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TMI Blog1966 (10) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... o (b), Rule 1, Chapter 3-B, High Court Rules and Orders, Vol. V. In pursuance of the abovesaid order of reference the petition came up for hearing before the Division Bench consisting of INDER DEV DUA and R.S. NARULA, JJ. At the time of hearing, the AdvocateGeneral for the State pressed for reconsideration of the view expressed by another Division Bench in Mansa Ram Sushil Kumar v. The Assessing Authority, Ludhiana [1964] (15 S.T.C. 857) to the effect that there could be no assessment of tax under the Punjab General Sales Tax Act, 1948, before the expiry of the financial year. On 23rd March, 1966, the learned Judges directed reference of the following question of law to a Full Bench: "Can penalty be imposed on a dealer under section 10(7) of the Punjab General Sales Tax Act before the end of the year?" The order of the Division Bench was as follows: ORDER OF THE DIVISION BENCH The petitioner M/s. Om Parkash Rajinder Kumar of Amritsar claims to be a partnership concern carrying on the business of soap manufacture and dealing in vegetable products. This firm is a registered dealer under the Punjab General Sales Tax Act of 1948 (hereinafter called the Act) and is required to fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tember, 1964. Another ground in the writ petition on which the impugned notice has been assailed is to the effect that Shri K.K. Opal has no jurisdiction either to assess the petitioner or to issue a notice under section 10(7) because it is the individual officer at Amritsar with whom all returns have been filed who has jurisdiction to assess the petitioner or to issue notices under section 10(7) of the Act. But this ground has not been pressed before us because a Bench of this Court has already repelled such a contention. This ground, therefore, does not concern us in the present proceedings. The learned counsel has in support of the challenge relied on a decision of the Supreme Court in M/s. Mathra Parshad and Sons v. State of Punjab and Others[1962] 13 S.T.C. 180; A.I.R. 1962 S.C. 745., in which by majority it was held that sales tax is a yearly tax, though the method of collection allows collection of tax at intervals. In some cases, tax is collected at the end of the year, in others quarterly and in still others even monthly. Reliance has also been placed on a Bench decision of this Court in Mansa Ram Sushil Kumar v. Assessing Authority, Ludhiana[1964] 15 S.T.C. 857., in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of sections 5 and 6, every dealer (except one dealing exclusively in goods declared tax-free under section 6) whose gross turnover during the year immediately preceding the commencement of this Act exceeds the taxable quantum, is liable to pay tax under the Act on all sales effected after the coming into force of the Act. Sub-section (2) of this section also contemplates gross turnover during any year for the purposes of payment of tax. Section 5 provides for the rate of tax and in this section also, the levy of tax is contemplated on the taxable turnover every year of a dealer. It may be pointed out that now this section has been amended and the expression "every year" has been deleted, but we are concerned with the unamended Act. Section 10, which provides for the payment of tax and for returns, lays down in sub-section (1) that tax payable under the Act shall be paid in the manner provided at such intervals as may be prescribed. Sub-section (2) empowers the Excise and Taxation Commissioner in prescribed circumstances to accept from any dealer, in lieu of the general tax payable during any period, a lump sum by way of composition determined in the prescribed manner. Sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain that amount with him for a longer period than the period of the return to be furnished by him and if he does so, he incurs the liability of being subjected to the imposition of penalty. The mandatory postponement of imposition of this penalty as suggested by the petitioner would, according to Shri Kaushal, defeat the statutory purpose. It is accordingly argued that this Court should not adopt the construction suggested on behalf of the petitioner. Shri Bhagirath Dass has sought to meet this contention by submitting that the statute does not in terms direct the dealer to realise the sales tax from the purchasers for payment to the Government and, therefore, this Court would not be justified in law to allow itself to be influenced by the fact that the tax is generally collected from the purchasers. Shri Kaushal has stressed that merely because there is no provision for quarterly assessment does not necessarily prohibit the imposition of penalty before the conclusion of the year, if default is discovered earlier. Section 10 of the Act, says the counsel, provides clear machinery for the purpose and the Bench of this Court in the case of Mansa Ram Sushil Kumar[1964] 15 S.T.C. 857. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orcement), hereinafter called the respondent, was appointed the Assessing Authority under the Act for the whole of the State of Punjab by notification dated 10th February, 1964 (annexure B). His authority and jurisdiction to exercise all the powers and to perform all the functions of Assessing Authority under the Act vis-a-vis the petitioner have not been questioned before us. Several points originally raised in the writ petition based on the alleged attack on the authority and jurisdiction of the respondent have been specifically given up by Shri Bhagirath Dass, learned counsel for the petitioner, at the hearing of this case. The petitioner was required to file quarterly returns under the Act. During the year 1964-65 when the petitioner had filed the prescribed returns for the first quarter ending 30th June, 1964, but had not yet submitted the returns for the next quarter, for which the Act gave him time till 30th October, 1964, the respondent served upon the petitioner the impugned notice dated 17th October, 1964, (annexure C), under sub-section (7) of section 10 of the Act calling upon the petitioner to appear before the respondent and to show cause to him on 29th October, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 5th February, 1965, was filed. The reply to the only contention of the petitioner, with which we are concerned, is contained in paragraph 12 of the written statement of the respondent in the following words: "In reply to paragraph 12 of the petition, it is submitted that as already submitted in the preceding paragraph the respondent is fully competent to frame assessment of the petitioner-firm in accordance with the provisions of law. The notice issued for the production of accounts for the period ending the 30th September, 1964, pertaining to the year 1964-65 is not related only to the filing of quarterly return but is also regarding maintaining of false accounts or submission of incorrect returns or submission of incorrect list of sales made to registered dealers or goods exported outside the Punjab during the year 1964-65, that is, from the 1st April, 1964, to the 30th September, 1964. The dealer has been given due opportunity to prove their correctness." An objection to the maintainability of the writ petition was also taken in paragraph 14 of the return on the ground that the petitioner had not availed of the alternative remedies by way of appeal and revision against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sections 5 and 6, every dealer (except one dealing exclusively in goods declared tax-free under section 6) whose gross turnover during the year immediately preceding the commencement of this Act exceeded the taxable quantum shall be liable to pay tax under this Act on all sales effected after the coming into force of this Act and purchases made after the commencement of the East Punjab General Sales Tax (Amendment) Act, 1958: Provided that the tax shall not be payable on sales involved in the execution of a contract which is shown to the satisfaction of the Assessing Authority to have been entered into before the commencement of this Act. (2) Every dealer to whom sub-section (1) does not apply or who does not deal exclusively in goods declared to be tax-free under section 6 shall be liable to pay tax under this Act on the expiry of 30 days after the date on which his gross turnover during any year first exceeds the taxable quantum: Provided that in the case of a dealer who imports any goods for sale or use in manufacturing or processing, or who manufactures or processes any goods for sale, the liability to pay tax shall commence with effect from the date on which his gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax at such rate, not exceeding eight naye Paise in a rupee, as may be so notified may be levied on the sale of luxury goods as specified in Schedule A appended to this Act from such date as the State Government may by notification direct. The State Government after giving by notification not less than three months notice of its intention so to do may by like notification add to or delete from this Schedule, and thereupon this Schedule shall be deemed to have been amended accordingly: Provided further that the rate of tax shall not exceed two naye Paise in a rupee in respect of any declared goods as defined in clause (c) of section 2 of the Central Sales Tax Act, 1956, and such tax shall not be levied on the purchase or sale of such goods at more than one stage: Provided further that Government may by notification in the Official Gazette declare that in respect of any goods or class of goods the dealer may pay such lump sum by way of composition of the tax payable under this Act, as the Government may notify from time to time. (1A) The State Government may by notification direct that, in respect of such goods and with effect from such date as may be specified in the notification, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the Indian Electricity Act, 1910, of goods for use by it in the generation or distribution of such energy; (v) sales or purchases of goods falling under section 29; (vi) the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter-State trade or commerce, or in the course of export out of the territory of India: Provided that in the case of such a sale to a registered dealer, a declaration in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction; (vii) such other sales as may be prescribed; (b) the amount of sales tax included in the gross turnover. 7.. (1) No dealer shall, while being liable to pay tax under this Act, carry on business as a dealer unless he has been registered and possesses a registration certificate. (2) Every dealer required by sub-section (1) to be registered shall make application in this behalf in the prescribed manner to the prescribed authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Such dealers as may be required so to do by the Assessing Authority by notice served in the prescribed manner and every registered dealer shall furnish such returns by such dates and to such authority as may be prescribed: Provided that, if any dealer establishes to the satisfaction of the Assessing Authority that his average taxable turnover does not exceed ten per centum of his average gross turnover, the returns to be furnished by such dealer under this sub-section shall be annual returns. (4) Before any registered dealer furnishes the returns required by sub-section (3), he shall, in the prescribed manner, pay into a Government Treasury or the Reserve Bank of India the full amount of tax due from him under this Act according to such returns and shall furnish along with the returns receipt from such Treasury or Bank showing the payment of such amount. (5) If any dealer discovers any omission or other error in any return furnished by him, he may at any time before the date prescribed for the furnishing of the next return by him furnish a revised return, and if the revised return shows a greater amount of tax to be due than was shown in the original return, it shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce or as soon afterwards as may be, the Assessing Authority shall, after hearing such evidence as the dealer may produce, and such other evidence as the Assessing Authority may require on specified points, assess the amount of tax due from the dealer. (4) If a registered dealer, having furnished returns in respect of a period, fails to comply with the terms of a notice issued under subsection (2), the Assessing Authority shall within four years after the expiry of such period, proceed to assess to the best of his judgment the amount of the tax due from the dealer. (5) If a registered dealer does not furnish returns in respect of any period by the prescribed date, the Assessing Authority shall within four years after the expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed to assess to the best of his judgment the amount of tax, if any, due from the dealer. (6) If upon information which has come into his possession, the Assessing Authority is satisfied that any dealer has been liable to pay tax under this Act in respect of any period but has failed to apply for registration, the Assessing Authority shall, within four years after the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, proceed to reassess the tax payable on the turnover which has been under-assessed or has escaped assessment. (2) An Assessing Authority or any such authority as may be prescribed, may, at any time, within one year from the date of any order passed by him and subject to such conditions as may be prescribed, rectify any clerical or arithmetical mistake apparent from the record. 11-B. The amount of any tax and penalty imposed under this Act, which remains unpaid after the due date, shall be recoverable as arrears of land revenue. 12.. The Assessing Authority shall in the prescribed manner, refund to a registered dealer applying in this behalf, any amount of tax paid by such dealer under this Act- (a) if the amount of tax so paid is in excess of the amount due from him under this Act; or (b) if the amount of tax so paid is in respect of the sale or purchase of any declared goods and such goods are sold in the course of inter-State trade or commerce; either by a refund voucher or, at the option of the dealer by deduction of the tax so paid from the amount of tax due from him in respect of any other period: Provided that the refund under clause (b) shall be subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business and may inspect, examine and copy the same and make such enquiries from such dealer relating to his business, as may be necessary: Provided that books, documents and accounts of a period more than five years prior to the year in which assessment is made shall not be so required. (2) Every registered dealer shall,- (a) maintain day to day accounts of his business; (b) maintain a list of his account books, display it along with his registration certificate and furnish a copy of such list to the Assessing Authority; (c) produce, if so required, account books of his business before the Assessing Authority for authentication in the prescribed manner; (d) retain his account books at the place of his business, unless removed therefrom by an official for inspection, by any official agency or by auditors, or for any other reason which may be considered to be satisfactory by the Assessing Authority. (3) If any officer referred to in sub-section (1) has reasonable grounds for believing that any dealer is trying to evade liability for tax or other dues under this Act, and that anything necessary for the purpose of an investigation into his liability may be found in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1963, on 10th January, 1963. By a subsequent amendment introduced by section 3(1) of Punjab General Sales Tax (Amendment) Act, 28 of 1965, the words "every year" originally occurring in sub-section (1) of section 5 of the Act have been deleted. There have been various other amendments to the Act from time to time but we are not concerned with the same. In exercise of the powers conferred by section 27 of the Act the State Government has framed Punjab General Sales Tax Rules, 1949, to which I will refer as "the Punjab Rules" in this judgment. Reference has been made at the hearing of this case before us to rules 17 to 21 and 32 to 37 only. These rules are, therefore, copied below: "17. During the first three years after the commencement of the Act, every registered dealer, whose taxable turnover, in the opinion of the appropriate Assessing Authority, is not likely to exceed 10 per cent. of his gross turnover, shall furnish a return in Form S.T. VIII annually within thirty days from the expiry of each year. 18.. After the expiry of three years from the commencement of the Act, every registered dealer whose taxable turnover does not exceed 10 per cent. of his gross turnover cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orised in this behalf, to hear the dealer's objection and to record any evidence brought in support thereof. 35. Every Assessing Authority shall maintain a register in Form S.T. XV, in which he shall enter the details of each case instituted under rule 33. 36.. A dealer, who has been served with a notice under rule 33, may prefer an objection in writing personally or through an agent. No fee shall be payable in respect of any such objection. 37.. After considering any objection made by the dealer and any evidence produced in support thereof, the Assessing Authority after giving the dealer an opportunity of being heard, shall assess the amount of tax (if any) and impose penalty (if any) to be paid by the dealer." Rules 48 to 52 prescribe the procedure for obtaining refunds of tax admissible under section 12 of the Act. I shall now proceed to deal with the rival contentions of the learned counsel for the parties. Mr. Bhagirath Dass first pressed into service certain general principles for interpretation of charging sections in fiscal laws with which principles there neither is nor can be any quarrel. He referred to the judgment of the Supreme Court in Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant observations of the Supreme Court in Messrs Mathra Parshad and Sons' case [1962] 13 S.T.C. 180; A.I.R. 1962 S.C. 745. Mr. Bhagirath Dass most vehemently urged that since we are concerned in this case with section 5 of the Act, prior to its amendment in 1965, it would be doing violence to that provision of law if we were to hold that despite the clear phraseology of that section, tax could be assessed at any time before the expiry of the relevant year. He then referred us to the authority conferred on a dealer by sub-section (5) of section 10 to furnish a revised return before the date prescribed for the furnishing of the next return by him if the dealer discovers any omission or other error in any return already furnished by him and argued that this statutory right of a dealer would be abrogated and nullified without any authority of law if the quarterly returns were allowed to be assessed before the expiry of the whole year. If the assessment could not be made before the expiry of the period allowed for filing returns for the entire financial year, argued counsel, penalty cannot possibly be imposed before completing the assessment. For determining whether and, if so, to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous and that in any case the imposition of penalty could not precede the final assessment for the year in question. Mr. Bhagirath Dass admitted that quarterly assessment could be made under the Act but reiterated that whether the assessments are made for a quarter or a month or for any particular period, they should not be made before the expiry of the year. Relying on the judgment of the Orissa High Court in Chakoobhai Ghelabhai v. The State of Orissa and Others[1956] 7 S.T.C. 36., it was urged that a liability under section 4 of the Act is not incurred on the mere exceeding of the turnover of a dealer beyond the figure mentioned in the Act as liability means no more than "to be under an obligation" and does not necessarily connote an existing liability. The charging section was referred to in that judgment as merely declaratory and it was held that the prospective and contingent liability to pay tax did not actually arise until an assessment had been made according to the directions laid down in the Sales Tax Act. Reference was also made to the judgment of the Supreme Court in State of Rajasthan and Others v. Ghasilal[1965] 16 S.T.C. 318; A.I.R. 1965 S.C. 1454., wherein it was he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein it was observed by Jagannadhadas, J., as he then was (who delivered the judgment of the Court) as below: "The contention of the learned counsel for the appellant is that during the relevant year 1939-40 the income was not chargeable to tax as a fact and that the retrospective operation of the Finance Act for the relevant year by virtue of a later legislation does not make a difference for this purpose. To decide this question it is necessary to have a clear idea of the scheme of the Income-tax Act and its correlation to the Finance Act of each year. The Income-tax Act is a standing piece of legislation which provides the entire machinery for the levy of income-tax. The Finance Act of each year imposes the obligation for the payment of a determinate sum for each such year calculated with reference to that machinery. As has been pointed out by the Federal Court in Chatturam v. Commissioner of Income-tax, Bihar[1947] F.C.R. 116; 15 I.T.R. 302. (quoting from the judgment of Lord Dunedin in Whitney v. Commissioners of Inland Revenue(1)) 'there are three stages in the imposition of a tax: There is the declaration of liability, that is the part of the statute which determines wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishing of the prescribed returns at the same interval. If the authority was not intended to be given the power of assessment on the basis of those returns, it could have been left to the dealer to deposit the tax at such intervals according to their books but to file only annual returns. Great emphasis was laid by Mr. Bhagirath Dass on the provision of sub-section (5) of section 10, which entitles a dealer to file a revised return before the date prescribed for the furnishing of the next return by him so as to correct any omission or error, in the original return furnished by him, which omission or error might have been subsequently discovered by the dealer. It was argued by Mr. Bhagirath Dass that no assessment could be made so long as a dealer had not exhausted his statutory right to correct any possible error or omission. The argument appears to me to be misconceived. In the case of a dealer required to submit annual returns, the period within which he can exercise his right of correction of error under sub-section (5) of section 10 would expire 30 days after another year has gone by. Still counsel for the petitioner could not argue that in the case of such a dealer assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the expression "every year " qualifying the phrase "taxable turnover" in sub-section (1) of section 5 of the Act. The tax under the Act, to which a registered dealer would be liable, would, it is admitted, not vary in quantum by assessment being taken in hand either at the end of the year or on the basis of the quarterly returns, if any. From this point of view there could be three types of dealers. Firstly those who were registered dealers under the Punjab General Sales Tax Act of 1941. From the date of coming into force of the Act such a dealer becomes and continues to be liable to sales tax till his registration is cancelled or until his case falls within sub-section (3) of section 4 of the Act. The second category of dealers consists of those who were not registered under the previous Act. A dealer falling in this category could not get himself registered unless his gross turnover during the year immediately preceding the commencement of the Act exceeded the "taxable quantum". Taxable quantum [defined in sub-section (5) of section 4] varies from one kind of dealer to another. The third category is of dealers who were not registered under the previous Act and who were either n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh notices of demand could be issued. There is no doubt that if any provision is made in the relevant statute to limit the time within which an assessment has to be made, no assessment proceedings can be taken after the expiry of such time. In Commissioner of Income-tax, Madras, and Another v. S.V. Angidi Chettiar[1962] 44 I.T.R. 739; A.I.R. 1962 S.C. 970., it was held that the power to impose penalty under section 28 of the 1922 Act depended upon the satisfaction of the Income-tax Officer "in the course of the proceedings under the Act" and the said power could not, therefore, be exercised before the completion of the assessment proceedings by the Income-tax Officer. It is apparent that the ratio of the Supreme Court judgment in that case was based on the statutory requirement of imposition of penalty only "in the course of any proceedings" under the 1922 Act. No such expression occurs in section 10(7) of the Act. The dictum of the Supreme Court in the above-mentioned case does not, therefore, help the petitioner at all. Mr. Bhagirath Dass then relied on the judgment of the Supreme Court in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur, and Others[1963] 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Form XIII gives the serial number, name of the dealer, nature of the business, gross turnover, taxable turnover as determined for the relevant years and the date of issue of notice in Form XI or Form XII. A perusal of the said rules and the forms discloses that the proceedings in the case of a registered dealer start only on the receipt of a return or returns required to be furnished under the rules. Under rule 33 a register is maintained giving the details of each case "instituted " under rules 31 and 32. Rule 34 enacts that a case instituted would be pending till an order of assessment was made. No doubt it would be pending till a final order of assessment was made by the highest tribunal or court under the Act. At this stage some of the decisions cited at the Bar may conveniently be noticed. A Full Bench of the Bombay High Court in Bisesar House v. State of Bombay[1958] 9 S.T.C. 654., held that a notice under sub-section (2) of section 11 of the C.P. and Berar Sales Tax Act, 1947, could not be issued more than three years after the expiry of the period for which it was proposed to make the assessment; but an assessment under sub-section (1) of section 11 could be made more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes 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. Now let us apply the said legal position to the facts of Civil Appeal No. 101 of 1961. The appellant has to submit quarterly returns and assessments are made on the basis of the said returns; that is to say, he has to be assessed for his turnover separately in respect of each quarter. Therefore, the question of escape of assessment has to be considered on the ground that each quarter is a separate period for the assessment. For the year 1949-50, that is, for the period from October 22, 1949 to November 8, 1950, he had to submit 4 returns for the four quarters. But he had submitted only one return on October 5, 1950, for one quarter. No assessment was made in respect of any of the four quarters. So the assessment proceedings must be held to be pending before the Commissioner only in respect of the quarter for which the appellant had made the return. In respect of the other quarters no proceedings could be said to be pending before the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Act according to such returns could not be assessed before the expiry of the financial year and the Assessing Authority could not proceed to make an assessment order with regard to each quarterly return furnished by the dealer. After referring to the rival contentions of the parties, the Division Bench accepted the dealer's contention with the following observations: "There is a good deal of force in the submission of Mr. Bhagirath Dass that in view of the majority decision in Mathra Parshad's case[1962] 13 S.T.C. 180; A.I.R. 1962 S.C. 745., the Assessing Authority has to make the assessment for a whole year and has to take into account any exemptions or deductions to which the assessee becomes entitled at any time during that year. If that be so, it is not possible to see how the Assessing Authority could make any final orders before the expiry of the year in question and proceed to make assessment with regard to each quarter as was done in the present case. Section 11-A further indicates that according to the provisions of the Act it was never contemplated that an assessment order could be made with regard to a return for each period. This section provides for an eventu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment year the Assessing Authority shall proceed to assess the amount of tax due from a dealer on the basis of the periodical returns which have been filed. If the other view commended by the learned counsel for the respondent is to be adopted, it will mean following the minority decision of Kapur, J., in Mathra Parshad's case[1962] 13 S.T.C. 180; A.I.R. 1962 S.C. 745. , who relied on the language of section 11 a good deal for holding that sales tax was not a yearly tax like the income-tax, which course is not permissible. If the matter were res integra, it may have been arguable that owing to the provisions of section 11, read with the relevant rules, the Assessing Authority can make the assessment for each period for which the return is furnished but the majority judgment of the Supreme Court settles the matter so far as the nature of the tax and its incidence is concerned. If sales tax is a yearly tax, then the assessment has to be made at the end of the year and cannot be made during the pendency of the year as and when a return is filed in the absence of any clear and explicit provisions to that effect. For the reasons given above, the petition is allowed and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt has held that there can be no assessment under the Act before the expiry of the financial year, the matter stands concluded and the question is no more open for argument. If, however, it is found that this was not so held by the Supreme Court even by implication, the very foundation of the Division Bench judgment falls and the matter has then to be decided afresh. What happened in the Supreme Court case was this. The registered dealer who dealt, amongst other things, in the sale of manufactured tobacco, was required to submit quarterly returns and had paid out the tax due from him for the period ending 31st of March, 1954. On 1st April, 1954, the Punjab Tobacco Vend Fees Act, 1954 (hereinafter called the Tobacco Act) came into force. On 7th May, 1954, the State Government gave notice of its intention to add manufactured tobacco as an item in the schedule of exemptions under section 6 of the Act. In June, 1954, the State Government issued a press note by which the dealers were informed that it was not intended to levy both a tax on sales under the Act as well as fee under the Tobacco Vend Fees Act for the same period. On 2nd August, 1954, came still another press note wherein t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not say from what date the exemption operates." Dealing with the above question, it was held in the majority judgment as follows: "There is no doubt that the tax is a yearly tax. It was payable, in the first instance, by a dealer whose gross turnover during the financial year immediately preceding May 1, 1949, was above the taxable quantum. The tax is to be levied on the taxable turnover of a dealer every year. The difference between gross turnover and taxable turnover is this, that to arrive at the taxable turnover of any period some deductions have to be made for the same period. This clearly shows that the tax is for a year. The method of collection allows collection of tax at intervals; in some cases, the tax is collected at the end of the year; in some others, the tax is collected quarterly and in still other cases, even monthly. If the exemption can be said to operate for that period for which the tax is payable according as it is annually, quarterly or monthly, the tax would be different for different persons. Those who are paying the tax annually would get exemption for the whole year, but those who are paying it quarterly or monthly would get benefit in the quarter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gional Assistant Commissioner of Sales Tax, Nagpur, and Others[1963] 14 S.T.C. 976; A.I.R. 1964 S.C. 766. On the contrary their Lordships again stated specifically that "it could not have been intended that the exemption was to operate differently in the case of dealers with different intervals of assessment". Different intervals referred to in an earlier part of the Supreme Court judgment referred to the intervals at which prescribed returns under the Act have to be filed. Those intervals for filing returns have been clearly equated by the Supreme Court with intervals of assessment. While considering the same question D.K. Mahajan, J., held on 31st of October, 1963, in Messrs Tara Chand Lajpat Rai v. The Excise and Taxation Officer, Ludhiana, and AnotherCivil Writ No. 1123 of 1962., after quoting in extenso from the judgment of the Supreme Court in the case of Messrs Mathra Parshad and Sons[1962] 13 S.T.C. 180; A.I.R. 1962 S.C. 745., as follows: "The case before their Lordships related to the question of exemption and not to the question of assessment. Moreover, if the argument of Mr. Sibal that the assessment can only be made yearly and not quarterly is correct, then their Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation must affect the entire financial year. This does not appear to necessarily imply that every legal aspect on which the minority view was based (including the fact that quarterly assessments could be made under the Act) would have been disapproved by the majority of their Lordships of the Supreme Court if they had written the judgment subsequent to the note of dissent. Still, this appears to be the impression under which the learned Judges of this Court felt compelled to give the earlier Division Bench judgment contrary to the view of Mahajan, J. Supreme Court, no doubt, referred to the provisions for quarterly or monthly or yearly returns and payments as machinery sections. But, as hereinafter discussed, the entire quantification proceedings from the stage of filing the returns till the pronouncement of the final assessment order constitute the machinery part of the Act. For the foregoing reasons but with the greatest respect to the learned Judges of this Court who decided the case of Mansa Ram Sushil Kumar[1964] 15 S.T.C. 857., both of which learned judges I have always held in the highest esteem, I find myself more inclined to agree with the view adopted by D. K. Mahajan, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency may arise in various circumstances. To argue that in spite of false accounts or false information coming to the knowledge of the authorities under the Act they must sit with folded hands till the expiry of the year to allow the dealer to create or destroy evidence appears to me to ask for defeating the very object of the provision. I do not find any force in the argument, which was vehemently pressed before us by Mr. Bhagirath Dass, to the effect that the interpretation which I am placing on sub-section (7) of section 10 of the Act would come into conflict with sub-section (5) of that section. His argument, to which a reference has already been made in another connection, was that it is the statutory right of a dealer to correct any error or omission in his account or return already furnished by him, howsoever dishonest may be such an error or omission, at any time by the date prescribed for the furnishing of the next return by the dealer. This argument of the learned counsel appears to ignore the fundamental difference between the scope of sub-section (5) and subsection (7) of section 10 of the Act. The use of the word "discovers" in sub-section (5) appears to me to be conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 13 of that Act for an order for refund of the amount paid by him on the plea that in the turnover he had included dyeing charges, which were not taxable. Shah, J., who delivered the judgment of the Supreme Court, held that section 13 implied for refund being granted of only such amount which was not lawfully due and whether a certain amount is lawfully due or not, must be determined by the Assistant Commissioner in making the order of assessment or reassessment. Upon that basis it was held that so long as the order of assessment passed by the Assistant Commissioner was not so set aside or modified, a dealer could not call upon the authorities to ignore the previous order and to grant refund contrary to the plain direction of the order. Reference was also made by the counsel for the petitioner to the judgment of my learned brother Pandit, J., in Karam Chand Thapar and Bros. Coal Sales Limited v. The State of Punjab and Others(1965) 67 P.L.R. 1185., wherein it was laid down that all previous assessments which had become final under the Act did not become without jurisdiction merely by the decision of the Supreme Court. There is no quarrel with the proposition of law referred to by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be imposed on the dealer would not be less than 10 per cent. and not more than one and a half times the amount of tax to which the dealer is liable to be assessed for that particular quarter. The matter of actual quantification and imposition of penalty is, however, not before us in the present reference and all that we have been called upon to answer is the question whether the penalty can or cannot be imposed before the end of the year. One possible way of imposition of penalty under section 10(7) of the Act may be to take proceedings under that provision, to come to a definite finding about the alleged fault or default of the dealer and to impose the penalty in certain permissible proportion to the quantum of tax liable to be assessed and to leave out the working of the amount to the proceedings of the assessment of the tax if the same have not yet taken place. That, however, is not the precise question with which we are faced at present. For the aforesaid reasons, the question referred to us is answered in the affirmative and it is held that penalty could be imposed by an appropriate authority under the Punjab General Sales Tax Act on a dealer under section 10(7) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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