STATE OF BIHAR Vs. BAL KISHUN HALWAI

JUDGEMENT

(1.) In pursuance of a direction issued by this court by an order dated 6th December, 1971, a common question of law has been referred for opinion of this court by the Commercial Taxes Tribunal, Bihar, Patna (hereinafter referred to as the Tribunal) under Section 25(3) of the Bihar Sales Tax Act, 1947 (hereinafter called the Act). The question of law so referred runs as follows: Whether, on the facts and in the circumstances of this case, the fresh assessment made by order dated 23rd December, 1963/28th January, 1964, was hit by the period of limitation provided !n the proviso to Section 13(6) of the Bihar Sales Tax Act, 1947 ?

(2.) For the purpose of answering the question referred, it is not necessary to go into any detailed statement, of facts. The only relevant facts necessary for the decision of the question are these: The assessee was assessed for sales tax for two periods: (1) for the period between 1st April, 1957, and 30th September, 1957, and (2) for the period between 1st October, 1957, and 31st March, 1959, by two orders of assessment respectively dated 21st February, 1959, and 1st September, 1959. Tax Case No. 49 relates to the assessment for the earlier period, namely, from 1st April, 1957, to 30th September, 1957, whereas Tax Case No. 48 is in relation to the subsequent period, these assessment orders having been passed under Section 13(5) of the Act. Appeals were preferred by the assessee against both the orders of assessment, and the appellate authority remanded the proceedings to the assessing officer with a direction to make a local enquiry to ascertain the actual state of the assessee's business and volume of sales. These appellate orders are, respectively, dated 2nd July, 1960, and 11th November, 1960. In pursuance of the directions contained in the remand order further enquiries were made and revised orders of assessment were passed by the assessing authority holding the assessee liable to pay sales tax with effect from 1st April, 1957. The gross turnover of the assessee was determined at Rs. 30,000 per year. Penalties were imposed amounting to Rs. 82 and Rs. 100 for the two periods, respectively. Against these revised assessment orders, the assessee preferred appeals before the appellate authority which reduced the estimated turnover to Rs. 20,000 only and also directed certain deduction to be allowed for sales of tax-free goods. While the penalty for the first period amounting to Rs. 82 was maintained, that for the second period amounting to Rs. 100 was cancelled. This appellate order dated 13th August, 1964, covering both the periods is marked annexure F to the statement of the case. The assessee then filed two revision applications before the Deputy Commissioner of Commercial Taxes, who, however, dismissed both the revision applications by a common order dated 17th July, 1966, a copy of which is on the record as annexure H to the statement of the case. On further revisions having been preferred by the assessee to the Tribunal, a preliminary objection was taken on behalf of the assessee, apart from objections on merits of the assessment. This preliminary objection was that the fresh assessment by the assessing authority in pursuance of the remand order of the appellate authority was barred by two years period of limitation, as prescribed in the proviso to Section 13(6) of the Act. The dates relevant for the purpose of the purported attracting of the period of limitation, which are not in controversy, are as follows: The appellate orders dated 2nd July, 1960, and 11th November, 1960, by which the original assessment orders were set aside and the proceedings were remanded to the assessing authority were received by the assessing officer on 2nd August, 1960, in Tax Case No. 49, and on 16th January, 1961, in Tax Case No. 48. It seems, for some reasons or the other, no action was taken in pursuance of the remand order for a pretty long time and, ultimately, an enquiry was held on 21st September, 1963, and orders were passed by the assessing authority directing the assessee to produce his books of account. Although the notices were ordered to be issued by the assessing authority on 12th November, 1963, such notices were actually issued on 14th November, 1963. It was contended on behalf of the assessee that since 14th November, 1963, was beyond a period of two years from the date of the disposal of the appeals, no proceedings for assessment of the tax due from him in respect of the relevant periods could be initiated and, as such, the entire so-called reassessment proceedings were without jurisdiction. This preliminary objection put forward on behalf of the assesses found favour with the Tribunal which held that the two years period of limitation prescribed in the proviso to Section 13(6) of the Act would be attracted on the facts of the present case and that, therefore, the initiation of the reassessment proceedings was barred by time,

(3.) Although the question referred for the opinion of this court has already been considered in one of the Bench decisions of this Court, before referring to that particular case, I think it worthwhile to examine the question as a matter of first impression. Section 13 of the Act deals with assessment; and Section 13(5) lays down that if upon information coming into the possession of the Commissioner, he is satisfied that any dealer has been liable to pay tax in respect of any period and has none the less wilfully failed to apply for registration, or having applied for registration, failed to furnish any particulars or information required by the prescribed authority, the Commissioner shall, after affording reasonable opportunity to the assessee of being heard, make a best judgment assessment. The present case is one of best judgment assessment and, therefore, I need not make any reference to Sub-sections (1) to (4) of Section 13 of the Act. Section 13(6), in its turn lays down that without prejudice to any prosecution which may be instituted for an offence under the Act, an assessment may be made under Section 13. But to this provision is added a proviso with which we are concerned in this case. This proviso runs in these terms: Provided that no proceeding for assessment of the tax due from a dealer in respect of any period shall be initiated later than four years from the expiry of such period or later than two years from the date of disposal of the appeal, revision, review or reference directing freth assessment. So far as the facts of the present case are concerned, we are not concerned with the four year period of limitation as the point involved in the cases at hand is whether there has been an initiation of a proceeding later than two years from the date of disposal of the appeal preferred by the assessee remanding the proceedings. The relevant portion of the proviso, if properly dissected, comprises two parts: (i) disposal of an appeal directing fresh assessment, and (ii) initiation of a proceeding for assessment of the tax due in pursuance of such a direction. In the present case, there has certainly been disposal of the appeals preferred by the assessee resulting in the setting aside of the original assessment orders and a direction for fresh assessment. But the question is whether there has been any initiation of a proceeding for assessment or not; for, in order to attract the bar of limitation prescribed in the proviso aforesaid, both the requirements mentioned above must be fulfilled. Before adverting to the nature of orders that were passed by the appellate authority under Section 24 of the Act, I think it worthwhile to quote the operative portions of the appellate order in the present case remanding the proceedings to the appellate authority. The operative portion of the appellate order with regard to the period between 1st October, 1957, and 31st March, 1959, runs thus: It is the duty of the assessing officer to collect materials of the business activities of the appellant and if he is really evading payment of tax on his correct turnover, serious attempts should be made to bring him to book. I, therefore, remand the case to the assessing officer to make a thorough inspection of the appellant's business premises and his business activities either by himself or through a gazetted officer before completing the assessment. The case is remanded accordingly. To the same effect, substantially, is the operative portion of the appellate order for the other period.