quarters of the financial year ending on March 31, 1955, and likewise, for the four quarters of the financial year ending on March 31, 1956. In respect of each year the Sales Tax Assessing Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the quarters after March 31, 1959. The question as to the effect of the two earlier notices was not canvassed. What this decision laid down was that the notice dated August 18, 1959, under which the authority proposed to proceed under section 11(4), having been served after expiry of three years from the respective dates when the said returns had to be furnished, the notice was futile and the authority not having proceeded to assess within time any action taken by him would be without jurisdiction. The question as to the legal effect of such a notice was considered in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur [1964] 4 S.C.R. 436; 14 S.T.C. 976. The points which fell for determination there were: (1) when can a proceeding be said to commence and (2) if a proceeding has commenced within the prescribed period but is pending when such period expires and an order is finalised thereafter, whether such an order is invalid on the ground of its being time-barred. The appellant there was a registered dealer. For the year 1949-50 he submitted only one return for one quarter and defaulted in respect of the other quarters. A notice was served on him on August ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the quarters other than that covered by the return made by the appellant. As regards the second case it held that the Commissioner had jurisdiction to assess the turnover in respect of the entire fourth quarter. At page 450, the Court observed that in a case where a return has been made, but the Commissioner has not accepted it and has issued a notice for enquiry, the assessment proceedings would be pending till the final assessment is made. Even in a case where no return has been made, but the Commissioner initiates proceedings by issuing the notice either under section 10(3) or under section 11(4), the proceedings would be pending till the final assessment is made. But where no return has been made, and the Commissioner has not issued any notice under the Act, it cannot be held that any proceedings are pending before the Commissioner. In the case of a registered dealer the proceedings before the Commissioner start factually when a return is made or a notice is issued and no question of limitation would arise where such proceedings are taken before the expiry of the prescribed period though an assessment order is finalised after the expiry of such period. This decision is, there ..... 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