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TMI Blog1988 (5) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... cate (I.S. Goel and C.V. Subba Rao, Advocates, with him), for the respondents. Raja Ram Aggarwal, Senior Advocate (Harish Salve and Vineet Kumar, Advocates, with him), for the petitioners. -------------------------------------------------- The judgment of the Court was delivered by RANGANATH MISRA, J. -These are applications under article 32 of the Constitution and the challenge in these proceedings is to the validity of notice issued by the Excise and Taxation Officer-cum-Assessing Authority, respondent No. 2, under the Haryana General Sales Tax Act, 1973 (hereinafter referred to as "the Haryana Act"). Such notice is said to have been issued on 18th of December, 1980. The relevant periods are 1968-69 to 1974-75 and each of the writ petitions relates to one of these years. As common questions of fact and law arise in these petitions and a common set of arguments has been advanced at the Bar, we proceed to dispose of all these writ petitions by a common judgment. The petitioner No. 1, a public limited company, has its factory at Ganaur within the District of Sonepat in Haryana State and petitioner No. 2 is its general manager (legal) and duly constituted at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be produced such evidence as he may rely upon in support of the return. Under sub-section (3), where the dealer responds to the notice under sub-section (2), the Assessing Authority after hearing such evidence as the dealer may produce and such other evidence as the Assessing Authority may require on specified points, has to assess the tax. Sub-section (4) authorises the Assessing Authority in the event of default of compliance with the terms of notice issued under sub- section (2) to proceed to assess, to the best of his judgment, the amount of tax due from the dealer. Sub-section (5) deals with the situation where returns are not furnished and provides a period of five years after the expiry of such period to which the returns, if filed, would be related as the outer limit for completing the assessment to the best of the Assessing Authority's judgment. The five sub-sections of section 28 thus deal with four different situations: Sub-section (1) authorises the making of assessment on the basis of returns without anything more; Sub-sections (2) and (3) deal with one particular situation, namely, when the Assessing Authority looks for evidence and supporting material, he calls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itable action under the Act. Taking of such an action may have the effect of initiating proceedings against the defaulter. The default may be the occasion for initiating the proceedings, but the default itself proprio vigore cannot initiate proceedings. Proceedings in respect of the assessment of the turnover for the relevant period cannot, therefore, be said to be pending before the Commissioner...... For the foregoing reasons, we hold that a statutory obligation to make a return within a prescribed time does not proprio vigore initiate the assessment proceedings before the Commissioner; but the proceedings would commence after the return was submitted and would continue till a final order of assessment was made in regard to the said return." On the basis of this authority, it would follow that notices under sub- section (2) of either section 11 or section 28 of the relevant Acts, having already issued and final orders of assessment having not been made, assessment proceedings are still pending. In Madan Lal Arora v. Excise and Taxation Officer [1961] 12 STC 387 (SC), a five-Judge Bench was examining the question of limitation in respect of a best judgment assessment. At that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (3) of the Punjab Act corresponding to section 28(2) and (3) of the Haryana Act. The court proceeded to state: "Sub-section (4) of section 11 is attracted in a case where a dealer having furnished a return in respect of a period fails to comply with the terms of a notice issued under sub-section (2). In such a case, the Assessing Authority has to take some effective step, such as issuance of a notice to the assessee intimating to him that he is proceeding to assess to the best of his judgment the amount of tax due from the dealer. On failure of a dealer to furnish a return in respect of any period by the prescribed date the Assessing Authority after giving the dealer a reasonable opportunity of being heard can proceed to assess to the best of his judgment the amount of tax, if any, due from the dealer. In such a case, also an effective step such as issuance of a notice to the dealer concerned showing that the Assessing Authority is proceeding to assess has got to be taken within five years of the expiry of the period concerned. Sub- section (6) is attracted in the case of a dealer who being liable to pay tax under the Act has failed to apply for registration. Similar steps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the assessee is before the authority and the documents and evidence produced by the assessee are examined, the assessee would certainly know which way the assessment proceeding is heading. It is quite possible that in course of examination of the papers produced by the assessee in answer to the notice, the Assessing Authority would indicate his dissatisfaction with the compliance. It may be that in a given case the original notice under section 11(2) or a subsequent order requiring production of some more material on specific points is not complied with. Non-compliance with the notice under section 11(2) of the Act leads to a situation where a best judgment assessment can be complied. It is true that this Court in Indian Aluminium case [1977] 39 STC 19; [1977] 1 SCR 716 has indicated that a further notice has to be given. The question that fell for determination before the court did not require examination as to whether such a notice was necessary. In view of the position as has emerged in the matter before us, we also do not think it necessary to finally indicate as to whether such a notice has to be issued and failure to issue such a notice would prevent the assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period not exceeding five years as the legislature has fixed the limitation of five years for completing assessments in case of escaped turnover. Unless there be an assessment made soon after the period to which such assessment relates, the question of consideration of escapement would indeed become difficult to consider and examine. We are, however, not inclined to extend into a situation like the one before us, a period of limitation for completion of assessments under section 11(3) or 28(3) of the respective Acts. The assessee has made returns for all the quarters and must have paid its admitted tax. Now that the Assessing Authority intends to complete assessments under section 11(3) of the Act, we see no prejudice to the assessee if the Assessing Authority is permitted to complete the assessment now. On the other hand, if no assessment is made an anomalous situation might arise and even though the assessee has collected the sales tax on its sale turnover, it might raise a claim for refund of it in the absence of an assessment. We do not propose to create such a situation. It would suffice to say that in the situation which has arisen in the matter before us, it would be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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