Case: M. V. Narasappa Vs. Commercial Tax Officer, Kolar, and Another

SIKRI, J. 1. The appellant, a member of the joint Hindu family - M. Venkatarayappa & Sons - hereinafter referred to as the assessee, filed quarterly returns of its business turnover for the year April 1, 1955, to March 31, 1956. The Commercial Tax Officer, Kolar, estimated the turnover at Rs. 2, 20, 000 and levied a tax of Rs. 2, 525. The assessee appealed to the Deputy Commissioner of Commercial Taxes, Bangalore Division, and filed a statement of purchases of groundnuts before the Deputy Commissioner. The Deputy Commissioner remanded the case with the following observations : "The order of the assessing officer does not indicate if this statement filed by the assessee is correct and he does not seem to have examined the accounts produced by the assessee. With a view to know the correct accounts, it is necessary to go into the accounts of the assessee once again to fix up the correct turnover. Under these circumstances, I find the assessing officer has not made proper enquiry or scrutiny of accounts or estimated the turnover properly. I, therefore, remand the case to the assessing officer with a direction that he should properly scrutinise the accounts and if the accounts are not maintained correctly, then he will estimate to the best of judgment after giving sufficient material." 2. On October 19, 1958, the Commercial Tax Officer, Kolar Circle, Kolar, estimated the total taxable turnover at Rs. 2, 00, 000 and assessed the tax at Rs. 2, 212-8-0. Thereupon the assessee filed a revision petition and the main contention of the assessee before the Deputy Commissioner of Commercial Taxes was that the last date for passing the assessment order for the year 1955-56 under the Mysore Sales Tax Act, 1948, was March 31, 1958, and the Commercial Tax Officer could not be exonerated from the application of the time-limit prescribed in the Act merely because the impugned assessment order had been passed in pursuance of a direction given by the appellate authority.The Deputy Commissioner rejected this contention. The assessee thereupon filed a revision before the Commissioner of Commercial Taxes. Before the Commissioner reliance was placed on a decision of the Mysore High Court in C.R.P. 666 of 1959 [Reported as K. S. Subbarayappa & Sons v. The State of Mysore [1962] 13 S.T.C. 873] according to which the impugned assessment in the case had to be struck down as barred by limitation. The Commissioner, however, relying on sections 4 and 6 of the Mysore Sales Tax (Amendment) Act, 1962, retrospectively amending section 40 of the Mysore Sales Tax Act, 1957, held on October 22, 1962, that the assessment was not barred by limitation. He, however, found that the Commercial Tax Officer had not given a notice in writing to the assessee how and why he was not satisfied with the correctness of the accounts and the basis on which he proposed to make the assessment. The Commissioner accordingly set aside the assessment and remanded the case once again to the Commercial Tax Officer to follow the procedure for making the best judgment assessments and pass fresh orders according to law. 3. The assessee then filed a petition under Article 226 of the Constitution for quashing the order passed by the Commissioner of Commercial Taxes mainly on the ground that sections 4 and 6 of the Mysore Sales Tax (Amendment) Act, 1962, were void. The High Court dismissed the petition repelling all the arguments raised by the assessee in support of his plea that sections 4 and 6 of the 1962 Amendment Act were void. 4. When the appeal was heard in this Court on January 19, 1968, the learned counsel for the respondent, Mr. G. L. Sanghi, stated that it would not be necessary to decide the constitutional points because in view of some recent decisions of this Court the power of the Commercial Tax Officer to assess the assessee in respect of the year 1955-56 could be sustained apart from relying on sections 4 and 6 of the 1962 Amendment Act. We heard the learned counsel for the appellant on the constitutional points involved but we find that it is not necessary to deal with them because we agree with the contention of the learned counsel for the respondent that the Commercial Tax Officer would be entitled to assess the assessee in respect of the year 1955-56 regardless of any limitation provided in rule 34 of the Mysore Sales Tax Rules, 1948.We may mention that the learned counsel for the assessee submitted that we should not allow Mr. Sanghi to take this point as the point is not mentioned in the statement of the case. We overrule this contention because by the time this case was taken up again for hearing on February 1, 1968, the learned counsel for the appellant had had sufficient opportunity to study the point. Moreover, this Court does not decide constitutional points unless it is absolutely essential to do so. 5. We may now give our reasons why we have come to the above conclusion. The relevant statutory provisions of the Mysore Sales Tax Act, 1948 - hereinafter referred to as the 1948 Act - are as follows : Section 3 is the charging section and provides, inter alia, that "subject to the provisions of this Act, every dealer shall pay for each year a tax on his total turnover for such year." "Year" is defined to mean "the financial year", and "dealer" is defined to mean "any person who carries on the business of buying or selling goods." Section 10 deals with registration of dealers, and section 11 deals with collection of tax by dealers. Section 12 provides as under : "12. (1) Every dealer whose turnover is ten thousand rupees or more in a year shall submit such return or returns relating to his turnover in such manner, and within such periods as may be prescribed. (2)(a) If the assessing authority is satisfied that any return submitted under sub-section (1) is correct and complete, he shall assess the dealer on the basis thereof. (b) If no return is submitted by the dealer under sub-section (1) before the date prescribed or specified in that behalf or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall assess the dealer to the best of his judgment :rovided that before taking action under this clause the dealer shall be given a reasonable opportunity of proving the correctness and completeness of the return submitted by him." Section 25 gives powers to the Government to make rules to carry out the purposes of this Act, and in particular, the Government may make rules providing for, inter alia, "the assessment to tax under this Act of any turnover which has escaped assessment, and the period within which such assessment may be made not exceeding three years [section 25(2)(f)]". In pursuance of these powers, the Mysore Sales Tax Rules, 1948, were made by the Government. The relevant rules may now be set out : "17. (1) Every dealer liable to submit a return under rule 12 except those who have elected to be assessed by the method described in rule 20 shall, on or before the first day of August in every year, submit to the assessing authority of the area in which his principal place of business is situated a return in Form VIII showing the actual gross and net turnover for the preceding year and the amounts by way of tax or taxes actually collected during that year. 6. Every dealer not liable to submit a return under rule 12, who has a net turnover of not less than Rs. 10, 000 in any year, shall unless he has elected to be assessed by the method described in rule 20 submit to the assessing authority of the area in which his principal place of business is situated a return in Form VIII showing the actual gross and net turnover for that year and the amount by way of tax or taxes actually collected during the year on or before the 1st day of August of the succeeding year and thereafter for every year on or before the 1st day of August immediately following such year.(2) On the receipt of a return in Form VIII the assessing authority shall, if he is satisfied after such scrutiny of the accounts and such enquiry as he considers necessary that the return is correct and complete, finally assess on the basis of the return the tax or taxes payable under section 3, 5 or 11(2) or under the notification or notifications issued under section 6(1) for the preceding year. (3) If no return is submitted or if the return submitted appears to the assessing authority to be incorrect or incomplete, the assessing authority may, after following the procedure prescribed in rules 14 and 15, finally assess the tax according to the best of his judgment. (4) ............" "34. (1) If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to the tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority, as the case may be, may, at any time within the year or the two years next succeeding that to which the tax or licence fee relates, assess the tax payable on the turnover which has escaped assessment or levy the licence fee, after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary. (2) If for any reason any tax or licence fee has been assessed at too low a rate in any year, the assessing authority or the licensing authority, as the case may be, may, at any time within the year or the two years next succeeding that to which the tax or licence fee relates, revise the assessment or the licence fee after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary ...." 7. We have already mentioned that the assessee filed four returns for the year 1955-56, and the Commercial Tax Officer passed an assessment order. The learned counsel for the assessee contends that the Commercial Tax Officer, when he passes an order of assessment on remand, would be assessing that turnover of the assessee which had escaped assessment to tax within the meaning of rule 34. However, the matter is concluded by authority of this Court. We are here concerned with a dealer who has submitted returns and not a dealer who has not submitted a return. As far as the dealer who has submitted a return, it seems to us that no limitation is provided for making an assessment on him, and that till a final assessment order is made it cannot be said that any turnover has escaped assessment within the meaning of rule 34(1).In Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur ([1964] 4 S.C.R. 436; 14 S.T.C. 976), Subba Rao, J., as he then was, speaking for the majority, while dealing with section 11-A of the Central Provinces and Berar Sales Tax Act, 1947, observed : "On the said analogy, the assessment proceedings under the Sales Tax Act must be held to be pending from the time the said proceedings were initiated until they were terminated by a final order of assessment. Before the final order of assessment, it could not be said that the entire turnover or a part thereof of a dealer had escaped assessment, for the assessment was not completed and, if completed, it might be that the entire turnover would be caught in the net." 8. He then dealt with the question : when do the assessment proceedings under the Act in respect of a registered dealer commence and when do they terminate ? He concluded thus : "It is manifest that in the case of a registered dealer the proceedings before the Commissioner start factually when a return is made or when a notice is issued to him either under section 10(3) or under section 11(2) of the Act." He then observed that a case would be pending till a final order of assessment was made by the highest Tribunal or Court under the Act. He finally concluded at page 453 : "For the foregoing reasons we hold that a statutory obligation to make a return within a prescribed time does not proprio vigore initiate the assessment proceedings before the Commissioner; but the proceedings would commence after the return was submitted and would continue till a final order of assessment was made in regard to the said return." 9. Applying the above reasoning to the facts of this case it follows that the proceedings commenced after the returns were submitted by the assessee. No final order of assessment has yet been made in regard to the said returns, and, therefore, it cannot be said that any turnover of the assessee has escaped assessment within rule 34(1) of the Mysore Sales Tax Rules, 1948.We may mention that a similar view has been taken in the later decisions of this Court in State of Punjab v. Tara Chand Lajpat Rai ([1967] 19 S.T.C. 493; A.I.R. 1967 S.C. 1408), State of Punjab v. Murlidhar Mababir Parshad ([1968] 21 S.T.C. 29) and Madhya Pradesh Industries Ltd. v. The State of Maharashtra [Civil Appeal No. 534 of 1966; judgment dated September 28, 1967; [1968] 22 S.T.C. 400].

Decision reasoning: 0[ds]We heard the learned counsel for the appellant on the constitutional points involved but we find that it is not necessary to deal with them because we agree with the contention of the learned counsel for the respondent that the Commercial Tax Officer would be entitled to assess the assessee in respect of the year 1955-56 regardless of any limitation provided in rule 34 of the Mysore Sales Tax Rules, 1948We overrule this contention because by the time this case was taken up again for hearing on February 1, 1968, the learned counsel for the appellant had had sufficient opportunity to study the point. Moreover, this Court does not decide constitutional points unless it is absolutely essential to do so7. We have already mentioned that the assessee filed four returns for the year 1955-56, and the Commercial Tax Officer passed an assessment order. The learned counsel for the assessee contends that the Commercial Tax Officer, when he passes an order of assessment on remand, would be assessing that turnover of the assessee which had escaped assessment to tax within the meaning of rule 34. However, the matter is concluded by authority of this Court. We are here concerned with a dealer who has submitted returns and not a dealer who has not submitted a return. As far as the dealer who has submitted a return, it seems to us that no limitation is provided for making an assessment on him, and that till a final assessment order is made it cannot be said that any turnover has escaped assessment within the meaning of rule 34(1).In Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur ([1964] 4 S.C.R. 436; 14 S.T.C. 976), Subba Rao, J., as he then was, speaking for the majority, while dealing with section 11-A of the Central Provinces and Berar Sales Tax Act, 1947, observed : "On the said analogy, the assessment proceedings under the Sales Tax Act must be held to be pending from the time the said proceedings were initiated until they were terminated by a final order of assessment. Before the final order of assessment, it could not be said that the entire turnover or a part thereof of a dealer had escaped assessment, for the assessment was not completed and, if completed, it might be that the entire turnover would be caught in the net."8. He then dealt with the question : when do the assessment proceedings under the Act in respect of a registered dealer commence and when do they terminate ? He concluded thus :"It is manifest that in the case of a registered dealer the proceedings before the Commissioner start factually when a return is made or when a notice is issued to him either under section 10(3) or under section 11(2) of the Act."He then observed that a case would be pending till a final order of assessment was made by the highest Tribunal or Court under the Act. He finally concluded at page 453 :"For the foregoing reasons we hold that a statutory obligation to make a return within a prescribed time does not proprio vigore initiate the assessment proceedings before the Commissioner; but the proceedings would commence after the return was submitted and would continue till a final order of assessment was made in regard to the said return."9. Applying the above reasoning to the facts of this case it follows that the proceedings commenced after the returns were submitted by the assessee. No final order of assessment has yet been made in regard to the said returns, and, therefore, it cannot be said that any turnover of the assessee has escaped assessment within rule 34(1) of the Mysore Sales Tax Rules, 1948.