Case: State of Punjab and Another Vs. Murlidhar Mahabir Parshad

S.T.C. 976). The points which arose in that case for determination were : (1) when can a proceeding be said to commence and (2) if a proceeding has commenced within the prescribed period but is pending when such period expires and an order is finalised thereafter, whether such an order is invalid on the ground of its being time-barred. The appellant there was a registered dealer, carrying on business in bidis. For the year 1949-50, i.e., for the period from October 22, 1949 to November 9, 1950, he submitted only one return on October 5, 1950, for one quarter and defaulted in respect of the other quarters. He was served a notice on August 13, 1954, under section 11(1) and (2) of the C.P. and Berar Sales Tax Act, 1947, in respect of the turnover for the said period. He filed the returns subsequently, but contended that the proceedings before the Sales Tax, Commissioner were barred by time. He then filed a writ petition in the High Court challenging the said proceedings. For the year 1950-51 he had filed no return at all and was served a notice on October 15, 1954, under section 11(4) of the Act. That notice was within three years from October 16, 1951, which fell within the fourth quarter of the year in question. He also filed another writ petition for a similar relief in respect of that year. The contention was that whatever may be said in the case of an unregistered dealer, in the case of a registered dealer the proceedings commence from the date of the registration certificate within which he has a statutory obligation to furnish his returns. It was held by this Court that assessment proceedings under the Act must be held to be pending from the time they are initiated until they are terminated by a final order of assessment. It was also held that in the case of a registered dealer there would be four variations in the matter of assessment of his turnover : (1) he submits a return by the date prescribed and pays the tax due in terms of the said return, the Commissioner accepts the correctness of the return and appropriates the amount paid towards the tax due for the period covered by the return; (2) the Commissioner is not satisfied with the correctness of the return, he issues a notice to him under section 11(2), but does not finalise the assessment; (3) the registered dealer does not submit a return, the Commissioner issues a notice under section 10(3) and section 11(4) of the Act; and (4) the registered dealer does not submit any return for any period and the Commissioner issues a notice to him beyond three years. It was held by this Court 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, and that the acceptance of the contention that the statutory obligation to file a return initiates the proceedings is to invoke a fiction not sanctioned by the Act. It was held in the first case that the Tribunal had no jurisdiction to issue a notice under section 11-A with respect to the quarters other than that covered by the return made by the appellant. In the second case the Commissioner had jurisdiction to assess the turnover in respect of the entire fourth quarter. At page 450 of the report, the Court observed that in a case where a return has been made, but the Commissioner has not accepted it and has issued a notice for enquiry, the assessment proceedings would be pending till the final assessment is made. The Court Proceeded to observe that even in a case where no return has been made, but the Commissioner initiates proceedings by issuing the notice either under section 10(3) or under section 11(4), the proceedings would be pending till the final assessment is made. This decision therefore clearly lays down the principle that in the case of a registered dealer the proceedings before the Commissioner start factually when a return is made or a notice is issued and no question of limitation would arise where such proceedings are taken before the expiry of the prescribed period of three years though an assessment order is finalised after the expiry of such period. In other words, the assessment proceedings commence in the case of a registered dealer either when he furnishes a return or when a notice is issued to him under section 11(4) or 10(3), and if such proceedings are taken within the prescribed time though the assessment is finalised subsequently even after the expiry of the prescribed period, no question of limitation would arise. The view expressed by this Court in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur ([1964] 4 S.C.R. 436; 14 S.T.C. 976), has been subsequently followed by this Court in a recent case, State of Punjab & Others v. M/s. Tara Chand Lajpat Rai (Civil Appeal No. 1080 of 1965 decided on 28-2-1967; [1967] 19 S.T.C. 493), in which the material facts were almost parallel to those in the present case. In view of the principle laid down by these decisions we hold in the present case that the proceedings for assessment of sales tax taken against the respondent by the Assessing Authority are legally valid, because the assessment in question being for the year 1957-58, the notice with regard thereto in Form S.T. XIV had been issued and served upon the respondent on January 2, 1960, and proceedings for assessment were initiated in time within the period prescribed under section 11(5) of the Act. It follows therefore that the respondent has made out no case for the grant of a writ under Article 226 of the Constitution for quashing the proceedings for assessment of sales tax for the year 1957-58 taken against him by the appellants.

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

Explanation:
1[ds]This decision therefore clearly lays down the principle that in the case of a registered dealer the proceedings before the Commissioner start factually when a return is made or a notice is issued and no question of limitation would arise where such proceedings are taken before the expiry of the prescribed period of three years though an assessment order is finalised after the expiry of such period. In other words, the assessment proceedings commence in the case of a registered dealer either when he furnishes a return or when a notice is issued to him under section 11(4) or 10(3), and if such proceedings are taken within the prescribed time though the assessment is finalised subsequently even after the expiry of the prescribed period, no question of limitation wouldview of the principle laid down by these decisions we hold in the present case that the proceedings for assessment of sales tax taken against the respondent by the Assessing Authority are legally valid, because the assessment in question being for the yearthe notice with regard thereto in Form S.T. XIV had been issued and served upon the respondent on January 2, 1960, and proceedings for assessment were initiated in time within the period prescribed under section 11(5) of the Act. It follows therefore that the respondent has made out no case for the grant of a writ under Article 226 of the Constitution for quashing the proceedings for assessment of sales tax for the yeartaken against him by the appellants.