BISESAR HOUSE Vs. STATE OF BOMBAY

JUDGEMENT

(1.) AN interesting and important question with regard to the question of limitation under the Central Provinces and Berar Sales Tax Act, 1947, arises in this Full Bench. The facts giving rise to this Full Bench are these. The petitioner is a registered dealer and his chargeable accounting year is from the 1st July to the 30th June. He made his return and paid the tax which according to him was due for the years 1st July, 1951, to 30th June, 1952, 1st July, 1952, to 30th June, 1953, and 1st July, 1953, to 30th June, 1954. On the 31st December, 1956, the Commissioner of Sales Tax issued a notice under section 11(2). This notices was served upon the assessee with regard to the first year on the 4th January, 1957, and with regard to the second year on the 8th January, 1957. The contention of the assessee was that his notice was bad because it was served three years after the end of the chargeable accounting year, and this petition was field in this Court challenging the notice and for an order preventing the Commissioner to act upon the notice.

(2.) IN order to understand the question that we have to decide, it is necessary to look at the scheme of the Sales Tax Act. The scheme of the Sales Tax Act in many respects is very different from the scheme of the INcome-tax Act. IN the first place, under the Sales Tax Act an assessee has not to pay tax in respect of the income for the previous year. He pays tax in respect of the chargeable accounting year itself. IN the second place, there is no notice which has to be served upon an assessee to file his return. The staute itself constitutes a notice which renders every registered dealer liable to make a return. The third distinction is that with the return an assessee has to pay into the Government treasury the full amount of tax due from him under the Act according to the return that he has made. Therefore, under the INcome-tax Act assessment proceedings are initiated by a notice, then follows a return, on the return an assessment order is passed, and after the assessment order is passed the assessee has to pay the tax. Under the Sales Tax Act the return is made obligatory under the Act itself and even the payment of tax according to the return is made obligatory. Therefore, the assessee has not to wait till the assessment order is passed before he becomes liable to pay tax. When these fundamental differences between the two Acts are recognised, the question that we have to decide will perhaps assume simpler proportions.

(3.) SO it will be noticed that in the case of a dealer who is not registered, a notice has to be served by the Commissioner and with regard to a registered dealer the section itself casts an obligation to furnish the return by such date and to such authority as may be prescribed. Section 11 deals with the returns made and sub-section (1) provides :- "If the Commissioner is satisfied that the returns furnished by a dealer in respect of any period are correct and complete, he shall assess the dealer on them." It will be noticed that under this sub-section the act of the Commissioner is a formal act. The return having been made, the tax having been paid, the Commissioner being satisfied with the return, he has to pass the formal order of assessment. Assessment in this case would be nothing more than appropriating the amount paid by the assessee to the revenue of the State. Then comes sub-section (2) : If the Commissioner is not so satisfied he shall serve the dealer with a notice appointing a place and day and directing him - (i) to appear in person or by an agent entitled to appear in accordance with the provisions of section 11-B; (ii) to produce evidence or have it produced in support of the returns; or (iii) to produce or cause to be produced any accounts, registers, cash memoranda or other documents as may be considered necessary by the Commissioner for the purpose." SO that this notice would really initiate proceedings in a case where the Commissioner is not satisfied with the return made by the assessee. The Commissioner would want to either increase the amount of the tax, or correct the return by including sales or deals which were not included in it, or in any other way amend or alter the return made by the assessee. In such a case it is obligatory upon him to serve this notice. Then sub-section (3) provides : "After hearing the dealer or his agent and examining the evidence produced in compliance with the requirements of clause (ii) or clause (iii) of sub-section (2) and such further evidence as the Commissioner may require, the Commissioner shall assess him to tax. Therefore, this assessment is different from the assessment under section 11(1) in the sense that in the case of section 11(1) it is a formal assessment as pointed out, and in the case of section 11(3) it is an assessment after initiation of proceedings by a notice under sub-section (2) after examining the dealer and his agent and taking evidence. Then sub-section (4) deals with best judgment assessment and that sub-section applies if no returns are furnished or returns are not furnished pursuant to the notice in sub-section (2) of section 11 or if he has not employed any proper method of accounting. Then sub-section (5) deals with a case where the Commissioner receives information that a dealer who is liable to pay tax under the Act has failed to apply for registration and the Commissioner is given power to assess such a dealer, but a period of limitation is fixed and that period of limitation is any time within three calendar years from the expiry of such period during which the dealer was liable to pay tax. Then we come to section 11-A which corresponds to section 34 of the Income-tax Act and deals with escaped assessment and the period of limitation is three years. The next section to which attention might be drawn is section 12(2) which provides :- "Before any registered dealer furnished the returns required by sub-section (1) of section 10, he shall pay into a Government treasury in the prescribed manner the full amount of tax due from him under this Act according to such returns and shall furnish along with the returns, a receipt from such treasury showing the payment of such amount."