9911796707
TMI Blog1972 (5) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... two points for our consideration. First, there is no material on record to show that the Sales Tax Officer could have reasons to believe that any part of the turnover of the petitioners has escaped assessment and that accordingly the notice issued under section 21 is invalid; second, the first proviso to sub-section (2) of section 21 is obnoxious to article 14 of the Constitution. The first point may shortly be disposed of. It was never raised before the appellate authority and the revising authority. It is being raised for the first time now. In the circumstances, we are not inclined to permit the petitioners to raise it now. Coming to the second point, it is necessary to examine section 21 of the Sales Tax Act. The material part of section 21 reads: "(1) If the assessing authority has reason to believe that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for any year, the assessing authority may, after issuing notice to the dealer, and making such enquiry as may be necessary, assess or reassess him to tax......... (2) No order of assessment under sub-section (1) or under any other provision of this Act shall be made for any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erified in such manner as may be prescribed. It further provides that the assessing authority may for recorded reasons extend the date for filing the return by any person or class of persons. Section 7(3) provides that if no return is submitted by the dealer under sub-section (1) within the period prescribed in that behalf or, if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such enquiry as he considers necessary, determine the turnover of the dealer to the best of his judgment and assess the tax on the basis thereof. The proviso to sub-section (3) says that before taking action under subsection (3) the dealer shall be given a reasonable opportunity of proving the correctness and completeness of any return submitted by him. The constitutionality of the first proviso to sub-section (2) of section 21 is to be seen in the backdrop of these provisions. The argument is that section 7(3) and section 21(1) contemplate one and the same class of dealers, that is, the dealers who have failed to file a return of their turnover. Sub-section (2) of section 21 prescribes limitation for assessment. It sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there being reasons to believe" and of "a notice having been served on the dealer". It may be true that section 7(3) and section 21(1) deal with the same class of dealers, that is, the dealers who have not filed a return. But it is not quite correct to say that the limitation provided for proceedings under section 7(3) and under section 21(1) is different. Sub-section (2) of section 21 provides for the same period of limitation for both the proceedings. The limitation is four years from the end of the relevant assessment year. The proviso to sub-section (2) enlarges the period of limitation in the case of proceedings under section 21. The enlargement is explained by the two preconditions of there being reasons to believe and the service of a notice on the dealer. Section 7(3) places no restriction on the assessing authority for making assessment on a dealer who has not filed a return. It is not necessary that the assessing authority should have reasons to believe in order to make an assessment under section 7(3). Nor there is any statutory requirement under section 7(3) that a notice should be served on the dealer who has not filed the return. It may be that the assessing autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time spent in obtaining materials for having reasons to believe and in serving notice on the dealer shall be excluded in computing the period of limitation, the Legislature has, in effect, said that where notice is served on a dealer during the fourth year, assessment may be made within one year from the date of the service of notice even after the expiry of four years. Perhaps the Legislature in its wisdom considered that the time spent in collecting materials for having "reasons to believe" and in serving the notice on the dealer could not be more than one year. Accordingly, it has itself exercised judgment on the period of time which may be excluded in computing the limitation under sub-section (2) of section 21. The wisdom of the Legislature cannot be questioned. It is, however, important to notice that the principle which justifies the first proviso does not create inequality; on the contrary, it brings about equality between the parties to the proceedings under section 21. Counsel for the petitioners relied on Anandji Haridas v. S.P. Kushare[1968] 21 S.T.C. 326 (S.C.). In our opinion, that decision does not help the petitioners. In that case, the Supreme Court held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing authority has discretion to proceed against the dealer under section 21. But it cannot be said that his discretion is unguided and unrestrained. It is the duty of the assessing authority to assess and collect revenue for the State. It is implicit in his duty that he should act in the interests of the revenue of the State. In M.M. Ipoh v. Income-tax Commissioner[1968] 67 I.T.R. 106 (S.C.)., the Supreme Court has pointed out: "The duty of the Income-tax Officer is to administer the provisions of the Act in the interests of public revenue, and to prevent evasion or escapement of tax legitimately due to the State. Though an executive officer engaged in the administration of the Act, the function of the Income-tax Officer is fundamentally quasi-judicial......... The nature of the authority exercised by the Income-tax Officer in a proceeding to assess to tax income, and his duty to prevent evasion or escapement of liability to pay tax legitimately due to the State, constitute, in our judgment, adequate enunciation of principles and policy for the guidance of the Income-tax Officer." Where the assessing authority has reasons to believe that the turnover of the dealer has esc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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