Skip to content


K. Mohd. Osman Saheb and Co. Vs. State of Andhra Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petition No. 2679 of 1969
Judge
Reported in[1971]27STC303(AP)
AppellantK. Mohd. Osman Saheb and Co.
RespondentState of Andhra Pradesh and ors.
Appellant AdvocateT. Anantha Babu, Adv.
Respondent AdvocateD.V. Sastry, Government Pleader for Tax Matters
DispositionPetition allowed
Excerpt:
.....years from the expiry of the year to which the assessment relates. even excluding this period, the fresh assessment should have been made before 13th june, 1969. admittedly in this case, the notice proposing to make a fresh assessment as well as the final order of assessment were made after the expiry of the period of four years as computed above. both the notice as well as the final order of assessment are, therefore, clearly barred by time and the commercial tax officer could not have exercised the jurisdiction under section 14(1) of the act to make fresh assessment after the expiry of the. on the other hand, if he finds that the return is incorrect or incomplete he gives an opportunity to the dealer to prove the correctness or completeness of the return and makes an enquiry and..........1966, set aside the assessment and remitted the matter to the commercial tax officer for making a fresh assessment. on 22nd june, 1969, the commercial tax officer issued a notice to the petitioner proposing to make a fresh assessment and to levy penalty. this writ petition was filed on 21st july, 1969. subsequently on 16th august, 1969, the commercial tax officer passed the assessment order. the contention of the petitioner is that this assessment is made under section 14(1) of the act and that the assessment has to be made within four years from the end of the assessment year, i.e., before 31st march, 1969. under section 14(7) of the act as amended with effect from 1st july, 1968, the period between 16th february, 1966, the date of the assessment order, and 29th april, 1966, the date.....
Judgment:

Ramachandra Rao, J.

1. This is an application for the issue of a writ of prohibition directing the Commercial Tax Officer, Hindupur, to forbear from assessing the petitioner to tax or penalty under the Andhra Pradesh General Sales Tax Act for the year 1964-65. It appears that after filing of the writ petition, final assessment was made on 16th August, 1969. The petitioner therefore prays for the issue of a writ of certiorari for quashing the aforesaid order of assessment.

2. The brief facts giving rise to this writ petition are as follows:

The petitioner is a partnership firm, registered as a dealer under the provisions of the Andhra Pradesh General Sales Tax Act and the Central Sales Tax Act. It purchases hides and skins within the State and sells them within the State as well as in the course of inter-State trade and commerce. For the year 1964-65 the Commercial Tax Officer, Proddatur, made an assessment by his order dated 16th February, 1966, under Section 14(1) of the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter called the Act). It appears that the assessment was made without giving the petitioner an opportunity to make representations. On appeal, the Assistant Commissioner, Commercial Taxes, Andntapur, by his order dated 29th April, 1966, set aside the assessment and remitted the matter to the Commercial Tax Officer for making a fresh assessment. On 22nd June, 1969, the Commercial Tax Officer issued a notice to the petitioner proposing to make a fresh assessment and to levy penalty. This writ petition was filed on 21st July, 1969. Subsequently on 16th August, 1969, the Commercial Tax Officer passed the assessment order. The contention of the petitioner is that this assessment is made under Section 14(1) of the Act and that the assessment has to be made within four years from the end of the assessment year, i.e., before 31st March, 1969. Under Section 14(7) of the Act as amended with effect from 1st July, 1968, the period between 16th February, 1966, the date of the assessment order, and 29th April, 1966, the date of the appellate order, which comes to two months and thirteen days, should be excluded in computing the period of four years. Even excluding that period, the period of four years expires by 13th June, 1969. The petitioner, therefore, contends that the notice issued on 22nd June, 1969, and the final assessment made on 16th August, 1969, are both beyond the period of four years prescribed by Section 14(1) of the Act and therefore the proceedings are without jurisdiction and liable to be struck down as void. It was also contended that the notice issued by the Commercial Tax Officer proposing to make a fresh assessment was vague and incompetent.

3. But the only point which has been stressed by the learned counsel for the petitioner in this writ petition is with regard to the question of limitation. In order to appreciate this contention, it is necessary to notice the provisions of Sub-sections (1) and (7) of Section 14 of the Act which read as follows:

14. (1) If the assessing authority is satisfied that any return submitted under Section 13 is correct and complete, he shall assess the amount of tax payable by the dealer on the basis thereof; but if the return appears to him to be incorrect or incomplete he shall, after giving the dealer a reasonable opportunity of proving the correctness and completeness of the return submitted by him and making such inquiry as he deems necessary, assess to the best of his judgment, the amount of tax due from the dealer, An assessment under this section shall be made only within a period of four years from the expiry of the year to which the assessment relates.

* * *14. (7) Where an assessment made under this section has been set aside by any court or other competent authority under this Act for any reason, the period between the date of such assessment and the date on which it has been set aside shall be excluded in computing the period of four years or six years, as the case may be, specified in this section for the purpose of making any fresh assessment.

4. The other provisions of the said section are not relevant and hence omitted. Section 14(1) of the Act applies to cases where a dealer files a return as required by Section 13. It is common ground that the assessment in question is made under Section 14(1). Under the said section, the assessment should be made only within a period of four years from the expiry of the year to which the assessment relates. There is no dispute that the year 1964-65 expired on 31st March, 1965. The assessment should have been completed within four years from the aforesaid date, i.e., before 31st March, 1969. Under Section 14(7) of the Act, however, the period between the date of assessment and the date on which it has been set aside should be excluded in computing the period of four years for making a fresh assessment. The period to be so excluded comes to two months and thirteen days. Even excluding this period, the fresh assessment should have been made before 13th June, 1969. Admittedly in this case, the notice proposing to make a fresh assessment as well as the final order of assessment were made after the expiry of the period of four years as computed above. Both the notice as well as the final order of assessment are, therefore, clearly barred by time and the Commercial Tax Officer could not have exercised the jurisdiction under Section 14(1) of the Act to make fresh assessment after the expiry of the. period of four years.

5. Sri D.V. Sastry, the learned counsel for the respondents sought to contend that the word 'assessment' is of wide import and it takes in not merely the final order of assessment but every step in the process of making an assessment and that it is enough if the assessment proceedings are initiated before the expiry of four years though the final order of assessment may go beyond the said period. No doubt the word 'assessment' may have a comprehensive meaning and may sometimes mean the whole procedure laid down for imposing the tax or penalty, but the said expression must be interpreted with reference to the context in which it is used. It is pertinent to notice that under Section 14(1), the proceedings for making an assessment have already been commenced by the dealer filing a return as required by Section 13 of the Act. Thereafter, the assessing authority, if it accepts the return, assesses the amount of tax payable by the dealer on the basis of the aforesaid return. On the other hand, if he finds that the return is incorrect or incomplete he gives an opportunity to the dealer to prove the correctness or completeness of the return and makes an enquiry and assesses to the best of his judgment. Therefore, the expression 'assessment' occurring in the last sentence of Section 14(1) of the Act is only referable to the final order of assessment and not the whole procedure for imposing the tax. This interpretation also gains strength from the provisions of Section 14(7).

6. Section 14(7) of the Act applies to cases 'where an assessment made under this section has been set aside'. The assessment made can only refer to the final order imposing the tax and not to any other step in the process of imposing the said liability. The period which should be excluded under Section 14(7) is the period between the date of the final order of assessment and the date on which the said final order is set aside. This gives an indication that the expression 'assessment' occurring in Section 14(1) and Section 14(7) of the Act applies only to the final order imposing the liability.

7. Sri D.V. Sastry relies upon a decision of the Supreme Court in Sales Tax Officer v. Sudarsanam Iyengar & Sons [1970] 25 S.T.C. 252 (S.C.), in support of his contention that it is enough if the assessment proceedings are initiated within a period of four years. In the said case, Rule 33 of the Travancore-Cochin General Sales Tax Rules, 1950, which fell for consideration of their Lordships is in the following terms:

If for any reason the whole or any part of the turnover of business of a dealer or licensee 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 of 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.

8. It was contended for the appellant before their Lordships that under Rule 33, the proceedings have to commence within three years next succeeding 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. On the other hand it was contended for the respondents therein that the final determination of the turnover which had escaped the assessment and the assessment of the tax have to be done within three years. But their Lordships rejected the contention of the respondents and held that:

It was difficult to accept that in the context of sales tax legislation the use of the words 'proceed to assess' and 'determine' would lead to different consequences.

9. On a construction of the language of Rule 33, their Lordships held that it is enough if the proceedings are commenced within a period of three years though the final order of assessment may be made after the aforesaid period. Their Lordships, however, pointed out at page 255 that:

Assessment is a comprehensive word and can denote the entirety of proceedings which are taken with regard to it. It cannot and does not mean a final order of assessment alone unless there is something in the context of a particular provision which compels such a meaning being attributed to it.

10. Again their Lordships observed in the penultimate paragraph of the judgment as follows:

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 made. Then the taxing authorities would certainly be debarred from completing the assessment beyond the period prescribed as was the case in Sub-section (3) of Section 34 of the Income-tax Act, 1922....

11. From these observations, it is clear that the expression 'assessment' has to be construed and interpreted according to the context in which it appears. We have, therefore, to see whether in the context in which the expression 'assessment' appears in Section 14(1) of the Act, it should be given the comprehensive meaning as including the whole procedure for imposing the liability upon the taxpayer or whether it was only used in the limited sense of denoting the determination of the tax payable. As we have already mentioned, the said expression in the context in which it appears, can only refer to the final order of determination of the tax payable and not to the entire procedure for making an assessment. In the instant case the final order of assessment having been made beyond the period of four years even after excluding the period between the date of the original assessment and the date on which it was set aside, the order of fresh assessment made on the petitioner is clearly barred by time and is devoid of jurisdiction.

12. Even the notice issued on 22nd June, 1969, proposing to make a fresh assessment is beyond the period of four years and consequently the said notice as well as the further order of assessment made in pursuance thereof are clearly without jurisdiction.

13. For the foregoing reasons, the proceedings of the Commercial Tax Officer, Hindupur, in P.O.R. 6/65-66 dated 16th August, 1969, are quashed and the writ petition is allowed with costs. Advocate's fee Rs. 100.


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