INDIA LEAR HOUSE Vs. SALES TAX OFFICER AGRA

JUDGEMENT

(1.) THE first petitioner, M/s. India Leather House, Agra, is a dealer within the meaning of that term in the U.P. Sales Tax Act. The second petitioner is a partner in M/s. India Leather House. The petitioners did not file any return of their turnover of sales for the assessment year 1956-57. On 24th March, 1962, the first petitioner was assessed to sales tax under section 21 of the U.P. Sales Tax Act. An appeal was preferred against the assessment order. It was allowed and the matter was remanded to the Sales Tax Officer for assessment. The petitioners filed a revision against the order of remand. It was dismissed. The Sales Tax Officer made another assessment. Again an appeal was preferred. It was allowed. The appellate authority remanded the case again to the Sales Tax Officer for assessment. It is at this stage that the petitioners have filed the present petition. Counsel for the petitioners has submitted 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.

(2.) 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 :

(3.) 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 says that no assessment would be made either under section 7 or under section 21 after the expiry of four years from the end of the relevant assessment year. The effect of the first proviso, however, is that where the notice under section 21 is served in the course of the fourth year, the assessment may on the dealer who has not filed his return within one year of the date of service of the notice. In other words, the assessment may be made even after the expiry of four years. It is said that the extension of limitation with respect to the assessment under section 21 creates an invidious discrimination between the same class of dealers. Where a dealer who has not filed his return is proceeded with under section 7(3), the assessment is made against him within four years from the end of relevant assessment year; but where another similar dealer is dealt with under section 21, the assessment may be made against him even after the expiry of four years if the notice has been served on him during the fourth year. Section 21 was amended in 1956. Before 1956 a proceeding for assessment could be under section 21 even if the assessing authority had no reason to believe that the turnover had escaped assessment. Again, before 1956, limitation for assessing a dealer under section 21 was three years from the end of the relevant assessment year. The amending Act made three important charges. After the amendment the pre-condition for initiating a proceeding under section 21 is that there should be reasons to believe with the assessing authority that the turnover has escaped assessment. There is another pre-condition. He should issue a notice to the dealer before making the assessment. The next important change is the enlargement of the period of limitation from years to four years. Before the amendment of 1956 there was no limitation for assessment under section 7(3), but after the amendment assessment under section 7(3) as well as under section 21 should be made within four years from the end of the relevant assessment year. The next important change made by the amending Act is the insertion of the first proviso to sub-section (2). We have already spoken about it. It seems to us that the proviso enlarges the period of limitation for assessment under section 21 on account of the first two important changes made in section 21, namely, "the pre-condition of there being reasons to believe" and of "a notice having been served on the dealer".