1. These two writ petitions (Civil Writ Nos. 1473 and 1646 of 1961) have some common features and must be disposed of together, as indeed, the learned counsel also addressed main arguments in Civil Writ No. 1646 of 1961, submitting that no separate detailed arguments would be necessary in Civil Writ No. 1473 of 1961.
2. In Civil Writ No. 1646 of 1961, the petitioner is a firm Messrs. Khem Chand Vijay Kumar claiming to be a partnership concern and carrying on business of fabrication of iron and steel articles and the sale thereof. Its registered number under the Punjab General Sales Tax Act (hereafter called, the Act) is stated to be R. C. No. Jul. III-2266. The firm, according to its allegations, was required to file quarterly returns under the Act and 'for the assessment year 1957-58 ending 31-3-1958, it actually filed returns ending 30-6-1957, 30-9-1957, 31-12-1957 and 31-3-1958 within the prescribed time and also depositedthe amount due as required by Section 10 of the Act.The total amount of tax paid was Rs. 12,074.82,nP., on a gross turnover of Rs. 16,14,522.99nP. On 12-7-1960, Shri Vijay Kumar appeared before the Assessing Authority when noticein Form S. T. XIV (Annexure 'A') was served on him. The petitioner was, accordingly,required to produce the account books for 1957-58, the date being 4-8-1960. The case was adjourned from time to time and the books, according to the petitioner's averment, were seen up to5-10-1961. Sometime in May, 1961, a noticewas received from respondent No. I, AssessingAuthority, requiring the petitioner to attend hisoffice on 29-5-1961 with account books for different years including the year 1957-58. Thisnotice is annexed to the petition as Annexure 'B'.On 20-11-1961, respondent No. I is stated tohave made' best judgment assessment at a figure of gross turnover of Rs. 22,85.435.35 nP. Thus creating a demand of Rs. 22,443.24 nP. The assessment order is Annexure 'C' to the petition.
3. Against the assessment order, the petitioner preferred an appeal, but it is averred in paragraph 5 of the petition that 'this appeal is not entertainable unless the petitioner deposits the amount of tax levied. It is, however, within the jurisdiction of the Appellate Authority to entertain the appeal without the tax being paid, tout all the same the recovery proceedings continue'.
It is then pleaded that, as is apparent from the notice Annexure 'B', up to 29-5-1961, the petitioner-firm was merely being required to show the books of account or to lead further necessary evidence in support of the return as required by Section 11(2) and that at no stage did the petitioner fail to comply with the terms of notice issued under Section 11(2) of the Act. This position, according to the petitioner's plea, also follows from the terms of notice dated 12-7-1960 because according to that notice also the petitioner was required to produce books of account. In the assessment order Annexure 'C' there is no finding that the assessee at any stage failed to produce the account books or that there was any failure on his part to give explanation on any specified points which may have been indicated by the Assessing Authority, respondent No. I. In the circumstances it is urged in paragraph 7 of the petition 'that the Assessing Authority had no jurisdiction to assess the petitioner-firm after the expiry of three years from the end of the respective periods, viz., the 31st of March, 1961, much less to make a best judgment assessment after the expiry of that period. The petition further proceeds in paragraph 8 to state 'that there is no finding on the record, nor is it apparent from the assessment order that respondent No. I at any time within a period of three years from the end of the respective periods may have proceeded to make a best judgment assessment; and in view of this state of affairs the entire assessment annexure 'C' falls to the ground'. Up to 29-5-1961, according to the petitioner's case, no best Judgment assessment was initiated or was proposed and that three years' period had already elapsed on 29-5-1961, the date fixed in Annexure 'B'.
4. In the written statement filed on behalf of the respondents, it is pleaded that a statutory notice in form S. T. XIV was issued to the petitioner-firm on 27-6-1960 for appearance before the Assessing Authority on 12-7-1960 in connection with the assessment year 1957-58. The service of this notice was effected on 5-7-1960 by pasting it on the petitioner's business premises. In response to this notice, however, Shri Vijay Kumar appeared before the Assessing Authority on 12-7-1960 but he was required to appear again on 4-8-1960. The Assessing Authority states to have received information that the petitioner-firm was indulging in evasion of sales tax by maintaining duplicate set of accounts with the result that the Authority took into its possession the petitioner's account books and examined them from day to day in the presence of the firm's representative. The petitioner was asked to substantiate the various deductions claimed as sales to registered dealers, exports outside Punjab and sales of tax-free goods, and for this purpose the petitioner was given various opportunities to adduce evidence.
It is expressly denied in paragraph 4 that the assessment framed is a best judgment assessment as contemplated by Section 11(4). The Assessing Authority, according to this reply, computed the gross turnover from the day books which were said to be genuinely maintained by the petitioner-firm and the assessment order was passed after taking into consideration the evidence produced by the petitioner-firm and no extraneous evidence was brought on the record. The assessment thus fell within the purview of Section 11(3) and is accordingly lawful and is not challengeable on the plea of limitation. It is also averred in reply that there is adequate and effective alternative remedy available to the petitioner-firm by way of appeal and revision and that if the assessee proves to the satisfaction of the appellate or revisional authority his inability to pay the tax assessed, the said authority can, for reasons to be recorded in writing, entertain the appeal or revision without requiring him to pay the entire amount of tax or a portion thereof.
5. This case along with quite a large number of other cases were bracketted together for hearing on the assumption that all of them involved one common basic question of law, but after hearing the learned counsel representing the petitioners in various cases, we found that this was not quite so, for, in some cases no such question of law could reasonably arise.
6. In the case in hand, as is clear from the writ petition, the first notice Annexure 'A' is dated 12-7-1960 in which the petitioner is informed that the Assessment Authority was not satisfied with the return filed for the year ending 1957-58 and that 4-8-1960 was fixed for production of documents etc., for the purposes of assessment together with any objection which may be sought to be preferred along with evidence in support thereof. This notice is in from S. T. XIV. Annexure 'B', which does not bear any date, is merely a memorandum in continuation of the notice in form S. T. XIV already served on the petitioner, and it merely purports to inform the assessee that the case for assessment for the year 1956-57, 1957-58, 1958-59 and 1959-60 under the Punjab General Sales Tax Act had been fixed for 29-5-1961 at 7 A.M. and that the assessee was required to attend the office on the said date with account books. In case of failure, action according to law was to follow. The assessment order placed on the record relates to the year 1957-58 with the result that we are not concerned with, Annexure 'B' in so far as it relates to the other assessment years.
7. The contention raised on behalf of the petitioner is very brief and clear-cut. The counsel has very fairly and frankly submitted that the Assessing Authority can be held under the law to proceed to make best judgment assessment only when he makes up his mind not to make the assessment strictly on the basis of the return. In other words, the moment the authority disbelieves the return or the assessee's books and decides not to use the return to be the sole basis for assessment, it is then and then alone that he should under the law be deemed to proceed to assess to the best of his judgment. Explaining this contention, the learned counsel* has submitted, to reproduce his own words, 'that the authority always makes a note on the record that the assesses is delaying or dilly dallying and that it would thence from proceed to make best judgment assessment'. It is such a note which, according to the counsel, is the determining factor for deciding whether or not the Assessing Authority has in fact proceeded to assess to the best of his judgment.
Shri Bhagirath Das has also submitted that no fresh notice is necessary for best judgment assessment, and, demanding from the assessee production of books and other evidence, is also, in law quite consistent both with the intention of the Assessing Authority to assess on the basis of the return and on best judgment 'basis.
The counsel has as a matter of fact gone further and has submitted that assessment under Section 11(3) would also be best judgment assessment if it is not strictly and exclusively based on the return. In support of his contention the learned counsel has relied on some decided cases.
The first decision cited in Doma Sahu Kishun Lal Sao v. State of Bihar (1951) 2 S. T. C. 37 : (AIR 1952 Pat 357) where a Bench of Patna High Court observed that where the assessee withheld genuine books of account and merely wanted time for writing out a fresh set of incorrect accounts for submission to the Sales Tax authorities, it is open to the Sales Tax Officer to make the assessment under Section 10(3) to the best of his judgment.
The next decision is Gopinath Naik v. Commissioner, Income-tax, U. P. AIR 1936 All 286, and reliance is placed on the judgment of Sulaiman C. J- on difference between two other Judges. According to head-note (c), on which the counsel has relied, on failure by assessee to produce satisfactory evidence in support of the return, the Income-tax Officer or Assistant Commissioner is entitled to fall back upon the assessment of income made during the previous year. This case, it may be mentioned, is concerned with Section 23 (3) of the Indian Income Tax Act, 1922. The counsel has, however, submitted that these observations by analogy sustain his submission.
The next authority relied upon is Nirmal Kumar Singh v. Secretary of State, AIR 1925 Cal 890. which again is a case dealing with Section 23 of the Indian Income Tax Act, 1932. It is observed there that under Sub-section (4) of Section 23 if there is a failure to comply with all the terms of the notice issued under Section 23 (2) the Income-tax Officer shall make the assessment to the best of his judgment and that if the Income-tax Officer decides not to assess on the basis of the return, the same not being correct or complete, the assessee is entitled to know the position so as to produce evidence in order to support the return.
The counsel has lastly submitted, again. I should say, very frankly, that in fiscal statutes there is no equity and that the language of the section has to be plainly construed. Reference in support of this contention has been made to Canadian Eagle Oil Co. Ltd. v. R., (1946) A. C. 119 and Commissioner of Income Tax v. S. Teja Singh. (1959) 35 I. T. R. 408.:, (AIR 1950 S. C. 352).
8. In my opinion, it is not necessary in the present proceedings to express any opinion on these arguments because the question whether or not the impugned assessment is best-judgment assessment must, on the contention of the petitioner's counsel himself, depend on the facts and circumstances of each case and, therefore, must, in the fitness of things, be determined by the appellate authority. The case in hand is not one of those clear-cut cases, in which it is possible to find that the impugned assessment is outside the statute and without the authority of law, justifying challenge under Article 226 of the Constitution. The ordinary remedy provided by statute is in the present case both adequate, convenient and effective. Merely because the appellant has to deposit the tax in accordance with law, does not in my opinion, make the remedy illusory or ineffective, for, it is not the petitioner's case that he is not financially in a position to deposit the amount. In this connection, it may in passing be observed that the procedural measures for collecting- or realising taxes assessed call for a somewhat liberal construction tending to facilitate the object, particularly in a welfare State where it operates beneficially in the larger interests of the society as a whole. The petitioner's counsel has, strictly speaking, completely failed to point out any such serious and self-evident error of law manifestly apparent on the record showing that the assessment is clearly and patently contrary to law. It was observed in The Punjab Woollen Textile Mills v. Assessing Authority, (1960) 62 Pun LR 322, that too much interference through extraordinary remedies in the sphere of taxation may adversely affect the efficiency of fiscal administration and may also prejudicially affect the State revenue. Such interference should generally be confined to special circumstances in which violation of a fundamental right or illegality of the tax is apparent on the face of the record or there is a glaring and gross error of law on which the taxing authority manifestly relies for imposition; and the asses see should not on unsubstantial grounds be permitted to by-pass and ignore proper procedure prescribed by the Legislature for the redress of grievances under taxing statutes.
Also see in this connection Jiwan Singh and Sons v. Excise and Taxation Officer, (1960) 62 Pun L. R. 562, in which some observations of the Supreme Court in K. S. Eashid and Sons v. Income-tax Commissioner, 1954 SCR 738 : (AIR 1954 SC 207) were reproduced. I may also observe here that the long range objective of alt tax measures is the accomplishment of good social order, and, the policy of the law, therefore, is to ensure the collection of taxes by reasonably facilitating the working of the statutory procedural machinery for this purpose, and, whenever it is possible on the statutory language to do so consistently with the cause of justice, Courts would construe the relevant provision to accomplish the result and not to retard, obstruct or delay it, without truly compelling reasons. For a welfare democratic State revenue is its very life blood and that seems to me to be the truly underlying purpose of the proviso to Section 20(r) of the Sales Tax Act. Thus except for manifestly compelling reasons, this Court should help achieve and promote this legislative design and not too readily agree in the exercise of its discretionary prerogative writ jurisdiction to interfere with its operation.
9. At this stage, I may here in passing notice an argument which was initially urged by the petitioner's counsel, but which would appear to me to be somewhat inconsistent with the final stand taken up by him at the bar.
It was contended that according to the Supreme Court decision in Madan Lal Arora v. Excise land Taxation Officer, AIR 1961 SC 1565, it is the date of the assessment order on which the Assessing Authority should be deemed to 'proceed to assess to the best of his judgment' and, therefore, if the date of the assessment order is more than three years after the expiry of the period of return it must on this short ground be quashed as wholly without jurisdiction and outside the Act. The respondents have, however, controverted this submission according to whom the Supreme Court judgment does not lay down that the Assessing Authority should be deemed to proceed to assess to the best of his judgment on the date when he actually passes the assessment order. According to the respondents, the very opening paragraph of the Supreme Court judgment suggests that no such rule of law was intended to be laid down. It is only the notice dated 18-8-1959 which, according to the judgment itself, stated that the case would be decided 'on best judgment assessment basis' and this date being beyond three years from the relevant point of time, the Court granted relief to the appellant before it.
Shri Bhagirath Dass, I may mention, also made a reference in this connection to an unreported Bench decision of this Court in Nathu Ram Nohar Chand v. State of Punjab, Civil Writ No. 168 of 1961, D/- 23-4-1962 (Punj), according to which the best judgment assessment to be lawful must be completed within three years.
10. The respondents have challenged the correctness of this decision and have submitted that it requires re-examination. In view of the final stand taken by the petitioner I do not think it is necessary in this case to pursue this matter in detail. I would, however, only briefly point out the submission made at the bar.
11. The term 'assessment', as observed by the Privy Council in Commissioner of Income-tax v. M/s Khemchand Ramdas, AIR 1938 PC 175 (cited by the respondents) has been used in the income-tax law in various shades of meaning. Sometimes it means the actual computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the taxpayer. This view was approvingly referred by the Supreme Court in C. A. Abraham v. Income-tax Officer Kottayam, AIR 1961 SC 669. Incidentally, in this decision the Supreme Court also, deprecated the tendency to abandon resort to the machinery provided by the taxing statute and to invoke Article 226 of the Constitution for redress of grievances. Now, the view discussed in these cases was not adverted to in the unreported case, nor was the attention of the Court drawn to the Bench decision in Jiwan Singh's case, 62 Pun LR 562, in which it was held that if proceedings to assess on the best judgment basis start within three years as contemplated by Section 11(4), then it is not necessary to finalise the assessment within the said three years.
The respondents' submission that the Supreme Court in Madan Lal Arora's case, AIR 1961 SC 1565 has not laid down that the assessment order must be passed within three years also does not seem to me to be without merit or unworthy of consideration, and I think a lot can with reason and logic be said in support of this submission. I, however, do not consider it necessary in this case to say anything more on this point, as on the facts and circumstances I am unable to find any cogent reason or any special feature why the petitioner should not pursue the ordinary remedy of appeal etc., under the Sales Tax Act and why this Court should exercise its extraordinary discretionary power of a high prerogative writ for vitiating the assessment Order. No hardship in this case has been suggested by pursuing the normal statutory course. ,
12. For the reasons foregoing, this petition fails and is dismissed with costs.
13. C. W. No. 1473/1961. Coming now to Civil Writ No. 1473 of 1961, Om Prakash petitioner claims to be a partner of the firm Des Raj Om Prakash, Mandi Fentonganj Jullundur City which used to carry on business of selling soap, matches and kerosene oil etc. This firm is stated to have started in 1952 and closed on 28-10-1954 after about two years of its start. It had a registration certificate No. Jul-III-7382 under the Punjab General Sales Tax Act but the same is alleged to have been returned to the Excise and Taxation Officer on 29-10-1954. Since such return, it is alleged that no business or dealing in the goods covered by that certificate were carried on by the petitioner in the name of Des Raj Om Frakash. The petition then proceeds to state that notices in forms S. T. XIV for the years 1954-55 and 1955-56 were issued by the Assessing Authority on 3-6-1958 and similar notices for the years 1956-57 and 2957-58 were issued on 14-3-1960. The latter notice was received by Shri Kara Gopal, father of the petitioner, who made a remark that the same would be handed over to the petitioner on his return. No copy of any such notices has, however, been annexed with the petition. It is then averred that no proceedings for assessment were started in pursuance of any one of the notices mentioned above. On 25-4-1960, the petitioner filed an affidavit before the respondent (Excise and Taxation Officer) a copy of which has been annexed to the petition as Annexure 'A'. On 4-10-1961, a notice was issued to the petitioner addressed to M/s Des Eaj Om Prakash requiring him to appear on 12-10-1961 with the account books of the firm for the years 1954-55, 1955-56, 1956-57 and 1957-58. A copy of this notice has been annexed with the petition as Annexure 'B' and it is this notice which is the subject of challenge in the present proceedings.
14. In the written statement filed by the respondent it has been pleaded that the registration certificate No. JUL-III-7382 was surrendered to the Assessing Authority by the petitioner on 8-8-1956 as per letter dated 7-8-1956 and not on 29-10-1954.
15. The statutory notices in- form S. T. XIV for the years 1954-55 and 1955-56 were issued on 23-6-1956 asking the assessee to appear on 6-7-1956 but the petitioner's father after accepting the notices refused to sign in token of their receipt. Fresh notices for the said years were again issued on 9-7-1956 for 30-7-1956 but on the petitioner's refusal to accept service, they were pasted on the business premises on 24-7-1956. The notice for the assessment year 1956-57 was, however, served on the petitioner on 29-1-1959 but the notice for the year 1957-58 had also to be pasted on the petitioner's business premises on 10-3-1960 in the presence of the Taxation Sub-Inspector because the petitioner had refused to accept its service. According to the reply, the assessment proceedings for the various years stood initiated on the dates of the service of the notices. On 7-1-1961, the petitioner was served with a notice asking him to appear before the Assessing Authority for the aforesaid four assessment years on 12-10-1961, but the case was adjourned to 4-11-1961. Mere surrender of the registration certificate, according to the written statement, does not mean its cancellation under the provisions of law, and the petitioner's liability to pay the sales tax remains in force so long as his certificate is not actually cancelled by the competent authority. In the reply, it is also averred that the partners of a firm are jointly and severally responsible in law for payment of tax etc. It is finally pleaded that adequate and efficacious legal remedies are available to the petitioner if he feels aggrieved by any order of the Assessing Authority and that this Court should not allow the present petitioner to invoke the extraordinary writ jurisdiction of this Court at this stage.
16. Now the notice dated 4-10-1961 (Annexure 'B') which is challenged in the present proceedings is merely a memorandum informing the assessee that 12-10-1961 has been fixed as the next date for assessment for the four years and that he is required to attend the office at 9 A. M., on the said date with account books. In case of failure action according to law is stated to follow. From this notice, it is not at all possible for me to conclude that the Assessing Authority is only on the date of the notice beginning to proceed to make the assessment to the best of his judgment. As already noticed earlier, the position of the learned counsel for the petitioner is that the Assessing Authority should be deemed to proceed to assess to the best of his judgment when he makes a note on the record to this effect. This would obviously be a question of fact to be determined on the record in each case and in the present proceedings before me, I am wholly unable to come to the conclusion that the Assessing Authority has either not proceeded to assess to the best of his judgment Before 4-10-1961 or within a period of three years as contemplated by Section 11(4) of the Sales Tax Act.
On the material available to me, therefore, I am completely unable to persuade myself to exercise the discretionary power, of a high prerogative writ in the present case in favour of the petitioner and quash the impugned notice, It is, however noteworthy that Annexure 'A' annexed to the writ petition which is an affidavit dated 25-4-1960 addressed to the Assessing Authority merely states that the firm Des Raj Om Prakash had been closed on 28-10-1954 and the relevant registration certificate returned to the Excise and Taxation office and that no business of whatsoever nature was conducted by the said concern after 28-10-1954. These two annexures clearly do not afford sufficient material to justify the conclusion that the Assessing Authority had not proceeded to the best judgment assessment till 4-10-1961 or within three years.
17. Tax laws in our country are largely premised or based on the theory of self assessment and the tax payer usually makes out his return computing the tax on it and files the return and pays the tax. It naturally calls for and requires honesty from a great majority of the tax-payers in order to make the tax administration feasible. In this background also this Court should be slow in interfering on writ side with the departmental proceedings intended to investigate into the dealings of the assessces.
18. This petition thus also fails and is dismissed with costs.