Case: Regional Assistant Commissioner Of Sales Tax,Indore Vs. Malwa Vanaspati &amp; Chemical Company Ltd

taken within the period prescribed under the Act for commencing the proceeding for bringing to tax turnover which has escaped assessment and therefore a notice issued under sub-section (2) of Section 11 of the C. P. and Berar Sales Tax Act more than three vears after the last day of the year of assessment is unauthorised, and no further proceeding for assessment may thereafter be had even in respect of the return duly submitted by the dealer. In our view the contention is wholly misconceived. In Ghanshyam Dass case, 1964-4 SCR 436 = (AIR 1964 SC 766 ) the Court was dealing with a proceeding for assessment under the C. P. and Berar Sales Act, 1947 the relevant provisions whereof relating to assessment and re-assessment are similar to, but not identical with, the provisions of the Madhya Bharat Sales Tax Act. 1950. This Court held in that case that a proceeding for assessment of sales tax remains pending from the time when it is initiated until it is determined by a final order of assessment and the turnover or any part thereof of a dealer has not escaped assessment so long as the assessment proceeding is not completed: that a proceeding of assessment commences against a registered dealer when he files his return, and against an unregistered dealer when the Commissioner calls upon him to file the return of his turnover, and that where the registered dealer has not filed a return the proceeding commences when the Commissioner issues a notice either under Section 10 (3) or under Section 11 (4) of the C P. and Berar Sales Tax Act, and not till then. Under Section 11-A of the C. P. and Berar Sales Tax Act. 1947, the Commissioner is entitled to re-assess or assess the turnover within three years from the expiry of the period for which the tax is due and the turnover has either escaped assessment or has been underassessed. This Court in Ghanshyam Dass case. 1964-4 SCR 436 = (AIR 1964 SC 766 ) in dealing with the case of a registered dealer under the C. P. and Berar Sales Tax Act. 1947 decided that the Sales Tax Authority had no jurisdiction to issue a notice of assessment after the expiry of three years in respect of the quarter other than that covered by the return made by the dealer, or in respect of the quaters beyond three years from the date of the issue of the notice where no return had been filed by the dealer. There is nothing in the judgment in Ghanshyam Dass case. 1964-4 SCR 436 = (AIR l964 SC 766) which supports the view that if the dealer has made a return of his turnover, the assessing authority is incompetent to proceed to assess the turnover by issuing a notice calling upon the dealer to produce evidence to explain or support the return, after the expiry of the period prescribed under Section 11 A of the C. P. and Berar Sales Tax Act.8. The following observation on which counsel relied"It is manifest that in the case of a registered dealer the proceedings before the Commissioner starts factually when a return is made or when a notice is issued to him either under Sec. 10(3) or under Sec. 11(2) of the Act" is the result of a typographical error. S.10 (3) of the C.P. and Berar Sales Tax Act in so far as it relates to a registered dealer authorises the Commissioner to impose a penalty upon the dealer who has failed to furnish a return as required by Section 10 (1). S. 11(2) of that Act authorises the Commissioner to call upon a dealer registered or unregistered, by notice to appear in person or by agent and to produce evidence in support of his return. Section 11 (4) authorises the Commissioner after giving notice to a registered dealer to record a "best judgment" assessment, if the dealer has failed to submit a return, or having filed a return has failed to comply with a notice under Section 11(2) or has not regularly employed any method of accounting or the method of accounting is such that assessment cannot properly be made on the basis thereof. Reading Sections 10 (1), 10 (3) and 11 (2) and 11 (4) of the C. P. and Berar Sales Tax Act together, it is clear that against a registered dealer the proceeding for assessment commences when he submits a return and if he does not submit a return the proceeding for assessment commences when a notice under Section 10 (3) or under Section 11 (4) is issued. In our view the words "Section 10 (3) or under Section 11 (2)" in the judgment in Ghanshyam Dass case. 1964-4 SCR 436 = (AIR 1964 SC 766 ) should have been "Section 10 (3) or under Section 11 (4) (a)." This is made clear in the earlier paragraph where Subba Rao. J. observed."Even in a case where no return has been made, but the Commissioner initiated proceedings by issuing a relevant notice either under Section 10 (3) or under Section 11 (4). the proceedings wild be pending thereafter before the Commissioner till the final assessment is made"There is nothing in the judgment in Ghanshyam Dass case, 1964-4 SCR 436 = (AIR 1964 SC 766 ) which supports the contention that a proceeding already commenced by the fling of a return by a registered dealer under Section 10 (1) commences afresh when a notice under Section 11 (2) of the C. P. and Berar Sales Tax Act, 1947, is issued.The notice under Section 11 (2) is only a step in the proceeding for assessment and does not disturb the continuity of the proceeding. Therefore when the Sales Tax Officer issued a notice against the respondent under section 8 (2) of the Madhya Bharat Sales Tax Act, 1950, a fresh proceeding to assess turnover which has escaped assessment was not commenced, and Section 10 of the Act was not attracted thereto.9.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]There is no doubt that where the clearer has not filed the prescribed return of his turnover, the case is clearly one of "escaped assessment", and the proceeding for assessment must commence in respect of that turnover within the period prescribed by S. 10. Where however a return is filed by a dealer under S. 7, a proceeding for assessment commences, and a notice under sub-s. (2) of S. 8 is a step in the proceeding for completing the assessment. The Act contains no Provision that the proceeding shall be completed within any fixed period; the assessing authority is therefore entitled to complete the proceeding properly commenced without any restriction as to time. If a proceeding for assessment is completed, and it is found that any turnover has escaped assessment, the proceeding for bringing to tax that turnover must be commenced within three years next succeeding the year to which the tax relates. Since in the present case the proceeding for assessment had already commenced when the respondent flied the return, that proceeding could be completed by the assessing authority at any time, and the issue of a notice under sub-s. (2) of S. 8 does not, in our judgment, attract the bar of S. 10 of the Madhya Bharat Sales Tax Act,our view the contention is wholly misconceived. In Ghanshyam Dass case, 1964-4 SCR 436   = (AIR 1964 SC 766  ) the Court was dealing with a proceeding for assessment under the C. P. and Berar Sales Act, 1947 the relevant provisions whereof relating to assessment and re-assessment are similar to, but not identical with, the provisions of the Madhya Bharat Sales Tax Act.is nothing in the judgment in Ghanshyam Dass case. 1964-4 SCR 436   = (AIR l964 SC 766) which supports the view that if the dealer has made a return of his turnover, the assessing authority is incompetent to proceed to assess the turnover by issuing a notice calling upon the dealer to produce evidence to explain or support the return, after the expiry of the period prescribed under Section 11 A of the C. P. and Berar Sales Taxour view the words"Section 10 (3) or under Section 11(2)" in the judgment in Ghanshyam Dass case. 1964-4 SCR 436   = (AIR 1964 SC 766  ) should have been"Section 10 (3) or under Section 11e is nothing in the judgment in Ghanshyam Dass case, 1964-4 SCR 436   = (AIR 1964 SC 766  ) which supports the contention that a proceeding already commenced by the fling of a return by a registered dealer under Section 10 (1) commences afresh when a notice under Section 11 (2) of the C. P. and Berar Sales Tax Act, 1947, is issued.The notice under Section 11 (2) is only a step in the proceeding for assessment and does not disturb the continuity of the proceeding. Therefore when the Sales Tax Officer issued a notice against the respondent under section 8 (2) of the Madhya Bharat Sales Tax Act, 1950, a fresh proceeding to assess turnover which has escaped assessment was not commenced, and Section 10 of the Act was not attracted thereto.