SALES TAX OFFICER Vs. SUDARSANAM IYENGAR AND SONS

JUDGEMENT

(1.) This is an appeal by special leave from a judgment of the Kerala High Court. The facts may be firstly stated:The respondent was a non-resident dealer carrying on business in Quilon, Ernakulam and Calicut in the State of Kerala. When the assessment in respect of sales tax for the assessment years 1961-62 and 1962-63 was pending the respondent had applied for a bifurcation of the assessment by treating his business at three places mentioned above as separate units. This request was acceded to by the Board of Revenue. The orders of assessment relating to the two years were made in April 1964 and March 1964 respectively.

(2.) The Sales Tax Officer issued notices in December 1965 for reopening the original assessments on the ground that certain turnover had escaped assessment. The objections of the respondent to these notices having filed a writ petition seeking to quash the orders made by the Sales Tax authorities was filed. A learned Single Judge held that in respect of the assessment year 1961-62 the Sales Tax Officer had no jurisdiction or authority to proceed under Rule 33 of the Travancore Cochin General Sales Tax Rules, 1950 which were in force at the material time. It was found that the notice served in December 1965 relating to that assessment year was beyond the time limit of three years prescribed the rule. As regard the assessment year 1962-63 the learned Judge held that the time limit would expire on March 31, 1966. Owing to the writ petition and the stay orders which had been made the assessment could not be completed. The learned Judge felt that it was owing to the orders of the court that the Sales Tax authorities had been prevented from completing the assessment within the time. While disposing of the writ petition it was observed that the Sales Tax authorities would be at liberty to complete the proceedings initiated by the notice within the period of 59 days at the expiry of which the period prescribed by the Rule 33 was to expire. The respondent preferred to appeal to a Division Bench which set aside the direction granting 59 days extension for completing the assessment on the ground that the same was not justified under the law.

(3.) Counsel for the appellant has confined the appeal only to the proceedings relating to the assessment year 1962-63. It is admitted that with regard to the other year 1961-62 the proceedings became barred. It is contended before us that on a true construction of Rule 33 it should be held that the proceedings under that Rule have to commence within three years next succeeding to that to which the tax relates and that it is not necessary that the entire proceedings relating to the escaped assessment should be completed within that period. In other words if such proceedings under Rule 33 have been commenced within the period prescribed by the rule they can be continued even beyond the period of three years till a final order of assessment is made. Reliance has been placed on a number of decisions of this court some of which may be noticed. In the State of Punjab vs. Tara Chand Lajpat Rai, 19 STC 439 the question which came up for consideration was that where the Sales Tax Authority issued 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 finalised the assessment order after three years from the aforesaid date, whether such an assessment could be said to be barred by time. It was held that assessment proceedings commenced in the case of a registered dealer either when he furnished a return or when a notice was issued to him under Section 11 (2) of the Punjab Act and if such proceedings were taken within the prescribed time, though the assessment was finalised subsequently even after the expiry of the prescribed period no question of limitation would arise. In the State of Punjab vs. Murlidhar Mahabir Parshad, (1968) 21 STC 29 (SC) the question of laws was whether on a proper interpretation of sub-sections (4) and (5) of Section 11 of the Punjab Act the period of limitation was three years for making the assessment from the last date on which the return was to be filed or whether the order of assessment was valid even after it was made after a period of three years provided the necessary notice had been issued within that period. The aforesaid, provision of the Punjab Act may be read: