P.N. Bhagwati, J.
1. The facts giving rise to these appeals are set out in the judgment about to be delivered by our learned brother S. Murtaza Fazal Ali and we do not think it necessary to reiterate them. So far as Civil Appeals 572-574 of 1972 are concerned, it would be sufficient to state briefly the following facts as these are the only facts necessary for appreciating the question of law which arises for determination in these appeals. In the assessments of the assessee to sales tax for three assessment years, the returns filed by him on the basis of his books of account appeared to the Sales Tax Officer to be incorrect and incomplete since certain sales appearing in the books of account of one Haji P.K. Usmankutty as having been affected by the assessee in his favour were not accounted lor in the books of account maintained by the assessee. The assessee applied to the Sales Tax Officer for affording him an opportunity to cross-examine Haji Uamankutty in regard to the correctness of his accounts, but this opportunity was denied to him and the Sales Tax Officer proceeded to make a best judgment assessment Section 17, Sub-section (3) of the Kerala General Sales Tax, 1963. The assessee appealed but without success and this was followed by a revision application to the High Court. The High Court took the view that the assessee was entitled to an opportunity to cross-examine Haji Usmankuty before any finding could be arrived at by the Sales Tax Officer that the returns filed by the assessee were incorrect and incomplete so as to warrant the making of the best judgment assessment and since no such opportunity had been given to the assessee, the High Court quashed the order the Sales Tax authorities and remanded the case to the Sales Tax Officer for making assessments according to law after giving an opportunity the assessee to cross-examine Haji Usmankutty. The facts in Civil Appeal No. 575 of 1972 are almost identical, save that instead of Haji Usmankutty, certain wholesale dealers were sought to be cross-examined in that case and the opportunity to cross examine them was denied by the Sales Tax authorities. Since the High Court quashed the orders of assessments in both cases, the State preferred an appeal by special leave in each case challenging the correctness of the view taken by the High Court.
2. Now, the Jaw is well settled that tax authorities entrusted with the power to make assessment of tax discharge quasi-judicial functions and they are bound to observe principles of natural justice in reaching their conclusions. It is true, as pointed out by this Court in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-Tax, West Bengal : 27ITR126(SC) that a taxing officer 'is not fettered by technical rules of evidence and pleadings, and that he as entitled to act on material which may not be accepted as evidence in a court of law', but that does not absolve him from the obligation to comply with the fundamental rules of justice which have come to be known in the jurisprudence of administrative law as principles of natural justice. It is, however, necessary to remember that the rules of natural justice are not a constant : they are not absolute and rigid rules having universal application It was pointed out by this Court in Suresh Koshy George v. The University of Kerala and Ors. : 1SCR317 that 'the rules of natural justice are not embodied rules' and in the same case this Court approved the following observations from the judgments of Tucker, L.D. in Russel v. Duke of Norfolk and Ors. (1949) 1 All English Reports 108 :
There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must defend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case.
3. One of the rules which constitutes a part of 'he principles of natural justice is the rule of audi alterem partem which requires that no man should be condemned unheard. It is indeed a requirement of the duty to act fairly which lies on all quasi judicial authorities and this duty has been extended also to the authorities holding administrative enquiries involving civil consequences or affecting rights of parties because, as pointed out by this Court in A.K. Kraipak and Ors. v. Union of India : 1SCR457 'the aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice' and justice, in a society which has accepted socialism as its article of faith in the Constitution, is dispersed not only by judicial or quasi-judicial authorities but also by authorities discharging administrative functions. This rule which requires an opportunity to be heard to be given to a person likely to be affected by a decision is also, like the genus of which it is a species, not an inflexible rule having a fixed connotey. It has a variable content depending on the nature of the inquiry, the frame work of the law under which it is held, the Constitution of the authority holding the inquiry, the nature and character of the rights affected and the consequences flowing from the decision. It is, therefore, not possible to say that in every case the rule of audi alter em partem requires that a particular specified procedure to be followed. It may be that in a given case the rule of audi alter em partem may import a requirement that witnesses whose statements are sought to be relied upon by the authority holding the inquiry should be permitted to be cross-examined by the party affected while in some other case it may not. The procedure required to be adopted for giving an opportunity to a person to be heard must necessarily depend on the facts and circumstances of each case.
4. Now, in the present case, we are not concerned with a situation where the rule of audi alter em par tem has to be read into the statutory provision empowering the taxing authorities to assess the tax. Section 17, Sub-section (3), under which the assessment to sales tax has been made on the assessee provides as follows :
If no return is submitted by the dealer under Sub-section (1) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment : Provided that before taking action under this Sub-section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such return.
It is clear on the plain natural construction of the language of this provision that it empowers the Sales Tax Officer to make a best judgment assessment only where one of two conditions is satisfied : either no return is submitted by the assessee or the return submitted by him appears to the Sales Tax Officer to be incorrect or incomplete. It is only on the existence of one of these two conditions that the Sales Tax Officer gets the jurisdiction to make a best judgment assessment. The fulfilment of one of these two pre-requisites is, therefore, a condition precedent to the assumption of jurisdiction by the Sales Tax Officer to make assessment to the best of his judgment. Now, where no return has been submitted by the assessee, one of the two conditions necessary for the applicability of Section 17, Sub-section (3) being satisfied, the Sales Tax Officer can, after making such inquiry as he may consider necessary and after taking into account all relevant material gathered by him, proceed 1o make the best judgment assessment and in such a case, he would be bound under the proviso to give a reasonable opportunity of being heard to the assessee. But in the other case, where a return has been submitted by the assessee, the Sales Tax Officer would first have to satisfy himself that the return is incorrect or incomplete before he can proceed to make the best judgment assessment. The decision making process in such a case would really be in two stages, though the inquiry may be continuous and uninterrupted : the first stage would be the reaching of satisfaction by the Sales Tax Officer that the return is incorrect or incomplete and the second stage would be the making of the best judgment assessment The first part of the proviso which requires that before taking action under Sub-section (3) of Section 17, the assessee should be given a reasonable opportunity of being heard obviously apply not only at the second stage but also at the first stage of the inquiry, because the best judgment assessment, which is the action under Section 17, Sub-section (3), follows upon the. inquiry and the 'reasonable opportunity of being heard' roust extend to the whole of the inquiry, including both stages. The requirement of the first part of the proviso that the assessee should be given a 'reasonable opportunity of being heard' before making best judgment assessment merely embodies the audi alterem partem rule and what is the contemplated of this opportunity would depend, as pointed out above, to a great extent on the facts and circumstances of each case. The question debated before us was whether this opportunity of bang heard granted under the first part of the proviso included an opportunity to cross examine Haji Usmankutty and other wholesale dealers on the basis of whose books of accounts the Sales Tax Officer disbelieved the account of the assessee and came to the finding that the return submitted by the assessee were incorrect and incomplete. But is not necessary for the purpose of the present appeals to decide this question since we find that in any event the assessee was entitled to this opportunity under the second part of the proviso.
5. The second part of the proviso lays down that where a return has been submitted, the assessee should be given reasonable opportunity to prove the correctness or completeness of such return. This requirement obviously applies at the first stage of the enquiry before the Sales Tax Officer comes to conclusion that the return submitted by the best judgment assessment. The question is what is the content of this provision which imposes an obligation on the Sales Tax Officer to give and confers a corresponding right on the assessee to be afforded, a reasonable opportunity ''to prove the correctness or completeness of such return'. Now, obviously 'to prove' means to establish the correctness or completeness of the return by any mode permissible under law. The usual mode recognised by law for proving a fact is by production of evidence and evidence includes oral evidence of witnesses. The opportunity to prove the correctness or completeness of the return would, therefore, necessarily carry with it the right to examine witnesses and that would include enqually the right to cross-examine witnesses examined by the Sales Tax Officer. Here, in the present case, the return filed the assessee appeared to the Sales Tax Officer to be incorrect or incomplete because certain sales appearing in the books of Hazi Usmankutty and other wholesale dealers were not shown in the books of account of the assessee The Sales Tax Officer relied on the evidence furnished by entries in the books of account of Hazi Usmankutty & other wholesale dealers for the purpose of coming to the conclusion that the return filed by the assessee was incorrect or incomplete. Placed in these circumstances, the assessee could prove the correctness and completeness of his return only by showing that the entries in the books of account of Hazi Usmankutty and other wholesale dealers were false, bogus or manipulated and that the return submitted by the assessee should not be disbelieved on the basis of such entries, and this obviously, the assessee could not do, unless he was given an opportunity of cross-examining Hazi Usmankutty and other wholesale dealers with reference to their accounts. Since the evidentiary material procured from or produced by Hazi Usmankutty and other whole-sale dealer was sought to be relied upon for showing that the return submitted by the assessee was incorrect and incomplete, the assessee was entitled to have Hazi Usmankutty and other wholesale dealers summoned as witnesses for cross-examination. It can hardly be disputed that cross examination is one of the most efficacious methods of establish truth and exposing falsehood. Here, it was not disputed on behalf of the Revenue that the assessee in both cases applied to the Sales Tax Officer for summoning Hazi Usmankutty and other wholesale dealers for cross examination, but his application was turned down by the Sales Tax Officer. This act of the Sales Tax Officer in refusing to summon Hazi Usmankutty and other wholesale dealers for cross-examination by the assessee clearly constituted infraction of the right conferred on the assessee by the second part of the proviso and that vitiated the order of the assessment made against the assessee.
6. We do not wish to refer to the decisions of various High Courts on this point since our learned brother has discussed them in his judgment. We are of the opinion that the view taken by the Orissa High Court in Muralimohan Prabhudayal v. State of Orissa 26 STC 22 and the Kerala High Court in M. Appukutty v. State of Kerala 14 STC 489 and the present cases represents the correct law on the subject. We accordingly dismiss the appeals with no order as to costs.