Case: Commissioner of Taxes, Assam, and Another Vs. Babubhai S. Patel and Another

GROVER, J.1. This is an appeal by special leave from a judgment the Assam and Nagaland High Court by which a petition filed by respondent No. 1 under article 226 of the Constitution was allowed and a notice dated March 11, 1963, issued to him under section 31(1) of the Assam Sales Tax Act, 1947 (Act 17 of 1947), hereinafter called the Act, was quashed.2. The facts may be stated : Respondent No. 1 carried on business under the name and style of M/s. Indian Tea Co. in Dibrugarh. He was registered as a dealer in January, 1956. He continued his business up to June 17, 1961, and at his request the registration certificate was cancelled with effect from June 18, 1961. Respondent No. 1 was assessed to sales tax for various periods between 1956 and 1961. Owing to a decision of the Assam High Court in which it was held that rule 80 of the Assam Sales Tax Rules, 1947, as amended was ultra vires, assessment was made on the basis that the price of goods purchased by respondent No. 1 for the purpose of resale in the State by giving a declaration under rule 80 but subsequently sent outside the State of Assam was not to be included in the net turnover under section 15(1)(b)(i)(a) of the Act. The judgment of the High Court was reversed by this court and the aforesaid rule was held to be intra vires. The appellant took steps to revise the assessments after the decision of this court. A notice was issued on March 11, 1963, to respondent No. 1 under section 31(1) of the Act amended in 1962 wherein he was asked to appear before the Commissioner for showing cause as to why the assessment orders for the periods in question made by the Superintendent of Taxes, Dibrugarh, should not be revised and the price of goods purchased by him free of tax for the purpose of resale in the State by giving a declaration under rule 80 but subsequently sent outside the State should not be included in his net turnover. Thereupon respondent No. 1 filed a petition under articles 226 and 227 of the Constitution in the High Court asking for the quashing of the notice and any subsequent proceedings taken pursuant thereto. The High Court allowed the petition on the ground that the provisions of section 31(1) as amended were not retrospective and the Commissioner could not exercise the powers under the said provisions so as to affect the final orders of assessment.During the pendency of the appeal before this court the Assam Legislature has, by section 8 of the Assam Sales Tax (Amendment) Act (13 of 1966) given section 31(1) of the Act as it stood on April 12, 1966, retrospective effect from December 24, 1947. In view of this amendment the sole ground on which the High Court had allowed the petition under article 226 no longer exists and counsel for respondent No. 1 has not been able to show how that judgment can be sustained owing to a clear declaration by the Legislature that section 31(1) should be deemed and always to have been deemed to have formed part of the principal Act as it the principal Act had been enacted as was amended with effect from December 24, 1947.3. Counsel for respondent No. 1 has invited our attention to the observations in the judgment under appeal that the present case was covered by section 19A and proper action should have been taken under that section. Section 19A deals with turnover escaping assessment. It provides that if upon information which has come into his possession the Commissioner is satisfied that any turnover in respect of sales of any goods chargeable to tax under the Act has escaped assessment or has been under-assessed or assessed at a lower rate or any deduction has been wrongly made therefrom he may at any time, within three years of the end of the aforesaid period, serve on the dealer liable to pay the tax a notice and then proceed to assess or reassess the dealer. According to the learned counsel for respondent No. 1 the Commissioner could take action only under section 19A in the circumstances of the present case but the notice under it would be barred by limitation in respect of several periods for which assessment is sought to be revised. The notice has, however, been issued under section 31(1) of the Act and the judgment of the High Court proceeded on the basis that that provision could not be given retrospective operation. Owing to the change in law, as pointed out above, that situation no longer obtains and the Commissioner could issue a valid notice under section 31(1) if the matter fell within the provision of that section. In our opinion it is still open to respondent No. 1 to satisfy the authority concerned that his case does not fall within the ambit of section 31(1) and is covered by section 19A under which no notice has been issued or could be issued owing to the bar of time.It has next been pointed out on behalf of respondent No. 1 that under the notice which has been issued under section 31(1) he has been required to produce all relevant accounts, documents and other papers in respect of his accounts etc. and to answer all material questions as to why the assessments for the periods in question should not be revised. Under rule 62 of the Rules accounts referred to in sub-section (2) of section 43 have to be preserved for a period of three years only. It is urged on behalf of respondent No. 1 that he could not be required to produce accounts for a period beyond three years. These again are matters which cannot be decided at this stage and it is for respondent No. 1 to show these and other relevant provisions to the authority by which the impugned notice has been issued and to satisfy it that production of accounts as called for will not be in conformity with the statutory provisions. At any rate it appears to us that the matter has to be decided under section 31(1) on the evidence and the accounts which are already on the record and no further or additional evidence can be called for and adduced.4.

Decision:
1[ds]In our opinion it is still open to respondent No. 1 to satisfy the authority concerned that his case does not fall within the ambit of section 31(1) and is covered by section 19A under which no notice has been issued or could be issued owing to the bar ofagain are matters which cannot be decided at this stage and it is for respondent No. 1 to show these and other relevant provisions to the authority by which the impugned notice has been issued and to satisfy it that production of accounts as called for will not be in conformity with the statutory provisions. At any rate it appears to us that the matter has to be decided under section 31(1) on the evidence and the accounts which are already on the record and no further or additional evidence can be called for and adduced.