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Sri Ram Swarath Singh Vs. Commissioner of Sales Tax - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case Number Sales Tax Reference No. 115 of 1970
Judge
Reported in[1972]29STC134(All)
AppellantSri Ram Swarath Singh
RespondentCommissioner of Sales Tax
Appellant Advocate Bharatji Agrawal, Adv.
Respondent Advocate Standing Counsel
Excerpt:
- .....the proceedings for assessing the assessee's escaped turnover started on the basis of the first notice served on him on 24th february, 1959. the date fixed for hearing was 11th march, 1959. long thereafter the second notice was issued in february, 1962, for the assessing authority on that date could not elicit from the file of the case as to what had happened on 11th march, 1959. the second notice contains the same facts which the first notice contained. neither it adds to nor subtracts from the first notice. it was accordingly a needless repetition of the first notice. so, in our judgment, it could not be the basis of taking proceedings under section 21(1). the basis of taking proceedings under that provision is the first notice which was served on the assessee on 24th february,.....
Judgment:

S.N. Dwivedi, J.

1. This is a reference under Section 11(1) of the U. P. Sales Tax Act by the Additional Judge (Revisions) Sales Tax, Gorakhpur. He has referred, along with the statement of case, these two questions :

(1) Whether the second notice fixing 17th March, 1962, for hearing could be issued under the first proviso to Sub-section (2) of Section 21 of the U. P. Sales Tax Act during the pendency of the proceedings started on 24th February, 1959, when the first notice was issued?

(2) Whether service of the second notice under Section 21 of the Act would extend the period of 4 years for a further period of one year from the date of service of the notice ?

2. It appears to us that these questions are not happily framed. Accordingly we reframe a single question as follows:

Whether on the facts and in the circumstances of the case the assessment made under Section 21(1) is validly made within one year of the date of the service of the second notice issued after the service of the first notice under Section 21(1) on 24th February, 1959, even though the period of four years from the end of the assessment year 1957-58 had expired before the date of the assessment order ?

3. Material facts giving rise to this reference are these : The turnover of the assessee for the assessment year 1957-58 was not determined under Section 7 of the Act. Notice under Section 21 of the Act was issued to him. It was served on him on 24th February, 1959. The date fixed for hearing was 11th March, 1959. Long thereafter on 17th March, 1962, the Sales Tax Officer served another notice under Section 21 of the Act on the assessee. The assessment was then made on 17th December, 1962. The assessee did not appear before the Sales Tax Officer.

4. The assessee filed an appeal against the order of the Sales Tax Officer. Before the appellate authority he raised two points. Firstly, he said that the second notice was not served on him at all and that accordingly the assessment was made after the expiry of four years from the end of the assessment year and was invalid. Secondly, he said that a second notice could not be issued by the Sales Tax Officer in the circumstances of the case, and that accordingly the assessment order, having been made after the expiry of four years from the end of the assessment year, was invalid. The appellate authority remanded the case to the Sales Tax Officer for enquiry into the question whether the second notice was served on the assessee.

5. Feeling aggrieved with the order of the appellate authority the assessee filed a revision and raised the same two points before the revising authority. The revising authority agreed with the appellate authority and dismissed the revision. Hence this reference.

6. Section 21(1) provides:

If the assessing authority has reason to believe that the whole or any part of the turnover of the dealer has, for any reason, escaped assessment to tax for any year, the assessing authority may, after issuing notice to the dealer, and making such enquiry as may be necessary, assess or reassess him to tax....

7. The material part of Sub-section (2) of Section 21 reads:

No order of assessment under Sub-section (1)...shall be made for any assessment year after the expiry of four years from the end of such year:

Provided that where the notice under Sub-section (1) has been served within such four years the assessment or reassessment to be made in pursuance of such notice may be made within one year of the date of the service of the notice even if the period of four years is thereby exceeded:....

8. The main part of Sub-section (2) of Section 21 prescribes a period of limitation for assessing the escaped turnover under Section 21(1). Tax is to be assessed within four years from the end of the assessment year. So in the instant case under the main part of Sub-section (2), the assessment could be made on or before 31st March, 1962. But the assessment was actually made on 17th December, 1962. So the assessment was, prima facie, time-barred. But the standing counsel relies on the first proviso to Sub-section (2). The first proviso says that where the notice under Sub-section (1) has been served within four years from the end of the assessment year, the assessment may be made within one year of the date of the service of the notice even though the period of four years prescribed by the main part of Sub-section (2) has already expired. The second notice was issued on 15th February, 1962. The assessment was made on 17th December, 1962. So it was within one year from the date of the service of the second notice. If the first proviso applies to the facts of the case, then the assessment will be valid. If, however, the first proviso is not attracted to the facts of the case, the assessment will be invalid. Section 21(1) provides that the escaped turnover may be assessed after issuing notice to the dealer. So the issue of a notice to the dealer is a condition precedent to the assessment of the escaped turnover. The first proviso to Sub-section (2) says that where 'the notice under Sub-section (1) has been served within such four years', the assessment may be made within one year of the date of the service of the notice. The expression 'the notice under Sub-section (1) ' refers to the notice which the assessing authority has served on the dealer for the purpose of assessing his escaped turnover. In the present case two notices had been issued. One was served on 24th February, 1959, and the other near about February, 1962. Which of these notices is 'the notice under Sub-section (1)' The notice under Sub-section (1) is the notice which, when served on the dealer, justifies the assessing authority 'in taking proceedings' against him. (Vide Y. Narayana Chetty v. Income-tax Officer [1959] 35 I.T.R. 388 at p. 392 (S.C.). It may be observed that the proceedings for assessing the assessee's escaped turnover started on the basis of the first notice served on him on 24th February, 1959. The date fixed for hearing was 11th March, 1959. Long thereafter the second notice was issued in February, 1962, for the assessing authority on that date could not elicit from the file of the case as to what had happened on 11th March, 1959. The second notice contains the same facts which the first notice contained. Neither it adds to nor subtracts from the first notice. It was accordingly a needless repetition of the first notice. So, in our judgment, it could not be the basis of taking proceedings under Section 21(1). The basis of taking proceedings under that provision is the first notice which was served on the assessee on 24th February, 1959.

9. The use of the definite article 'the' before 'notice' in the first proviso supports our interpretation of the expression 'the notice under Sub-section (1)' in that proviso. The definite article suggests that the notice is one which justifies the assessing authority in taking proceedings against a dealer. It cannot be a notice which is a needless repetition of the first notice. Accordingly as long as proceedings were continuing on the basis of the first notice, there was no need for another notice for taking proceedings under that section on the same facts and in the same circumstances.

10. In the result our answer to the question, as reframed by us, is in the negative. The assessee shall get his costs which we assess at Rs. 100.


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