Case: Bharat Steel Tubes Limited and Another Vs. State of Haryana and Another

These are applications under Article 32 of the Constitution and challenge in these proceedings is to the validity of notice issued by the Excise and Taxation Officer-Cum-Assessing Authority, Respondent no. 2, under the Haryana General Sales Tax Act, 1973 (hereinafter referred to as the Haryana Act). Such notice is said to have been issued on 18th of December, 1980. The relevant periods are 1968-69 to 1974-75 and each of the writ petitions relates to one of these years. As common questions of fact and law arise in these petitions and a common set of arguments has been advanced at the Bar, we proceed to dispose of all these writ petitions by a commonpetitioner No. 1, a Public Limited Company, has its factory at Ganaur within the District of Sonepat in Haryana State and petitioner No. 2 is its General Manager (Legal) and duly constituted Attorney. Petitioner No. 1 a manufacturer of electric resistence, welded steel tubes and pipes, is a dealer registered under the Haryana Act as also under the Central Sales Tax Act. It filed returns for all the quarters covered within the period indicated above as prescribed by the Punjab General Sales Tax Act, 1948 (hereinafter referred to as the Punjab Act) till 31.3.1973 and under the Haryana Act for the quarters of the remained years in question as the Haryana Act came into force with effect from 5th May, 1973. On the receipt of notice relating to assessment years 1968-69, 1969-70, 1970-71, 1971-72, 1972-73 and 1973-74 in the prescribed form ST-XIV under section 14(2) of the Punjab General Sales Tax A ct and in the prescribed form ST-25 under section 28(2) of the Act relating to year 1974-75, the petitioner company appeared before the respondent No. 2 and complied with the requirements of such notice by production of documents , books and other papers. While the matter was thus proceeding, the second respondent again issued a notice on 24.9.1982 requiring the petitioner company to produce certain further records and documents. The petitioner has challenged that notice as also the vires of section 28A of the Haryana Act.Section 11 of the Punjab Act lays down the procedure of assessment which broadly corresponds to section 28 of the Haryana Act.

Court's reasoning:
Undoubtedly, the assessment proceedings have been very delayed. As the material placed before us shows, the assessee had gone before different courts from time to time to ask for injunction against the completion of assessment but that trial appears be have started in December, 1980 when a suit was filed and injunction was obtained. Though not ices were issued under sections 11(2) of the Punjab Act or 28(2) of the Haryana Act within a reasonable period from the filing of returns for the respective quarters in the assessment years under consideration, further action has not been tak en by the assessing officer to complete the assessments. But as we have said above, in the absence of any prescribed period of limitation, the assessment has to be completed within a reasonable period. What such reasonable period would be, would depend upon facts of each case. One view can be that it should be a period not exceeding five years as the Legislature has fixed the limitation of five years for completing assessments in case of escaped turnover. Unless then be an assessment made soon after the period to which such assessment relates, the question of consideration of escapement would indeed become difficult to consider and examine. We, are, however, not inclined to extend into a situation like the one before us, a period of limitation for completion of assessments under sections 11(3) or 28(3) of the respective Acts. The assessee has made returns for all the quarters and must have paid its admitted tax. Now that the assessing authority intends t o complete assessments under section 11(3) of the Act, we see no prejudice to the assessee if the assessing authority is permitted to complete the assessment now. On the other hand, if no assessment is made an anomalous situation might arise and eve n though the assessee has collected the sales tax on its sale turnover, it might raise a claim for refund of it in the absence of an assessment. We do not propose to create such a situation. It would suffice to say that in the situation which has a risen it the matter before us, it would be appropriate to call upon the assessing authority to complete all these pending assessments within a total period of four months from today on the basis of available material in the record before him and such other material as the authority may obtain. We, however, make it clear that such assessment has to be only under section 11(3) of the Act.Before we part with the case, we would like to indicate that assessment of tax should be completed with expedition. It involves the revenue to the state. In the case of a registered dealer who collects sales-tax on behalf of the State, there is no justification for him to withhold the payment of the tax so collected. If a timely assessment is completed, the dues of the State can be conveniently ascertained and collected. Delay in completion of assessment often creates problems. The assessee would be required to keep up all the evidence in support of his transactions. Where evidence is necessary, with the lapse of time, there is scope for its being lost. Oral evidence as and when required to be produced by the assessing authority may not be available if a long period intervenes between the transactions an d the consideration of the matter by the assessing authority. Long delay thus is not in the interest of either the assessee or the State. In view of the fact that a period of limitation has been prescribed for bringing the escaped turn-over into the net of taxation, such an eventuality cannot be grappled with appropriately unless timely assessment is completed. In several taxing statutes, even in a situation like this, where assessment under sections 11(3) or 28(3) of the respective Acts is contemplated, a period of limitation is provided. Until by statute, such a limitation is provided, it is proper for the State Governments to require, by statutory rules or appropriate instructions, to ensure completion of assessments with expedition and reasonable haste but subject to rules of natural justice.