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Thereafter no returns were submitted. FAC |
On September 13, 1955, the Assistant Commissioner of Sales Tax, the assessing authority at that time, issued a notice calling upon the appellants to show cause why action should not be taken against them under sections 10(3) and 11(4)(a), on account of their failure to furnish the return for the period 1.1.53 to 31.12.... |
Similar notices were issued to them on October 27, 1955 for the period 1.1.54 to 31.12.54 and on July 7, 1956 for the period 1.1.55 to 31.12.55. FAC |
It appears that the appellants repeatedly took time for submitting their explanation. ARG |
The first respondent to whom the appellants ' case stood transferred issued in 1958 fresh notices to the appellants similar to those issued in 1955. FAC |
At that stage the appellants objected to the validity of those notices both orally as well as in writing on the ground that their assessment year was not the calendar year as mentioned in those notices but the year ending October 31. FAC |
Evidently in view of that objection, the first respon dent issued another set of notices on July 8, '1959. FAC |
The appellants contended that those notices were barred by time. FAC |
Thereafter the appellants challenged the validity of the notices issued in 1959 in the petitions under article 226 from which these appeals arise. FAC |
In these apneals the questions arising for decision are whether section 11 (4)(a) or section 11 A(3) or any parts thereof contravene the guarantee of equal protection of the laws or equality before the law or whether those provisions are based on a valid classification which is reasonable in view of the object with whi... |
Mr. H.R. Gokhale learned counsel for the appellants, urged that both these provisions deal with the same class of persons having common characteristics and Properties and hence there is no just 666 basis for the classification made. ARG |
According to him the classification complained of has brought about a discrimination. ARG |
Further he asserted that the Act had conferred arbitrary power on the assessing authority to pick and choose from the persons belonging to the same class to be dealt with either under section 11(4)(a) or under 11A(1). ARG |
He urged that as a case coming under section 11(4)(a) also falls under section 11 A, as the law now stands, the persons proceeded against under section 11A(1) will have the benefit of the period of limitation prescribed therein; while the said benefit is not available for those proceeded under section 11(4)(a). ARG |
According to the learned counsel for the revenue, sections 11(4)(a) and 11A deal with different classes of persons; the classification made under those provisions is a reasonable classification having nexus with the object sought to be achieved. ARG |
Before adverting to the points at issue, it would be convenient to set out the circumstances under which section 11A(3) which is said to have brought about the discrimination complained of came to be enacted. Ratio |
The Act is in force ever since 1947. Ratio |
Section 11A as it originally stood was inserted into the Act in 1953. Ratio |
In Bisesar House vs State of Bombay(1) the question arose whether a notice under section 11(2) initiates a fresh proceeding and if that is so, whether the limitation prescribed under s.11A(1) is attracted to that proceeding. PRE |
A Full Bench of the Bombay High Court speaking through Chagla, C. J. held that a notice under section 11(2) initiates a fresh proceeding and to such a proceeding the limitation prescribed in section 11A is attracted. PRE |
From the ratio of that decision it followed that the limitation prescribed under section 11 A also governed proceedings under s.11(4)(a). Ratio |
Evidently, to get over the effect of that decision, the Bombay Legislature enacted the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act 1959 (No. 22 of 1959) which came into force on April 18, 1959. Ratio |
Section 6 of that Act inserted the new subsection (3) into S.11A and the reason for that amendment, as stated in the statement of objects and reasons, is as follows: "In its judgment in Bisesar House vs Commissioner of Sales Tax, Nagpur, the Bombay High Court has held that the period of limitation laid down in S.IIA of... |
It has also been found that the said limitation applies to suo motu revisions also. Ratio |
The said decision affects the original assess ments and suo motu revisions, which have been made after the expiry of the period of limitation laid down for the reassessment of turnover escaping assessment under the different sales tax laws in force in this State. Ratio |
It has, (1) 60 B.L.R. 1395 667 therefore, become necessary to establish the validity of all such assessments and to provide that the period of limitation prescribed for reassessment of escaped turn overs does not apply to original assessment and suo motu revisions. Ratio |
" In Ghanshyam Das vs Regional Assistant Commissioner of Sales Tax, Nagpur(1) this Court did not agree with that decision so far as the scope of s.11(2) is concerned. Ratio |
Therein it was held that a notice under section 11(2) does not initiate a fresh proceeding and to that proceeding the limitation prescribed in section 11A does not apply. Ratio |
Though in view of that decision, s.11A(3) became superfluous in respect of a proceeding in which a notice under section 11 (2) is given, it undoubtedly changed the law in respect of proceedings under s.11(4)(a). Ratio |
Before we proceed to consider the aforementioned complaint of discrimination, it is necessary to have a survey of the relevant provisions of the Act. Ratio |
'Dealer ' is defined in section 2(c) as meaning a person who whether as principal or agent carries on in the State the business of selling or supplying goods whether for commission, remuneration or otherwise and includes a firm, a partnership, a Hindu undivided family or a State government or any of their departments a... |
A 'registered dealer ' is defined in section 2(f) as meaning a dealer registered under the Act. STA |
Section 2(j) defines 'turnover ' as meaning the aggregate of the amounts of sale prices and parts of sale prices received or receivable by a dealer in respect of the sale or supply of goods or in respect of the sale or supply of goods in the carrying out of any contract effected or made during the prescribed period; an... |
Section 8 says: "(1) No dealer shall, while being liable to pay tax under this Act, carry on business as a dealer unless he has been registered as such and possesses a registration certificate." STA |
Section 8A provides for voluntary registration of a dealer. STA |
Sub s.(3) thereof provides that every dealer who has been registered upon an application made under this section so long as his registration remains in force, be liable to pay tax under that Act. STA |
Sub section(4) of that section stipulates that the registration of a dealer upon an application made under that section shall be in force for a period not less than three complete years and shall remain in force thereafter unless cancelled under the provisions of the Act. STA |
Section 10 provides for returns by dealers. STA |
It reads: "(1) Every such dealer as may be required so to do to by the Commissioner by notice served in the prescribe manner and every registered dealer shall furnish such returns by such dates and to such authority as may be prescribed." STA |
Sub section(2) of that section is not necessary for our present purpose. STA |
Sub section(3) of that section reads: "(3) it a dealer fails to comply with the requirement of a notice issued under sub section (1) or a registrate dealer fails to furnish his return for any period within prescribed time to the prescribed authority without any sufficient cause, the Commissioner may, after giving such ... |
Sections 11 and 11A are important for our present purpose. Ratio |
They deal with assessment and assessment on turnover escaping assessment. Ratio |
They, to the extent necessary for our present purpose read: "11(1).If the Commissioner is satisfied that the returns furnished by a dealer in respect of any period are correct and complete, he shall assess the dealer on them, (2) If the Commissioner is not so satisfied he shall serve the dealer with a notice appointing... |
(4) If a registered dealer (a) does not furnish returns in respect of any period by the prescribed date or (b) having furnished such returns fails to comply with any of the terms of a notice issued under sub section (2), or (c) has not regularly employed any method of accounting or if the method employed is such that, ... |
Section 11A provides: "(1).If in consequence of any information which has come into possession, the Commissioner is satisfied that any turnover of a dealer during any period has been under assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner m... |
The assessment or reassessment made under sub section (1) shall be at the rate at which it would have been made, had there been no under assessment or escapement. STA |
Nothing in sub sections (1) and (2) (i) shall apply to any proceeding (including any notice issued) under Sections 11 or 22A or 22B, and (ii) notwithstanding any judgment, decree or order 'of a Court or Tribunal, shall be deemed ever to have been applicable to such proceeding or notice. STA |
(b) The validity of any such proceeding or notice shall not be called in question merely on the ground that such proceeding or notice was inconsistent with the provisions of sub sections (1) and (2). STA |
Rule 19 of the rules framed under the Act provides that every registered dealer should furnish to the appropriate sales tax 670 officer his quarterly return in the prescribed form within one calendar month from the expiry of the quarter to which the return relates. STA |
Each of such returns submitted should be accompanied by a treasury challan in the form prescribed in proof of the fact that he had paid the tax payable on the basis of his return, The only other rule relevant for Our present purpose is r. 32 in Part VII of the Rules, which deals with assessment of tax and/ or penalty. ... |
That rule provides that where a registered dealer has rendered himself to a best judgment assessment as well as penalty by reason of his default in furnishing the prescribed return or re turns in respect of any period by the prescribed date, the assessing authority shall serve on him a notice in form 12 specifying the ... |
That rule further pro vides that no such notice shall be necessary where the dealer, having appeared before the assessing authority, waives such notice. STA |
Now we may turn to the questions formulated for decision. Ratio |
As mentioned earlier, the main contention advanced on behalf of the appellants is that sub section(3) of section 11A has brought about a discrimination between those dealers proceeded against under section 11(4)(a) and those dealt with under section 11A. Ratio |
The contention advanced on behalf of the appellants is that the turnover of a registered dealer who has failed to submit his return and also to deposit the tax due from him, has escaped assessment; the case of such a dealer comes both within section 1 1 (4) (a) as well as section 11A; therefore, he can be dealt with un... |
Where section 11A prescribes a period of limitation for a proceeding under that provision, in view of sub section 3 of section 11A a proceeding under section 11(4)(a) can be initiated at any time; under those circumstances it is open to the authorities to proceed against some of the same class of dealers under section ... |
It was said on their behalf that it is well settled that in its application to legal proceedings, article 14 assures to every one the same rules of evidence and modes of procedure; in other words, the same rule must exist for all in similar circumstances. ARG |
On the other hand, it was urged on behalf of the revenue that section 11(4)(a) deals only with registered dealers who have certain advantages under the Act, whereas section 11A deals with dealers who do not come either under section 11(4) or section 11(5), and therefore the classification of dealers made under the vari... |
671 We have now to see whether the dealers who come within the mischief of section 11(4)(a) can also be dealt with under section 11A. Ratio |
Before a person can be dealt with under section 11A, it must be shown that in consequence of any information which has come into his possession, the Commissioner is satisfied that any turnover of that dealer during any period has been under assessed or has escaped assessment or assessed at a lower rate or any deduction... |
Quite plainly the expression 'dealer ' in section IIA(1) includes both registered and unregistered dealers. Ratio |
In this case we are concerned with the escapement of assessment. Ratio |
Therefore the first question that arises for decision is whether it can be said that the appellants ' turnovers for the period 1 5 52 to 30 10 55 had escaped assessment. Ratio |
There is no dispute that those turnovers had not been assessed. Ratio |
From the fact that those turnovers had not been assessed, can it be said that they had escaped assessment? In Maharaj Kumar Kamal Singh vs Commissioner of Income Tax, Bihar and Orissa,(1), this Court laid down that the expression "has escaped assessment" in section 34(1)(b) of the Indian Income Tax Act, 1922 is applica... |
In Commissioner of Income Tax, Bombay City vs M/s. Narsee Nagsee and Co., Bombay(2) interpreting the words "profits escaping assessment" in section 14 of the Business Profits Tax Act, 1947, this Court held that those words apply equally to cases where a notice was received by the assessee but resulted in no assessment,... |
Kapur, J. speaking for the majority of Judges in that case, observed (at p. 993 of the report) that it is well settled that an income escapes assessment when the process of assessment has not been initiated as also in a case where it has resulted in no assessment after the completion of the process of assessment. Ratio |
The true scope of the expression "escaped assessment" in section 11A came up for consideration before this Court in Ghanshyam Das vs Regional Assistant Commissioner of Sales Tax, Nagpur(3). PRE |
This is what Subba Rao, J. (as he then was) who delivered the judgment of the majority of the Judges, observed in that regard: "In Commissioner of Income Tax, Bombay vs Pirojbai N. Contractor the words 'escaped assessment ' in the Indian Income tax Act were defined. PRE |
It was held therein that the said words were wide enough to include cases where no notice under s.22(2) of the Income tax Act had been issued to the assessee and therefore his income had not been assessed at all under section 23 thereof. PRE |
The said view has been assumed to be correct by this Court in Maharaj Kumar Kamal Singh vs Commissioner of Income Tax, Bihar and Orissa [1959] Supp. 1 S.C.R. 10 and Maharajadhiraj Sir Kameshwar Singh vs State of Bihar ([1960] 1 S.C.R. 322) and extended to cover a, case where the first assessment was made in due course ... |
This Court, in Commissioner of Income tax, Bombay vs Narsee Nagsee and Co. ([1960] 3 S.C.R. 988), construing the provisions of section 14 of the Business Profits Tax Act, 1947, reviewed the law on the subject and came to the following conclusion: All these cases show that the words "escaping assessment" apply equally t... |
It is true that the said decisions were given with reference to either section 34(1) of the Income Tax Act or section 14 of the Business Profits Tax Act but so far as the present enquiry is concerned the said sections are in pari materia with section 11A of the Act. Ratio |
In construing the meaning of the expression 'escaped assessment ' in section 11A of the Act there is no reason why the said expression should bear a more limited meaning than what it bears under the said two Acts. Ratio |
All the three Acts are taxing statutes and the three relevent sections therein are intended to gather the revenue which has improperly escaped. Ratio |
A division Bench of the Madras High Court in the State of Madras vs Balu Chettiar (7 S.T.C. 519) following the decision of a Full Bench of that Court, held that where an assessee did not tile at any time a return of his turnover for a year and, therefore, there was no assessment made, the turnover escaped assessment. P... |
It was observed therein: 'Whether it was a case of omission or of deliberate concealment on the part of the assessee, he did not submit any return. PRE |
It was his default that led to the escape of the turnover for 1951 52 from assessment to the tax lawfully due. PRE |
It was the whole of the turnover for that year that escaped assessment. ' It is not necessary to multiply citations. PRE |
We, therefore, hold that the expression 'escaped assessment ' in section 11A of the Act includes that of a turnover which has not been assessed at all, because for one reason or other no assess ment proceedings were initiated and therefore no assessment was made in respect thereof." PRE |
In one of the appeals dealt with in that judgment, i.e. C.A. No. 102 of 1901, this Court had to consider whether a case under 673 (a) also comes under section 11A. PRE |
The Court answered that question in the affirmative seen earlier it was the duty of the appellants not only to submit their quarterly returns but send along with those returns the treasury challans in proof of the payment of the tax admittedly due from them. Ratio |
As they have failed to do so within the prescribed period, it follows that the turnovers in question had escaped assessment. Ratio |
This takes us to, the next question whether in the instant case the assessing authority can be said to have been satisfied about the escapement of the assessment as a consequence of any information which had come into his possession. Ratio |
From the notices issued in 1955 as well as later on, it is clear that the assessing authorities were satisfied about the escapement of the assessment due from the appellants. Ratio |
But the real question is whether they were so satisfied "in consequence of any information which had come into their possession". Ratio |
The assessing authorities knew that the appellants had neither submitted their returns nor treasury challans in proof of the payment of the tax due from them. Ratio |
From that circumstance it is reasonable to, hold that in consequence of the information that the appellants had not submitted their returns as well as the treasury challans the assessing authority should have been stisfied about the escapement of the assessment. Ratio |
It was urged on behalf of the revenue that 'information ' contemplated by s.11A should be from some outside source and not something that could be gathered by the assessing authority from his own records. ARG |
According to the revenue in the instant case there was no information from any outside source, therefore, it cannot be said that the assessing authority was satisfied about the escapement of tax in consequence of any information which has come into its possession. Ratio |
In our view, this contention is untenable. Ratio |
In Maharaj Kumar Kamal Singh vs Commissioner of Income Tax, Bihar and Orissa, this Court held that the word 'information ' in section 34(1)(b) of the Income Tax Act, 1922, includes information as to the true and correct state of the law and so would cover information as to the relevant judicial decisions. PRE |
It was laid down therein that that information need not be about any fact; it may be even as to the legal position. PRE |
In other words, the term 'information ' in section 34(1)(b) of the Income Tax Act 1922 really means knowledge. PRE |
In Salem Provident Fund Society Ltd. vs Commissioner of Income Tax madras(1) a division bench of the Madras High Court interpreting the scope of the words 'information which has come into his possession ' found in section 34 of the Indian Income Tax Act, observed thus: "We are unable to accept the extreme proposition t... |
Suppose a mistake in the original order of assessment is not discovered by the Income Tax Officer himself on further scrutiny but it is brought to his notice by another assessee or even by a subordinate or a superior officer, that would appear to be information disclosed to the Income Tax Officer. PRE |
If the mistake itself is not extraneous to the record and the informant gathered the information from the record, the immediate source of information to the Income, Tax Officer in such circumstances is in one sense extraneous to the record. PRE |
It is difficult to accept the position that while what is seen by another in the record is 'information ' what is seen by the Income Tax officer himself is not information to him. PRE |
In the latter case he just informs himself. PRE |
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