Skip to content


Pesala Venkata Subbayya and Bros. Vs. State of Andhra - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case Number Tax Revision Case No. 1 of 1954
Judge
Reported in[1956]7STC242(AP)
AppellantPesala Venkata Subbayya and Bros.
RespondentState of Andhra
Appellant Advocate P. Babul Reddy and S.O. Chowdary, Advs.
Respondent Advocate M. Seshachalapathi, The Government Pleader
DispositionPetition dismissed
Excerpt:
.....a case where a provisional assessment has been made under sub-rule (3) and, as no such provisional monthly assessment was made in the present case, the yearly assessment made under that rule is bad. if no return is filed or if the return filed is not acceptable, sub-rule (4) provides for the determination of turnover to the best of the commercial tax officer's judgment. if the return, say for january of a year, could be taken up for assessment either under sub-rule (3) or sub-rule (4) in the month of december, we fail to see anything in the rules to prevent the assessing authority from taking up for assessment all the monthly returns submitted in form a-3 up to the point of assessment ;still the basis of assessment is only the monthly return. the collector made the assessment to the best..........etc. at nellore. in respect of the assessment year 1951-52, they elected to be assessed on monthly turnover basis. monthly returns in form a-3 were submitted by the petitioners. the deputy commercial tax officer, on a surprise inspection, discovered that a turnover of rs. 1,16,875-12-11 was not included in the return submitted for april and may, 1951. he did not make any provisional assessment month after month separately. instead, on 31st march, 1953, he made a final assessment for the whole year on a turnover of rs. 6,56,073-0-8 of which rs. 2,00,000 was an addition made by him on the basis of supression of turnover in the returns for the months of april and may, 1951. the assessees questioned the validity of that order by preferring an appeal to the commercial tax officer. but.....
Judgment:

Subba Rao, C.J.

1. The facts in this revision case are not in dispute and they may be briefly stated. The petitioners are a firm of wholesale dealers dealing in pulses, provisions etc. at Nellore. In respect of the assessment year 1951-52, they elected to be assessed on monthly turnover basis. Monthly returns in Form A-3 were submitted by the petitioners. The Deputy Commercial Tax Officer, on a surprise inspection, discovered that a turnover of Rs. 1,16,875-12-11 was not included in the return submitted for April and May, 1951. He did not make any provisional assessment month after month separately. Instead, on 31st March, 1953, he made a final assessment for the whole year on a turnover of Rs. 6,56,073-0-8 of which Rs. 2,00,000 was an addition made by him on the basis of supression of turnover in the returns for the months of April and May, 1951. The assessees questioned the validity of that order by preferring an appeal to the Commercial Tax Officer. But the appeal was dismissed. An appeal preferred against that order to the Sales Tax Appellate Tribunal was also rejected. In the revision, the assessees question the validity of the assessment on the ground that the Deputy Commercial Tax Officer had no power to assess the petitioners for the whole year without making a provisional assessment every month.

2. To appreciate this argument, the relevant provisions of the Madras General Sales Tax Act and the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, may be noticed.

3. Section 3 (1) :-'Subject to the provisions of this Act-

(a) every dealer shall pay for each year a tax on his total turnover for such year.

Section 3 (4) :-'For the purposes of this section and the other provisions of this Act, turnover shall be determined in accordance with such rules as may be prescribed :

Provided that no such rules shall come into force unless they are approved by a resolution of the Legislative Assembly.Section 3 (5) :-'The taxes under Sub-sections (1) and (2) shall be assessed, levied and collected in such manner and in such instalments if any as may be prescribed.

Section 9 (1) :-'Every dealer whose turnover is ten thousand rupees or more in a. year shall submit such return or returns relating to his turnover in such manner and within such periods as may be prescribed.

Section 9 (2) :-'(a) If the assessing authority is satisfied that any return submitted under Sub-section (1) is correct and complete, he shall assess the dealer on the basis thereof.

(b) If no return is submitted by the dealer under Sub-section (1) before the date prescribed or specified in that behalf or if the return , submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall assess the dealer to the best of his judgment.

4. Section 3 is the charging and taxing section. Section 9 prescribes the procedure to be followed by the assessing authority. Both the sections provide for the making of statutory rules prescribing the manner of determining the turnover and the mode of assessing, levying and collecting the tax.

5. Rules 7 to 12 provide for yearly assessment on an estimate and for the collection of tax in monthly instalments, subject to re-adjustment at a later stage. But another set of rules provide for an alternative method of assessment. Under Rule 13, in lieu of the method of assessment prescribed in rules 7 to 12, the method prescribed in Sub-rules (2) to (6) of Rule 13 may be adopted in the case of dealers, whose net turnover exceeds Rs. 20,000. Under Sub-rule (2) the dealer shall submit so as to reach the assessing authority on or before the 25th day of every month a return in Form A-3 showing the gross and net turnover for the preceding month and the amount or amounts actually collected by way of tax or taxes during that month. Under Sub-rule (3) the return so filed shall, subject to the provisions of Sub-rule (4) be provisionally accepted. Under sub rule (4), if no return is submitted in respect of any month before the 25th day of the succeeding month, or, if the return submitted is incorrect or incomplete, the assessing authority, after giving the necessary opportunity , has the power to determine the turnover to the best of his judgment. Sub-rule (5) says that, after the close of the year in which the provisional assessment as laid down in Sub-rule (3) has been made, the assessing authority shall, after such scrutiny of the accounts and after such enquiry as he considers necessary, satisfy himself that the returns filed are correct and complete and finally assess under a single order on the basis of the returns, the tax or taxes payable under any of the Sections 3, 5, or 8B(2) or under any notifications issued under Section 6 (1) for the preceding year. The proviso added to that sub-rule on 24th April, 1953, need not be considered as the assessment in the present case was made prior to the amendment.

6. On the basis of the aforesaid procedure, it is contended that Sub-rule (5) applies only to a case where a provisional assessment has been made under Sub-rule (3) and, as no such provisional monthly assessment was made in the present case, the yearly assessment made under that rule is bad. If the argument of the learned counsel be accepted, every yearly assessment made even on the basis of the monthly returns would be void unless provisional assessments were made for every month. If the rules bear out that construction, he should succeed but we do not think that that was the intention of the rule-making authority.

7. A combined reading of the provisions of Sub-rules (3), (4) and (5) disclose that the scheme of assessment is logical and self-contained. They are intended to provide for a machinery which, at the same time, lightens the burden on the assessee and facilitates collection by the authorities. They are not intended to and cannot, obviously override the provisions of Sections 3 and 9 of the Act. They should, therefore, be construed if possible consistent with the provisions of the said sections. Sub-rules (3) and (4) should be read together for Sub-rule (3) itself is subject to the provisions of Sub-rule (4). Both the rules together provide for a monthly assessment. An assessee may make a correct return and, if it is accepted, it amounts to a provisional assessment. The fact that instead of the word 'assessment', the word used is 'accepted' in Sub-rule (3) cannot make any difference. If the return is accepted, it can only mean that the turnover is assessed at that figure. Indeed, the fact that the rules do not contemplate a difference between acceptance and assessment is clear from the fact that Sub-rule (5) describes acceptance in Sub-rule (3) as provisional assessment. If no return is filed or if the return filed is not acceptable, Sub-rule (4) provides for the determination of turnover to the best of the Commercial Tax Officer's judgment. Sub-rule (5) says that, after the close of the year in which provisional assessment as laid down in Sub-rule (3) has been made, the assessing authority can satisfy himself again whether the returns filed are correct and complete and finally assess under a single order. In this sub-rule, though Sub-rule (4) is not specifically mentioned, in the context the provisional assessment referred to in that rule is provisional assessment made under Sub-rules (3) and (4), for we have already pointed out that the assessment under Sub-rule (3) is subject to the provisions of Sub-rule (4). If so, under Sub-rule (5), a final assessment can be made on the basis of the monthly returns.

8. It is then said that the word 'after' in Sub-rule (5) indicates that provisional assessment is a condition precedent for the making of the final assessment under Sub-rule (5). It is true that ordinarily it is expected a monthly assessment would be made. But the jurisdiction to make an yearly assessment does not depend upon the existence of monthly assessments though the basis of both is the monthly return. The word 'after' does not imply a condition precedent but denotes a point of time or stage when ordinarily the yearly assessment is ;to be made, for Sub-rule (4) does not prescribe any particular time within which the monthly assessment should be made. It may be because of the default made by the assessee in furnishing information, or, for any other reason there may be some delay but there is nothing in the rule which says that, at a later stage, the assessment cannot be made. So long as the assessment is made on monthly returns, we are of the view that the yearly assessment is valid.

9. This view was accepted by a Division Bench of the Madras High Court consisting of Satyanarayana Rao and Rajagopalan, JJ., in Tax Revision Case No. 155 of 1953 where the learned Judges observed as follows :-

Neither in Sub-rule (3) nor in Sub-rule (5) was there any time limit within which the assessing authority had to complete the assessment. The basis of assessment no doubt remained the monthly returns submitted by the assessee under Sub-rule (2) but the assessing authority could, for instance, take up a return submitted for January of a year in the month of February either in March or much later either in the same year or in the next year, subject to the other statutory requirements with which we are not concerned at this stage. If the return, say for January of a year, could be taken up for assessment either under Sub-rule (3) or Sub-rule (4) in the month of December, we fail to see anything in the rules to prevent the assessing authority from taking up for assessment all the monthly returns submitted in Form A-3 up to the point of assessment ; still the basis of assessment is only the monthly return.

10. Later on, the learned Judges proceeded to state :-

Merely because the assessing authority took up for assessment the returns for all the months at the same time, that did not alter the basis of the assessment, which was still the monthly return submitted by the assessee.

11. We agree with the aforesaid observations.

12. Learned counsel then contended that a statute which imposes a duty, must be strictly construed and so construed, sub-rule-(5) does not enable the making of a final assessment in the absence of monthly returns. Dealing with such a contention Lord Esher, M.R., in Gowan v. Wright 18 Q.B.D. 201 made the following observations, which would be apposite :-

I find in Maxwell on the Interpretation of Statutes page 184 (page 180 in the Seventh edition) in a section headed, construction against impairing obligations or permitting advantage from one's own wrong, the principle resulting from the various authorities there collected is expressed as follows : On the general principle of avoiding injustice and absurdity any construction would be rejected, if escape from it were possible which enabled a person to defeat a statute or impair the obligation of his contract by his own act or otherwise to profit by his own wrong.

13. Curgenven and Sundaram Chetti, JJ., in Gopalaswami v. Secretary of State for India [1933] I.L.R. 57 Mad. 237, applied the principle in a case arising out of the Cotton Duties Act. Sub-section (1) of Section 9 of that Act reads ;-

The Collector shall assess the duties payable in respect of the period to which the return relates and unless the amount thereof is immediately tendered shall cause a notice, in such form as may be prescribed by any rules under this Act, to be served on the owner requiring him to make payment of the amount assessed within ten days of the date of service of notice.

14. The assessee did not make the return. The Collector made the assessment to the best of his judgment. It was contended that the Collector had no power to do so on the ground that Sub-section (1) of Section 9 prescribes the making of a return a condition precedent for the assessment. Dealing with that contention, the learned Judge observed at page 242 :-

The return in fact is only intended to facilitate assessment and cannot be described as an indispensable pre-requisite of it.

15. The learned Judge went further and observed:-

But even if the Act and the rules thereunder were less explicit, I think that the liability to duty being clear, it would be improper to conclude that no means exist of realising it unless the language of the Act compelled such a view.

16. As we have already stated, Section 3 of the General Sales Tax Act is the charging section and Section 9 prescribes the procedure for collection. Sub-rules (3) and (4) as stated supra should be read together. Sub-rule (5) only enables the Commercial Tax Officer to make an yearly assessment and there is nothing in that rule to indicate that, in cases where no returns are made, the authority has no power to make an assessment to the best of his judgment. Sub-rule (5) is only a continuation of the procedure prescribed by Sub-rules (3) and (4). The rule may not be happily worded but, when it says that the Commercial Tax Officer shall satisfy himself whether the returns filed are correct and complete, it can only mean when the returns are filed. It can even be held that the word 'complete' is comprehensive enough to take in a case where all the monthly returns are not filed. When the liability is clear and the duty on the part of the Commercial Tax Officer to assess is also not in doubt, we think Sub-rule (5) can reasonably be construed, without doing violence to the language, as being intended to cover all the cases contemplated by rules 3 and 4. In this view, the assessment made at one point of time is valid as the assessment was based only on monthly returns and in the manner provided by Rule 4.

17. The revision fails and is dismissed with costs. Advocate's fee is fixed at Rs. 100.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //