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Sri Mohammad Nazirul, Haq and ors. Vs. Deputy Transport Commissioner (Passenger-tax), U.P., Lucknow and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberWrit No. 3953 of 1973 connected with Writ No. 2-36 of 73
Reported in(1976)5CTR(All)309
AppellantSri Mohammad Nazirul, Haq and ors.
RespondentDeputy Transport Commissioner (Passenger-tax), U.P., Lucknow and ors.
Cases ReferredRegional Assistant Commissioner of Sales Tax vs. Malwa Vanaspati Co. Ltd.
Excerpt:
- - 2. escaped assessment is well known phrase in the taxing statute. it was held by their lordships of the supreme court :there is no doubt that where the dealer has not filed the prescribed return of his turnover, the case is clearly one of 'escaped assessment',and the proceedings for assessment must commence in respect of that turnover within the period prescribed by section 10. where however a return is filed by a dealer under section 7, a proceeding for assessment commerce, and a notice under sub-section (2) of section 8 is a step in the proceeding for completing the assessment......on the ground that they were without jurisdiction. it was urged that the petitioners having filed returns and no action having been taken within a reasonable time the tax for those months escaped assessment and the case would be covered under section 9. the returns having been filed but the tax having not been paid in accordance with the provisions of section 7 of the act, the tax for those months escaped assessment and the only recourse open to the authorities was to take action under section 9 of the act. he placed great reliance on the phrase 'if for any reason' which occur in the opening part of section 9 and has urged that it is indicative of the fact that the legislature intended that the word escaped assessment used in section 9 should be interpreted in the widest possible.....
Judgment:

R. M. Sahai, J. - The petitioners, stage carriage owners, submitted their monthly returns in the year 1967-68. Notices were issued under section 8(1) under the provisions of U.P. Motor Gari Yatri Kar Adhiniyam, 1962, after more than three years on the ground that the returns filed by the petitioners were inaccurate and incomplete. An objection was filed which was rejected and an order under section 8(2) was passed directing the petitioners to deposit the amount of tax showed in the order and also the penalty imposed against them. The petitioners preferred appeals which were allowed by the Deputy Transport Commissioner and he remanded the case with a direction to the assessing authority to decide the cases afresh after giving notice to the petitioner regarding the amount of tax and penalty assessed against them. Mr. Shanti Bhushan appearing for the petitioners has not challenged the appellate order but has confined his arguments on the validity of notices on the ground that they were without jurisdiction. It was urged that the petitioners having filed returns and no action having been taken within a reasonable time the tax for those months escaped assessment and the case would be covered under section 9. The returns having been filed but the tax having not been paid in accordance with the provisions of section 7 of the Act, the tax for those months escaped assessment and the only recourse open to the authorities was to take action under section 9 of the Act. He placed great reliance on the phrase 'if for any reason' which occur in the opening part of section 9 and has urged that it is indicative of the fact that the Legislature intended that the word escaped assessment used in section 9 should be interpreted in the widest possible manner so as to include within its fold even those cases where although the returns were filed but the tax was not deposited.

2. Escaped assessment is well known phrase in the taxing statute. There is no ambiguity or doubt about its meaning. It has been held by the Supreme Court under the provisions of the Income Tax Act that so long as regular assessment is pending the tax does not escape assessment. There is no provision in the Act or Rules which lays down any period during which an assessment should be completed. It has been held in the case of Ghanshyam Dass vs. Regional Assistant Commissioner, Sales Tax (A.I.R. 1964 S.C. 766) that the proceedings for assessment start either by issue of notice or by filing of return and continues so long as the assessment is not made. Admittedly the returns were filed by the petitioners but the assessment proceedings had not been finalised and therefore the assessment proceedings which were initiated by filling of return had not come to an end. In the circumstances it cannot be said that the tax of the month for which the returns were filed escaped assessment. Mr. Shanti Bhushan vehemently urged that in interpreting the words escaped assessment we should not be quided by the decisions given under the provisions of the Income Tax Act or Sales Tax Act. It is true that there is no direct authority on section 9 of U.P. Motor Gari Yatri Kar Adhiniyam, 1962, but it is a taxing statute and provisions of section 9 are in pari materia with analogous provisions contained in different Sales Tax Acts of different provinces. It was urged in the case of Ghanshyam Dass (supra) that the decision given on the word 'escaped assessment' under the provisions of Income Tax Act and Business Profit Tax Act can be of no assistance while interpreting the phrase 'escaped assessment' as used in the C.P. and Berar Sales Tax Act. It was observed by the Supreme Court :

'It is true that the said decisions were given with reference to either section 34(i) of the Income Tax Act or section 14 of the Business Profit Tax Act but so far as the present enquiry is concerned the said sections are pari materia with section 11-A of the Act. In construing the meaning of expression escaped assessment in section 11-A 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. All the three Acts are taxing statute and the three relevant sections therein are intended together the revenue which has improperly escaped.'

It is thus clear that the word 'escaped assessment' used in section 9 should be given the same meaning as in the Income-Tax Act or in the Sales Tax Act. We therefore do not think that there is any substance in the submission raised on behalf of the petitioners counsel regarding jurisdiction.

3. Mr. Shanti Bhushan has next contended that the notices issued in this case were in any case barred by time. It is admitted that no limitation is provided either under the Act or the Rules framed there under for assessment u/sec. 8(1)(2). But it has been urged that reading sections 8, 9 and rule 13 together it was clear that the Legislature never intended that the proceedings under section 8(2) would go beyond three years. The argument does not impress us. Limitation is a rule of public expediency. It is a creature of Legislature. No period of limitation has been provided under the provisions of the Act itself. To accept the argument of the petitioner would amount to adding to that section or re-writing it by providing something which the Legislature has expressly avoided. The scope of sections 8 and 9 is entirely different. They operate in different field. Sri. V. D. Singh, Standing Counsel, has brought to our notice a decision reported in Regional Assistant Commissioner of Sales Tax vs. Malwa Vanaspati Co. Ltd. (21 S.T.C. 431) wherein a similar connection was rejected by their Lordships of the Supreme Court. The assessee in that case filed its return for the assessment year 1958-59. Show clause notice for levying tax at full rate was issued in September, 1962. It was challenged under Article 226 of the Constitution on the ground that as the assessment was not completed within three years it was barred by time. No limitation was provided under section 8 for assessment where return was filed under section 7 whereas section 10 dealt with escaped assessment and it provided limitation of three years for completing assessment. It was held by their Lordships of the Supreme Court :

'There is no doubt that where the dealer has not filed the prescribed return of his turnover, the case is clearly one of 'escaped assessment', and the proceedings for assessment must commence in respect of that turnover within the period prescribed by section 10. Where however a return is filed by a dealer under section 7, a proceeding for assessment commerce, and a notice under sub-section (2) of section 8 is a step in the proceeding for completing the assessment. The act contains no provision that the proceeding shall be completed within any fixed period; the assessing authority is therefore entitled to complete the proceeding properly commenced without any restriction as to time. If a proceeding for assessment is completed, and it is found that any turnover has escaped assessment the proceeding for bringing to tax that turnover must be commenced within three years next succeeding the year to which the tax relates. Since in the present case the proceeding for assessment had already commenced when the respondent filed the return, that proceeding could be Completed by the assessing authority at any time, and the issue of a notice under sub-section (2) of section 8 does not, in our judgment, attract the bar of section 10 of the Madhya Bharat Sales Tax Act,, 1950.'

This decision completely demolishes the argument raised on behalf of the petitioner.

4. For the reasons stated above the petition fails and is dismissed with costs.


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