SALES TAX OFFICER & ANR. SUDARSANAM IYENGAR & SONS August 13, 1969 [J. C. SHAH, ACTING <;.J., V. RAMASWAMI AND A. N. GROVER, JJ.] c Travancore-Cochin General Sales Tax Rules, 1950, Rule 33-Determi- nation and assessment of escaped turnover-Limit of three years-Pro .. ceedings !or assessment whether must be initiated or finally completed within that period.
The respondent was assessed to sales tax in the State of Kerala for the year 1962-63 in March, 1964. In December, 1965 the Sales Tax Officer issued notice under R. 33 of the Travancore-Cochin General Sales Tax Rules, 1950 in force at that time for reopening the original assessment on the ground that c~rtain turnover had escaped assessment. According to the relevant portion 0£ the snid rule the assessing authority "may at any time within three years next succeeding that to which the tax ……. . relates determine to the best of his judgment the turnover which has
escaped asseissment and assess the tax payable. . . on such turnover aftgr issuing a notice to the 1dealer . . . and after making such enquiry as he considers necessary". The respondent's objection to the notice having
failed it filed a writ petition in the High Court. The learned Single Judge who heard the writ petition felt that it was due to the orders of the court that the Sales tax authorities had been prevented from completing the assessment within the time allowed by Rule 33.
While disposing of the writ petifion he observed that the Sales Tax Authorities would be at liberty to complete the proceedings initiated bv the notice within a further period of 59 days.
The respondent preferred an appeal to the division bench which s·et aside the dir~ction granting 59 days extension for completing the asse·ssment. The .Revenue appealed. On behalf of the appellant it was
contended that on a ttue construction of Rule 33 it should be held that the proceedings under that rule have to commence within three years next succeeding that to wli.ich the tax relates and that it is not necessary that the entire proceedinga relating to the escaped assessment should be com- pleted within that period.. On behalf of the respondent it was urged that the word 'determirte' ·in Rule 33 meant that the final determination of the turnover which had e!caped assessment and the assessment of the tax have to be done within ttn;ee years.
Allowing the appeal. HELD : In vie\v Of the previous decisions of this Court in which pro- visions similar to Rule 33, namely, sub-clauses (2), (4) and (5) of s. 11 o'f the Punjab Genera! Sales Tax Act, 1948 came up for consideration, the principle is firmly e.~ablished that assessment proceedings under the Sales Tax Act must be taken to be pending from the time the proceedings are initiated until they· ·fire terminated hy a final orJer of assessment. In
these cases the initiation o( proceedings within the prescribed period was considered sufficient, . -The fact that the word used in Rule 33 is 'determine' whereas in ss. 11(4} and (5) of the Punjab Act the words 'proceed to assess' are use_(!, canfiot, in the context of sales tax legislation lead to a different result. f862 H-863 CJ
The words which follow the word 'detelrmine' in Rule 33 must be accorded their due s;ignification. The words 'assess the tax payable' can- not be ignored an,.d,. i~ is clearly meant that the assessment has to be made within the petjod·-prescribed. ·~essmenf is a comprehensive word and can [ 19701 I s.c.R.
denote the entirety of proceedings '-"·hich arc taken \vith rcg;nd to it. It canI'lot and does not mean a final order Of asseso;mcnt alone unless there is $Omething in the context of a particular provision v.·hich compels such a meaning being attributed to it.
Rule 33 mus.I not be so interpreted that it may be defeated by taking certain collateral proceeding<; and obtaining a stay order as was done in the present case or by unduly delaying a<.>.lcss- mcnt proceedings beyond a period of three years.
It must he interpreted like the analogous provisions considered in earlier cases. l'his must parti- cularly be so when there is no provision in the Ruic in question analogous to sub-s. (3) of s. 34 of the Income-tax Act, 1922 by v;hich the Income Tnx authorities v.·crc deharred from completing the assessment beyond the ptriod prescribed. [863 D-Gl
The State of Punjab v. Tera Chn11d Laipat Roi. 19 S.T.C. 493 and The Stnte of Punjab v. !vf11rlidhnr Mahabir Prashad. ~I S.l·.c. 29 applied. Glu.n.-.hyan1 Das v. Reginnal Assi.Hant ('on1111i5sio11er of Sales Tax,
,\"oRpur, [1964] 4 S.C.R. 436, referred 10. Civn. APPELLATE JURISDICTION : Civil Appeal No. 123'.? oi 1968. Appeal by special leave from the judgmem and decrc~ da1ed June 18, 1968 of the Kerala High Court in Writ Appeal l'\,1. 46 of 1967.
M. R. K. Pillai, for the appellant. T. A. Ramachandran, for the respondent. c The Judgment of the Court was delivered by Grover, J, This is an appeal by speci:il leave from a judg-
ment of the Kerala High Court. The facts may be firstly stated : The respondent was a non-resident dealer carrying on business in Quilon, Emakulam and Calicut in the State of Kerala.
When the assessment in respect of sales tax for the assessment y~ars 1961-62 and 1962-63 was pending the respondent had applied for a bifurcation of the assessment by treating his business at three places mentioned above as separate units.
This request was ac- ceded to by the Board of Revenue. The orders of assessment relating to the two years were made in April 1964 and JI.larch l 9M respectively. The Sales Tax Officer issued notices in December 1965 for
reopening the original assessment on the ground that certain turnover had escaped assessment. The objection of the respon· dent to these notices having failed a writ petition seeking
to quash the orders made by the Sales tax authorities was filed. learned Single Jud~e held that in respect of the assessment year 1961-62 the Sales Tax Officer had no jurisdiction or authority to proceed under Rule 33 of the Travancore Cochin General Sales tax Rules, 1950 which were in force a: the material time.
It was found that the notice served in December 1965 relatin~ to that c S.T.O. v. s. IYENGAR & SONS (Grover, J.) assessment year was beyond the time limit of three years pres- cribed by the rule. As regards the assessment year 1962-63 the learned judge held that the time limit would expire on March 31, 1966. Owing to the writ petition and the stay orders which had been made the assessment could not be completed. The learned judge felt that it was owing to the orders of the court that the Sales tax authorities had been prevented from
completing the assessment within the time. While disposing of the writ petition ib was observed that the Sales tax authorities would be at liberty to complete the proceedings initiated by the notice within the period of 59 days at the expiry of which the period prescribed by. Rule 33 was to expire.
The respondent preferred an appeal to a division bench which set aside the direction granting 59 days extension for completing the assessment on the ground that the same was not justified under the law.
Counsel for the appellant has confined the appeal only to the proceedings relating to the assessment year 1962-63. It is ad- mitted that with regard to the other year 1961-62 the proceed- ings became barred. It is contended before us that on a true construction of Rule 33 it should be held that the proceedings under that Rule have to commence within three years next suc- ceeding that to which the tax relates and that it is not necessary that the entire proceedings relating to the escaped
assessment should be completed within that period. In other words if such proceedings under Rule 3 3 have been commenced within the period prescribed by the rule they can be continued even beyond the period of t\lree years till a final order of assessment is made. Reliance has beein. placed on a number of decisions of this Conrt some of which may be noticed.
In the State of Punjab & Ors. v. Tara Chand Lajpat Rai(') the question which came up for con- sideration was that where the Sales tax Authority issued a notice under s. 11(2) of the Punjab General Sales Tax Act, 1948 be- fore the expiry of three years frnm the termination of the period for furnishing returns but finalised the assessment order
after three years from the aforesaid date, whether such an assessment could be said to be barred by time. It was held that assessment proceedings commenced in the case of a registered dealer either when he furnished a return or when a notice was issued to him under s. 11 (2) of the Punjab Act and if such proceedings were taken within the prescribed time,
though the assessment was finalised subsequently even after the expiry of the prescribed period no question of limitation wonld arise. In The State of Punjab & Anr. v. Murlidhar Mahabir Prashad( 2 ) the
question of law was whether on a proper interpretation of sub-ss. ( 4) and ( 5) of s. 11 of the Punjab Act the period of limitation was three (I) 19 S.T.C. 493. (2) 21 S.T.C. 29. [ 1970] l S.C.R,
years for making the assessment from the last date on which the return was to be filed or whether the order of assessment was valid even after it W'.IS made after a period of three years pro- vided the necessary notice had been issued within that period. The aforesaid provision of the Punjab Act may be read :
"11 ( 4) If a registered dealer, having furnished re- turns in respect of a period fails to comply with the terms of a notice issued under sub-s. ( 2) the Assessing Authority shall within three years after the expiry of
such period, proceed to assess to the best of his judg- ment the amount of the tax due from the dealer. ( 5) If a registered dealer does not furnish returns in respect of any period by the prescribed date, the
Assessing Authority shall within three years after the expiry of such period, after giving the dealer a reason- able opportunity of being heard, proceed to assess to the best of his judgment, the amount of tax, if any, due
from the dealer". Relying mainly on the observatiQ!l in Ghanshyam Das v. ·Regional Assistant Commissioner of Sales Tax, Nagpur( 1 ) this Court held that the proceedings for assessment were valid because the same had been initiated within the period prescribed
under s. 11 (5). The principle laid down in Tara Chand LJjpat Rats case(') was followed. Rule 33 of the relevant rules is in these terms : Rule 33(1) "If for any reason the whole or an>
part of the turnover of business of a dealer or lice1.see has escaped assessment to tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority as the case
may be, subject to the provisions of sub-rule (2) may at any time within three years next succeeding that to which the tax or licence fee relates determine to the best uf his judgment the turnover which has escaped
assessment and assess the tax payable or levy the licence fee in such turnover after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary."
Now in view of the previous decisions the principle is firmly established that assessment proceedings under the Sales Tax Act must be held to be pending from the time the proceedings are initiated until they are terminated by a final order of assessment. The distingui5hing feature on which emphasis has been laid by (t) [1964) 4 S.C.R. 436.
(2) 19 S. T. C. 493. c ,B c ,".! S.T.O. v. s. IYENGAR & SONS (Grover, J.) 8 63 the counsel for the respondent is that the language employed :n rule 33 is such as to lead to only one conclusion that the final determination of the turnover which has escaped assessment and the assessment of the tax have to be done within three years. It is pointed out that in the other Sales tax provisions which came up for consideration in the cases mentioned above the words employed were "proceed to ·assess" e.g., sub-ss. ( 4) and (5) of s. 11 of the Punjab General Sales Tax Act. Our attention has been invited to the appropriate dictionary meaning of the word "determine" which is "to settle or decide-to come to a judicial· decision-(Shorter Oxford English Dictionary). It is suggested that the word "determine" was employed in Rule 33 with a defi- nite intention to set the limit within which the final order in the matter of assessment should be made, the limit being three years. We find it difficult to accept that in the context of sales tax legis- lation the use Of the words "proceed to assess" and "determine" would lead to different consequences or result. In this connection the words which follow the word "determine" in Rule 33 must be accorded their due signification.
The words "assess the tax payable" cannot be ignored and it is clearly meant that the assessment has. to he made within the period prescribed. Assess- ment is a comprehensive word and can denote the entirety of pro- ceedings which are taken with regard to it.
It cannot and does not mean a final order of assessment alone unless there is some thing in the context of a particular provision which compels such a meaning being attributed to it.
In our judgment despite the phraseology employed in Rule 33 the principle which has be.~n laid in other cases relating to analogous provisions in sales tax statutes must be followed as otherwise the purpose of a provision like Rule 33 can be completely defeated by taking certain col- lateral proceedings and obtaining a stay order as was done in the present case or by unduly delaying assessment proceedi'lgs be- yond a period of three years.
It is undoubtedly open to the legislature or the rule making authority to make its intention quite clear that on the expiry of a specified period no final order of assessment can be mad-. Then taxing authorities would certainly be debarred from completing the assessment beyond the period prcscribe.d as was the case in sub-s. ( 3) of s. 34 of the Income tax Act, 1922, but such is not the case here and we would hold that the assessment proceed- ings relating to the year 1962-.63 were within time.
The appeal is allowed and the judgment of the High Court is set aside. The case shall go back to the High Court for disposal of such points as were previously not decided. In terms of the
previous order dated April 3, 1969, the respondents shall be en-· titled to costs in this Court. G.C. Appeal allowed. L!5S"p.Cl/-!1