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

1. This appeal is brought, by certificate, from the judgment of the Punjab High Court dated November 6, 1963, dismissing the Letters Patent Appeal No. 319 of 1963, against the order of Harbans Singh, J., dated August 1, 1963, allowing the writ petition of the respondents being Civil Writ No. 725 of 1961 dated June 6, 1961.2. Theis a registered dealer under the Punjab Sales Tax Act and has been dealing in gur, shakkar and sugar. On March 16, 1959, there was a notice issued in Form S.T. XIV in respect of the assessment to sales tax for the yearThe service of the notice was effected on January 2, 1960, and the respondent was required to appear before the Assessing Authority on January 11, 1960. The respondent did not appear on that date and the case was adjourned. Thereafter, the respondent was requested to appear before the Assessing Authority on March 18, 1961, but he failed to appear on that date also due to the illness of his son. Further adjournments were granted and ultimately the respondent was given a final opportunity for appearance on June 10, 1961, with account books for the years60 failing which the Assessing Authority would assess him on best judgment basis. Before the assessment proceedings could be completed, the respondent filed a writ petition in the Punjab High Court on June 6, 1961, for grant of a writ mandamus or any other suitable writ directing the appellants not to proceed against the respondent under section 11 of the Punjab Sales Tax Act. In answer to the writ petition the appellants filed acontesting the averments raised in the writ petition. The writ petition was, however, allowed by Harbans Singh, J., by his judgment dated August 1, 1963, and directions were issued to the appellants not to continue the proceedings for assessment of the respondent to sales tax for the yearThe learned Judge took the view that the point of law arising in this case was covered by the decision of the Full Bench of the Punjab High Court in Rameshwar Lal Sarup Chand v. U. S. Naurath (Civil Writ No. 798 of 1962; 1963 P.L.R. 768; 15 S.T.C. 932), in which it was held that assessment of sales tax under(4), (5) and (6) of section 11 of the Punjab Sales Tax Act must be completed within a period of three years from the last day on which the return has to be filed and any assessment made after the lapse of the said period of three years shall be without jurisdiction. The appeal under the Letters Patent from the judgment of Harbans Singh, J., was summarily dismissed on November 6, 1963.Section 11 of the Punjab General Sales Tax Act originally stood in these terms :"If no returns are furnished by a registered dealer in respect of any period by the prescribed date, or if the assessing authority is not satisfied that the returns furnished are correct and complete, the assessing authority shall, within twelve months after the expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed in such manner as may be prescribed to assess to the best of his judgment the amount of tax due from the dealer.

Reasoning: 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.