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

In these two appeals by special leave a common question of law falls for our determination, hence, they have been heard together and are being disposed of by this judgmentThe Indian Aluminium Cables Ltd., appellant No. 1 in both the appeals has got its factory at Faridabad in the State of Haryana. It sells and supplies aluminium cables to several State Electricity Undertakings or Boards situated in the various States . In respect of the assessment year 1962-63, the Company raised a dispute that it was not liable to pay Central Sales Tax underthe Central Sales Tax Act, 1956, as it claimed to be exempt from inter-State tax on the s ales of its products to the various State Undertakings or Boards by reason of the provisions contained in section 5 (2)(a)(iv) of the Punjab General Sales Tax Act, 1948--hereinafter referred to as the Act. The Tribunal decided the matter in favour of the assessee Company but the High Court of Punjab and Haryana answered the Sales Tax Reference made at the instance of the Revenue against the assessee. The decision of the High Court is reported in The State v. Indian Aluminium Cable Ltd., Faridabad(1). The matter was brought to this Court in appeal and by a decision given on April 2, 1976 the view of the High Court was affirmed an d it was held that the sales were not exempt from tax generally within the meaning of section 8(2A) of the Central Act read with section 5(2)(a)(iv) of the Punjab Act. The decision of this Court is reported in Indian Aluminium Cables Ltd. and another v. State of Haryana(2)The period of assessment concerning the appellant is each quarter of the year. In respect of all the 8 quarters of the years 1969-70 and. 1970-71, Returns were filed by the Company in time, i.e. on or before the last day of the month following the quarter concerned. The Assessing Authority did not accept the Returns and issued notices on May 22, 1970 under section 11 (2) of the Act in respect of the 4 quarters of 1969-70 requiring the assessee Company to produce evidence in support of the Returns. Since the question of assessees liability to pay Central Sales Tax was pending in reference before the High Court the matter was not pursued by the Assessing Authority and as per the request of the assessee it was kept pending. Even though the High Court decision was given on November 5, 1973, the matter became sub judice in appeal filed in this Court. It appears that the matter of assessment in respect of the year 1969-70 was taken up by the Assessing Authority again by issuance of a notice on September 15, 1975. Thereupon, the Company filed Civil Writ Petition No. 561/1976 in the High Court on January 27, 1976 to quash the notice dated September 15, 1975 and to restrain the State. of Haryana and its Officer--the Excise and Taxation Officer, Faridabad, from proceeding with the assessment. It is said that in respect of the 4 quarters of the (2) 38 S.T.C. 108. year 1970-71 notices under section 11(2) of the Act were issued for the first time by the assessing authority on January 30, 1976. Thereupon, the Company filed in the High Court Civil Writ Petition No. 1961/1976 for reliefs similar to the ones asked for in the other writ petition.According to the appellant, in the first writ petition were raised before the High Court the two main questions in the following terms:"(i) Whether the assessment proceedings with regard to assessment year 1969-70 could be proceeded with and whether assessment order could be passed beyond a period of 5 years after the expiry of the period to which the assessment relates. In other words, whether the Sales Tax Officer had jurisdiction to make assessment for the assessment year 1969-70 which had become time barred;(ii) Whether Central Sales Tax was payable in respect of sale of electric cables manufactured and sold by the petitioner Company to State Electricity Boards in view of the exemption granted generally under section 8(2A) of the Central Sales Tax Act read with section 5 (2) (a) (iv) of the Punjab General Sales Tax Act, 1948"This writ petition was dismissed in limine by a Bench of the High Court stating "Reply has been filed. The matter is covered in favour of the respondent by 33 STC 152  . Dismissed". It appears by the time the second writ petition came to be filed the appellants liability to pay Central Sales Tax was decided by this Court in the case referred to above. Therefore, in the second writ petition, in the main, the question raised was one of limitation as in the other writ petition. Another Bench of the High Court d ismissed this writ petition in limine on July 21, 1976. In substance and in effect, in spite of the Full Bench decision (by the majority) of the High Court in the case of Rameshwar Lal Sarup Chand v. Shri U.S. Naurath , Excise &Taxation Officer, Assessing Authority, Amritsar and Another(15 S.T.C. 932.), on which Mr. S.T. Desai, learned counsel for the appellant heavily relied upon before us, neither Bench found any substance in the point of limitation raised by the Company and dismissed the two writ petitions in limine. In our opinion the High Court was right, for the reasons to be stated hereinafter in this judgment, in not entertaining the point of limitation in spite of the full Bench decision aforesaid, as, the said decision in view of many pronouncements of this Court to be alluded to hereinafter is no longer good law.In face of the decision of this Court in Indian Aluminium Cables Ltd. &Anr. v. State of Haryana (supra) the question of the appellants tax liability under the Central Sales Tax Act was not reagitated before US.

Reasoning:
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.