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Assistant Commercial Taxes Officer Vs. Delight Steel Furniture - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtRajasthan High Court
Decided On
Case NumberD.B. Sales Tax Reference No. 3 of 1972
Judge
Reported in[1987]65STC329(Raj)
AppellantAssistant Commercial Taxes Officer
RespondentDelight Steel Furniture
Advocates: G.S. Bapna, Adv.
Excerpt:
.....gross turnover as well as the taxable turnover of the assessee at rs. the aforesaid order of the assessing authority was upheld in appeal by the deputy commissioner (appeals). the board of revenue, in revision, set aside the order of the assessing authority as well as the deputy commissioner (appeals) on the view that there was nothing on the record to show that notice under section 10(1)(b) of the act had been given to the assessee. according to the learned member of the board of revenue, section 10(1)(b) makes it obligatory that the assessee shall be given a reasonable opportunity of being heard before an assessment is made to the best of his judgment by the assessing authority and, since notice under section 10(1 )(b) had not been served on the assessee before making the assessment..........the act). in respect of the assessment year 1963-64, the assessee did not submit any return. the assessing authority made a best judgment assessment after estimating the gross turnover as well as the taxable turnover of the assessee at rs. 22,000. the assessing authority also imposed a penalty of rs. 1,000 under section 16(1)(c) and a penalty of rs. 50 under section 16(1)(d) of the act. the aforesaid order of the assessing authority was upheld in appeal by the deputy commissioner (appeals). the board of revenue, in revision, set aside the order of the assessing authority as well as the deputy commissioner (appeals) on the view that there was nothing on the record to show that notice under section 10(1)(b) of the act had been given to the assessee. according to the learned member of the.....
Judgment:

S.C. Agrawal, J.

1. The Board of Revenue has referred the following question for the opinion of this Court:

Whether, under the facts and circumstances of the case, it was necessary to issue a written notice to the assessee while passing order under Section 10 of the Act when the assessee had not filed any return under Section 7 of the Act read with Rule 25 ?

2. The facts, briefly stated, are as under :

M/s. Delight Steel Furniture, Jaipur (hereinafter referred to as the assessee) carries on business at Jaipur and is registered as a dealer under the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as the Act). In respect of the assessment year 1963-64, the assessee did not submit any return. The assessing authority made a best judgment assessment after estimating the gross turnover as well as the taxable turnover of the assessee at Rs. 22,000. The assessing authority also imposed a penalty of Rs. 1,000 under Section 16(1)(c) and a penalty of Rs. 50 under Section 16(1)(d) of the Act. The aforesaid order of the assessing authority was upheld in appeal by the Deputy Commissioner (Appeals). The Board of Revenue, in revision, set aside the order of the assessing authority as well as the Deputy Commissioner (Appeals) on the view that there was nothing on the record to show that notice under Section 10(1)(b) of the Act had been given to the assessee. According to the learned Member of the Board of Revenue, Section 10(1)(b) makes it obligatory that the assessee shall be given a reasonable opportunity of being heard before an assessment is made to the best of his judgment by the assessing authority and, since notice under Section 10(1 )(b) had not been served on the assessee before making the assessment according to the best of his judgment, the said assessment made by the assessing authority could not be upheld. The learned Member of the Board of Revenue, therefore, set aside the orders of the assessing authority and the Deputy Commissioner (Appeals). The department filed an application before the Board of Revenue for making a reference to this Court under Section 16(1) of the Act, but, no orders were passed on the said application within 180 days. The department, therefore, approached this Court under Section 15(3A) of the Act. By its order dated 1st February; 1971, this Court directed the Board of Revenue to refer the question mentioned above to this Court. Thereupon, the Board of Revenue has referred the above question to this Court.

3. We have heard Shri G.S. Bapna, the learned counsel for the department. The assessee has not appeared even though duly served.

4. Shri Bapna has submitted that for the purpose of making a best judgment assessment under Section 10 of the Act it is not obligatory for the assessing authority to issue a notice. In this connection, Shri Bapna has invited our attention to the provision contained in Section 10 of the Act. The provisions regarding best judgment assessment are contained in Section 10(1)(b) of the Act and, at the relevant time, the said provisions read as under :

(b) If no return has been submitted by the dealer under Sub-section (1) of Section 7 within the period prescribed in that behalf, or if any return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such inquiry as he considers necessary, assess the tax for the previous year to the best of his judgment:

Provided that before taking action under this Sub-section, the dealer shall be given a reasonable opportunity of proving the correctness of any return submitted by him.

5. Sub-section (2) of Section 10, which makes provision for issuance of notice, reads as under :

10. (2) If the assessing authority is not satisfied without requiring the presence of the person who made the returns or the production of evidence that the returns are correct and complete, he shall serve on such person a notice requiring him on a date and place to be therein specified-

(i) to appear in person, or by an agent duly authorised in writing ; or

(ii) to produce or cause to be produced any evidence on which such person may rely in support of the returns ; or

(iii) to produce or cause to be produced such accounts or documents pertaining to the assessment year as the assessing authority may require ; or

(iv) to produce or cause to be produced such accounts or documents pertaining to three years preceding as the assessing authority may require :

Provided that the production of such accounts or documents may not be insisted upon during the first two assessments from the commencement of this Act.

6. Shri Bapna has submitted that the only provision with regard to issuance of notice is contained in Sub-section (2) of Section 10 of the Act and that the said provision has no application to a case where the assessee has failed to file a return. According to Shri Bapna the said provisions contained in Section 10(2) are applicable only in those cases where the assessee has filed a return and the assessing authority is not satisfied with regard to the correctness or completeness of such return and in such an event the assessing authority is required to give a notice in terms of the aforesaid Sub-section.

7. We find ourselves in agreement with the aforesaid submission of Shri Bapna that the provisions contained in Sub-section (2) of Section 10, which provide for issuance of a notice, are applicable only to those cases where the assessee has filed a return and the assessing authority is not satisfied with regard to the correctness and completeness of such return and in order to satisfy itself about the correctness and completeness of the return the assessing authority considers it necessary to require the presejice of the assessee.

8. The next question which arises for consideration is, whether issuance of a notice is implicit under the proviso to the Clause (b) of Sub-section (1) of Section 10, which lays down that before taking action under Sub-section (1) a dealer shall be given a reasonable opportunity of proving the correctness of his return submitted by him. The terms of the above proviso postulate that the reasonable opportunity, which is contemplated under the said provision is for the purpose of proving the correctness of return submitted by the dealer. In other words, the said proviso also is applicable only in those cases where the dealer has submitted a return. The said proviso is not applicable in cases where no return has been filed by the dealer and best judgment assessment is to be made by the assessing authority.

9. In cases where the dealer has failed to file a return and a best judgment assessment is to be made, the only provision is that contained in Clause (b) of Sub-section (1) of Section 10 which lays down that if no return has been submitted by the dealer within the prescribed time in that behalf, the assessing authority, shall, after making such inquiry as he considered necessary, assess tax to the best of his judgment. This would show that for the purpose of making assessment to the best of his judgment the assessing authority may hold such inquiry as he considers necessary. There is no doubt that the inquiry that is contemplated by the aforesaid clause must be a fair inquiry and it may imply that an opportunity should be given to the dealer to explain the material relied against him. But this does not mean that for the purpose of holding such inquiry it is necessary that the assessing authority should give a written notice to the dealer before making an assessment to the best of his judgment. A fair inquiry may be held by the assessing authority without giving a written notice to the dealer, for example, the assessing authority or any other officer may visit the premises of the dealer and inspect the books of accounts at his premises in the presence of the dealer, in which case no written notice may be necessary. The requirement as contained in Clause (b) of Sub-section (1) of Section 10, about making an inquiry, if the assessing authority considers such an inquiry necessary, cannot, therefore, be construed to imply an obligation in every case to give a written notice to the dealer before making a best judgment assessment. In the facts and circumstances of the present case, it cannot be said that it was necessary to issue a written notice to the assessee while passing an order under Section 10 of the Act when the assessee had not filed any return under Section 7 read with Rule 25 of the Rules.

10. The question is, therefore, answered in the negative. Thereshall be no order as to costs.


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