Case: Indian Aluminium Cables Ltd. &amp; Anr Vs. Excise And Taxation Officer &amp; Anr

under the Punjab General Sales Tax Act had filed returns for the 4 quarters of the financial year ending on March 31, 1955 as also for the 4 quarters for the financial year ending on March 31, 1956. In respect of each year the Sales Tax Assessing Officer served three successive notices on the dealer one on March 7, 1958, the other on April 4, 1958, and the third on August 18, 1959. The first two notices were merely under section 11(2) of the Act. But in the last notice which was issued after the expiry of 3 years it was stated that on the dealers failure to produce the documents and other evidence mentioned in the not ice, the case would be decided on best judgment assessment basis. The dealer did not comply with any of the notices and challenged with success by a petition under Article 32 of the Constitution the right of the authorities to, make a best judgment assessment. In that connection it was pointed out that the period of 3 years mentioned in sub section (4) of section 11 of the Act had to be counted from the expiry of the period in relation to which the returns had been filed and on expiry of the said period the authorities could not proceed to make the best judgment assessment. The third and t he last notice given on August 18, 1959 was taken to be a notice to the dealer that the assessing authority was proceeding to make the best judgment assessment and since this was done more than 3 years after expiry of all the 8 quarters in respect of the two years it was held to be without jurisdiction and the respondent was restrained from making any best judgment assessment on the petitioner for sales tax for any quarter of the financial years 1954-55 and 1955-56. The decision of this Court in Madan Lal Aroras(12 S.T.C. 387.) case justifies our apprehension which we have mentioned in the beginning of our judgment to the effect that if a dealer fails t o comply with the notice issued under section 11 (2) of the Act, then in such a case, even though there may not be any time limit for issuance of a notice, but on the dealers failure to comply with it the assessing authority may be obliged to take recourse to sub- section (4) attracting the bar of limitation of 5 years for proceeding to assess on the best judgment basis. The majority, however, was wrong when they said at page 949 of 15 S.T.C. with reference to Madan Lal Aroras case:"In the case before the Supreme Court, two notices were within three years and the third notice was beyond three years and their Lordships held that the third notice beyond three years, the Assessing Authority had no jurisdiction to make the assessment. If the phrase "proceed to assess" bears the meaning which the learned counsel for the State contends for, namely, that only a step towards assessment has to be taken and the assessment can be made at any time after the period of three years, their Lordships would on the basis of the two notices within the period of limitation, have come to a different conclusion and that is not what has been done." 12. This was, it appears to us, clearly a mistaken reading of the judgment of this Court. The majority in our opinion, was also wrong in importing the period of limitation provided in sub-sections (4), (5) and (6) of section 11 of the Act into sub-section (3) and in holding, therefore, that an assessment under sub-section (3) must also be completed within 3 years from the last date on which the return should be filed under the Act. We are again constrain ed to point out that the majority of the Full Bench committed a mistake in thinking that, this Court had held in Madan Lal Aroras case that the period of 3 years had to be counted from the last date on which the return should be filed. The decision of the Full Bench of the Punjab High Court in the case of Ramashwar Lals case (supra) is clearly erroneous and must be over-ruled. Pandit, J. in his dissenting opinion had, by and large, taken a correct view in favour of the Revenue. 13. Lastly, we may also make a reference to a recent decision of this Court delivered by one of us (Untwalia, J.) in the case of Gurbaksh Singh v. Union of India &Others ([1976] 3 S.C.R. 247.) An argument quite similar to the one advanced before us was advanced on behalf of the assessee appellant in that case before this Court. It was argued that the period of 4 years of limitation prescribed under sub-section (2a) of section 11 of the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi, should be imported into the revisional and the appellate power of the authorities conferred on them under section 20. This argument was repelled and it was pointed out that .the legislature had not provided any period within which an order was to be made by an Appellate or Revisional authority; no such period should be imported in the exercise of the power on the basis of section 11 (2a). Mr. Desai relied upon the penaltimate paragraph of this decision in support of his contention that in any view of the matter notice under section 11 (2) had to be issued and the assessment completed within a reasonable time. We do not accept this contention to be sound. The argument as presented cannot be accepted to be correct. In Gurbaksh Singhs case it was not stated that the exercise of the revisional power suo moto could not be made after an undue long delay. On such an assumption it was merely found as a fact that there was no undue delay in the suo moto exercise of the power.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]But we think it is high time that the decision of the Full Bench of the High Court in Rameshwar Lals case should be clearly and expressly over-ruled now. An identical view had been expressed by his Court reversing the decision of the Punjab High Court in Letters Patent Appeal No. 319/63 in the case of The State of Punjab and another v. Murlidhar Mahabir Prasad(21 S.T.C. 29.)The majority opinion of the Full Bench of the Punjab High Court was delivered by two judges in the case of Rameshwarlal Sarupchandra (Supra) Pandit Jave a dissenting opinion. It is wrong to say, as stated by the majority, that the expression "proceed to assess" and the word "assess" connote the same meaning. The ratio of the majority opinion is chiefly based upon the decision of the Full Bench of the Bombay High Court in Bisesar Houses case which decision was not approved by this Court and must be deemed to have been overruled. The majority we may also point out with respect, committed a mistake in appreciating the decision of this Court in the case of Madan Lal Arora v. The Excise and Taxation Officer, Amritsar(12 S.T.C. 387) Sarkar, J., as he then was, delivering the judgment on behalf of a Constitution Bench of this Court adverted to the facts of the case and stated that the registered dealer under the Punjab General Sales Tax Act had filed returns for the 4 quarters of the financial year ending on March 31, 1955 as also for the 4 quarters for the financial year ending on March 31, 1956. In respect of each year the Sales Tax Assessing Officer served three successive notices on the dealer one on March 7, 1958, the other on April 4, 1958, and the third on August 18, 1959. The first two notices were merely under section 11(2) of the Act. But in the last notice which was issued after the expiry of 3 years it was stated that on the dealers failure to produce the documents and other evidence mentioned in the not ice, the case would be decided on best judgment assessment basis. The dealer did not comply with any of the notices and challenged with success by a petition under Article 32 of the Constitution the right of the authorities to, make a best judgment assessment. In that connection it was pointed out that the period of 3 years mentioned in sub section (4) of section 11 of the Act had to be counted from the expiry of the period in relation to which the returns had been filed and on expiry of the said period the authorities could not proceed to make the best judgment assessment. The third and t he last notice given on August 18, 1959 was taken to be a notice to the dealer that the assessing authority was proceeding to make the best judgment assessment and since this was done more than 3 years after expiry of all the 8 quarters in respect of the two years it was held to be without jurisdiction and the respondent was restrained from making any best judgment assessment on the petitioner for sales tax for any quarter of the financial years 1954-55 and 1955-56. The decision of this Court in Madan Lal Aroras(12 S.T.C. 387.) case justifies our apprehension which we have mentioned in the beginning of our judgment to the effect that if a dealer fails t o comply with the notice issued under section 11 (2) of the Act, then in such a case, even though there may not be any time limit for issuance of a notice, but on the dealers failure to comply with it the assessing authority may be obliged to take recourse to sub- section (4) attracting the bar of limitation of 5 years for proceeding to assess on the best judgment basis. The majority, however, was wrong when they said at page 949 of 15 S.T.C. with reference to Madan Lal Arorasn the case before the Supreme Court, two notices were within three years and the third notice was beyond three years and their Lordships held that the third notice beyond three years, the Assessing Authority had no jurisdiction to make the assessment. If the phrase "proceed to assess" bears the meaning which the learned counsel for the State contends for, namely, that only a step towards assessment has to be taken and the assessment can be made at any time after the period of three years, their Lordships would on the basis of the two notices within the period of limitation, have come to a different conclusion and that is not what has been done."This was, it appears to us, clearly a mistaken reading of the judgment of this Court. The majority in our opinion, was also wrong in importing the period of limitation provided in sub-sections (4), (5) and (6) of section 11 of the Act into sub-section (3) and in holding, therefore, that an assessment under sub-section (3) must also be completed within 3 years from the last date on which the return should be filed under the Act. We are again constrain ed to point out that the majority of the Full Bench committed a mistake in thinking that, this Court had held in Madan Lal Aroras case that the period of 3 years had to be counted from the last date on which the return should be filed. The decision of the Full Bench of the Punjab High Court in the case of Ramashwar Lals case (supra) is clearly erroneous and must be over-ruled. Pandit, J. in his dissenting opinion had, by and large, taken a correct view in favour of the RevenueLastly, we may also make a reference to a recent decision of this Court delivered by one of us (Untwalia, J.) in the case of Gurbaksh Singh v. Union of India &Others ([1976] 3 S.C.R. 247.) An argument quite similar to the one advanced before us was advanced on behalf of the assessee appellant in that case before this Court. It was argued that the period of 4 years of limitation prescribed under sub-section (2a) of section 11 of the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi, should be imported into the revisional and the appellate power of the authorities conferred on them under section 20. This argument was repelled and it was pointed out that .the legislature had not provided any period within which an order was to be made by an Appellate or Revisional authority; no such period should be imported in the exercise of the power on the basis of section 11 (2a). Mr. Desai relied upon the penaltimate paragraph of this decision in support of his contention that in any view of the matter notice under section 11 (2) had to be issued and the assessment completed within a reasonable time. We do not accept this contention to be sound. The argument as presented cannot be accepted to be correct. In Gurbaksh Singhs case it was not stated that the exercise of the revisional power suo moto could not be made after an undue long delay. On such an assumption it was merely found as a fact that there was no undue delay in the suo moto exercise of the power.