Civil Appeal No 535 of 1964
Appeal by special leave from the judgment and order dated July 25 1961 of the Allahabad High Court in Sales Tax Reference No 460 of 1954
A V Viswanatha Sastri and K K Jain for appellant
C B Agarwala and 0
P Rana for respondent
The Judgment of the Court was delivered by Sikri J
This appeal by special leave is directed against the judgment of the High Court of Judicature at Allahabad passed 608 in a reference made to it under section II of the UP Sales Tax Act 1948 UP Act XV of 1948 hereinafter referred to as the Act
In this reference the following question was referred by the Judge Revision Sales Tax at the instance of the appellantModi Sugar Mills Ltd hereinafter called the assessee Whether a dealer who has been assessed to tax on the turnover of the previous year according to his election can change his option and elect the assessment year by filing quarterly returns without the previous sanction of Sales Tax Commissioner The High Court answered the question in the negative
The answer to this question depends upon the interpretation of section 71 of the Act and rr 39 40 and 41 of the UP Sales Tax Rules and form IV prescribed under these rules
These provisions are as under section 7 1
Subject to the provisions of section 18 every dealer whose turnover in the previous year is Rs 12000 or more in a year shall submit such return or returns of his turnover of the previous year within sixty days of the commencement of the assessment year in such form and verified in such manner as may be prescribed  Provided that the Provincial Government may prescribe that any dealer or class of dealers may submit in lieu of the return or returns specified in this section a return or returns of his turnover of the assessment year at such intervals in such form and verified in such manner as may be prescribed and thereupon all the provisions of this Act shall apply as if such return or returns had been duly submitted under this Section
Provided further that the assessing authority may in his discretion extend the date of the submission of the return by any person or class of persons
Rule 39  Election of Assesment year
1 Any dealer may elect to submit returns of his turnover of the assessment year in lieu of the returns of the turnover of the previous year and shall signify such election in the return filed by him in Form IV
609 Provided that a dealer who did not carry on business during the whole of the previous year shall elect to submit his returns of the assessment year
2 A dealer who has once signified his election under sub rule 1 shall not again exercise his option so as to vary the basis of assessment Provided that the Sales Tax Commissioner may for reasons to be recorded in writing and on such conditions as he deems fit permit a dealer to exercise a fresh option
Rule 40
Submission of returns Every dealer who elects to submit return of his previous year shall within sixty days of the commencement of the assessment year submit to the Sales Tax Officer a return in Form IV showing his turnover for the previous year Provided that no dealer whose turnover in the previous year was less than Rs 15000 shall be required to furnish such returns
Rule 41
Returns of assessment year
1 Every dealer whose estimated turnover during the assessment year is not less than Rs 15000 and who elects to submit returns of such year shall before the last day of July October January and April submit to the Sales Tax Officer a return of his gross turnover for the quarters ending June 30 September 30 December 31 and March 31 respectively in Form IV Provided that every dealer or firm to whom the pro visions of sub section 3 of Section 18 are applicable shall submit such returns within seven days of the expiry of each month during the year in which the business is commenced
 Before we deal with the interpretation of the section and the rules it is necessary to give a few relevant facts
It appears that for the assessment year 1948 49 1949 50 and 1950 51 the assessee was assessed on the basis of returns filled for the turnover of the previous year relev ant to each of these assessment years
For the assessment year 1951 52 however the assessee purporting to make an election under r 39 of the rules filed returns of his turnover of the assessment year instead of the returns of the turn 610 over of the previous year
The Judge Revision held that without sanction of the Sales Tax Commissioner the assessee was not entitled to do so
Mr Sastri the learned counsel for the assessee submits that the above rules should be interpreted as follows  Under sub rule 1 of r 39 the election is to Me returns of the turnover of the assessment year instead of returns of the turnover of the previous year and not vice versa
Sub rule 2 also deals with the same election ie the election to file returns of the turnover of the assessment year instead of the turnover of the previous year
Rule 40 does not displace the above reading of r 39 because it covers the case of every dealer who wishes to submit a return of the turnover of the previous year
There is no other rule which deals with such a dealer and he says that the word elects  may perhaps have reference to the election mentioned in form IV which we will presently consider
At any rate he says that sub r
2 of r 39 has nothing to do with the election mentioned in r 40
He then submits that r 41 is concerned with the dealer who has elected under r 391 to submit returns of the turnover of the assessment year and this rule provides various matters in this connection
The learned counsel for the State Mr C B aggarwala on the other hand contends that section 7 of the Act read with the rules gives a dealer an option to file returns in respect of the turnover of the previous year or returns of the turnover of the assessment year and he says that this option is and can only be exercised in the first year when a dealer becomes taxable under the Act and it is this option or election that is covered by sub rule 2 of r 39
He relies strongly on form IV in which the following lines occur I have elected to submit return of my turnover of the previous year endingmonth or months of the assessment year
In the alternative he contends that even if r 3 9 2 does not cover the filing of the returns of the previous year according to general principles the assessee having exercised an option to be assessed in respect of the turnover of the previous year cannot now change the basis of assessment
In our opinion the Judge Revision was in error in holding that the assessee was not entitled to make an election under r 39 1 without the sanction of the Sales Tax Commissioner and the answer to the question referred to the High Court should be in favour of the assessee
Rule 392 specifically mentions an elec 611 tion under sub r
1 and there is only one kind of election under r 391 and that is for a dealer to elect to submit returns of his turnover for the assessment year in lieu of the returns of the turnover of the previous year
In other words under r 391 the dealer makes a choice that he will be assessed in respect of the turnover not of the previous year which is normally the rule under section 7 but in respect of the return of the turnover of the assessment year
It seems to us that r 392 covers only the case where election has been made by a dealer to be assessed in respect of the turnover of the assessment year
It is true that r 40 also uses the word elects  but this may have reference to the lines in form IV which we have already reproduced above
But assuming that when a dealer submits a return in respect of the previous year under r 40 and he is treated to have elected within r 40 yet there is no provision like r 392 which debars him from exercising the option under r 391
In our opinion an express provision like r 392 was necessary to prevent a dealer from exercising the option given to him under r 391
We do not express any opinion whether such a rule could validly be made under section 7 1
We are not impressed by the argument of Mr Aggarwal that general principles debar the assessee from exercising the option under r 39 1
It is a statutory right given to the assessee and the general principles if applicable cannot displace the statutory right
We may mention that the reasoning in the judgment under appeal has been doubted in an unreported judgment of the Allahabad High Court in Ms Mahesh Company Kahoo Kothi Kanpur vs
The Commissioner of Sales Tax Uttar Pradesh1
In the result we accept the appeal and answer the questionreferred to the High Court in the affirmative
The appellant will have his costs here and in the High Court


Summary:
For the assessment years 1948 49 1949 50 and 1950 51 the appellant was assessed on the basis of returns filed for the turnover of each relevant previous year
For the assessment year 1951 52 the appellant purporting to make an election under r 391 of the UP Sales Tax Rules filed returns of his turnover of the assessment year instead of the previous year
The Judge Revision Sales Tax held that without the sanction of the Sales Tax Commissioner under r 392 the appellant was not entitled to do so and the High Court also on a reference held against the appellant
In appeal to this Court HELD  The answer of the High Court should have been in favour of the appellant
610 HI Under r 391 the dealer makes a choice that he will be assessed in respect of the turnover not of the previous year which is the normal position under section 7 but in respect of the turnover of the assessment year
Rule 392 requiring the sanction of the Sales Tax Commissioner covers only the case where such election has been made under r 391 that is where the election has been made by a dealer to be assessed in respect of the turnover of the assessment year and the dealer wishes to exercise a fresh option
Even assuming that when a dealer submits a return in respect of the previous year under r 40 be is treated to have elected within that rule yet there is no provision like r 39 2 which debars him from exercising the option under r 391
In the absence of an express provision like r 392 general principles cannot debar an assessee from exercising a statutory right given to him
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