Case: Tax Officer-Cum-Regional Transport Officer Raipur, and Others Vs. Durg Transport Company Private Limited

The assessee is a transport operator. It was liable to pay passenger tax under the Madhya Pradesh Motor Vehicles (Taxation of Passengers) Act, 1959, hereinafter referred to as "the Act". It is said that it failed to pay the tax due from it for the period from October 1, 1961, to May 6, 1962. Admittedly, it submitted no return as required by section 5 of the Act, nor did it make the required deposit under section 6 of that Act. No action appears to have been taken against it till November 6, 1963, on which date the Tax Officer issued to it a notice under section 7 of the Act. Thereafter he proceeded to assess it. The impugned assessment order was made on June 19, 1965. That order was challenged before the Madhya Pradesh High Court by means of a writ petition under sections 226 and 227 of the Constitution. The High Court accepted that petition and quashed the impugned order The question before this court is whether the order of the High Court is sustainable.

Court's reasoning:
This contention does not appeal to us. In our opinion, when the liability to pay tax is evaded by one method or other there is an escapement of assessment. The term "escaped assessment " includes botht as well as. When a person is not assessed to tax though he is liable to be taxed he escapes assessment2. We are unable to agree with Mr. Shroff that while the legislature fixed one year time within which a reassessment has to be made it fixed no time limit for making the assessment. This is a prima facie unacceptable argument. The provisions of the Act are somewhat similar to the Madhya Bharat Sales Tax Act, 1950. While considering the meaning to be given to the expression "escaped assessment" this court in Regional Assistant, Commissioner of Sales Tax, Indore v. Malva Vanaspati & Chemical Co. Ltd. held that where a dealer has not filed the prescribed return of his turnover at all, it would be a case of "escaped assessment" and the proceedings for assessment must be commenced in respect of that turnover within the period of three years prescribed by section 10. We are of the opinion that the ratio of that decision apply to the facts in the present case