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C.G. Natarajan Vs. the Deputy Commercial Tax Officer, Pollachi West - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberWrit Appeal No. 375 of 1980
Judge
Reported in[1981]48STC193(Mad)
ActsTamil Nadu General Sales Tax Act, 1959 - Sections 16, 16(1) and 16(4)
AppellantC.G. Natarajan
RespondentThe Deputy Commercial Tax Officer, Pollachi West
Advocates:P. Chidambaram, Adv.
Cases ReferredPondicherry v. State of Tamil Nadu
Excerpt:
.....of notice to be issued calling upon assessee to show cause with question to proposed assessment of escaped turnover - not necessary to mention turnover alleged to have escaped and sought to be assessed - appeal dismissed. - - after recording statements from others as well as from the appellant himself on 26th march, 1976, the respondent issued a notice dated 30th march, 1976, calling upon the appellant to appear in person on 19th april, 1976, when he would be given an opportunity to examine witnesses. section 16(1)(a) is relevant for our purpose and it reads as follows :where, for any reason, the whole or any part of the turnover of `business of a dealer has escaped assessment to tax, the assessing authority may, subject to the provisions of sub-section (2), at any time within a..........nadu general sales tax act, 1959, so as to clothe the respondent with jurisdiction to assess the escaped turnover under that section. section 16(1)(a) is relevant for our purpose and it reads as follows : 'where, for any reason, the whole or any part of the turnover of `business of a dealer has escaped assessment to tax, the assessing authority may, subject to the provisions of sub-section (2), at any time within a period of five years from the expiry of the year to which the tax relates, determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity to show cause against such assessment.' 2. sub-section (4) of section.....
Judgment:

Ismail, C.J.

1. This is an appeal against the order of Padmanabhan, J., dated 9th April, 1980, dismissing W.P. No. 3614 of 1977. The appellant herein filed the writ petition in question praying for the issue of a writ of prohibition prohibiting the respondent herein from taking any action on proceedings pursuant to his pre-assessment notice, T.N.G.S.T. 7607/70-71 dated 28th September, 1977. For the purpose of understanding the form of the prayer in which the relief is asked for it is necessary to set out certain facts. The appellant herein is an assessee under the Tamil Nadu General Sales Tax Act, and he has been assessed to sales tax for the year 1970-71 by the assessment order dated 3rd January, 1972. Subsequent to this date certain enquiries were made on the basis of information received by the department that the appellant herein had been carrying on certain business under benami names. After recording statements from others as well as from the appellant himself on 26th March, 1976, the respondent issued a notice dated 30th March, 1976, calling upon the appellant to appear in person on 19th April, 1976, when he would be given an opportunity to examine witnesses. The notice also referred to the earlier statement given by the appellant on 26th March, 1976, and the statements given by the other persons and pointed out that the appellant had already been given copies of some statements and that the copy of the statement of A.N.C. Arumugham was enclosed. Still the case of the appellant was that this notice did not constitute a notice as contemplated under section 16(1) of the Tamil Nadu General Sales Tax Act, 1959, so as to clothe the respondent with jurisdiction to assess the escaped turnover under that section. Section 16(1)(a) is relevant for our purpose and it reads as follows :

'Where, for any reason, the whole or any part of the turnover of `business of a dealer has escaped assessment to tax, the assessing authority may, subject to the provisions of sub-section (2), at any time within a period of five years from the expiry of the year to which the tax relates, determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity to show cause against such assessment.'

2. Sub-section (4) of section 16 reads :

'In computing the period of limitation for assessment or reassessment under this section, the time during which the proceedings for assessment or reassessment remained stayed under the orders of a civil court or other competent authority shall be excluded.'

3. Based upon these two statutory provisions, two arguments were advanced before us. The first argument is that the expression 'determine to the best of its judgment' occurring in section 16(1)(a) contemplates the passing of a final order of assessment of escaped turnover and not merely giving a notice like the notice dated 30th March, 1976, to which we have already drawn attention. The second argument is that, even assuming that section 16(1)(a) does not contemplate a completed order of assessment within the period of five years referred to therein and that it merely contemplates the initiation of proceedings for reassessment, such an initiation has not been done in this case, because the notice dated 30th March, 1976, cannot be said to have complied with the requirement of the statute in this behalf.

4. We shall first dispose of the former question. Admittedly a similar question has been considered by the Supreme Court in Sales Tan Officer, Special Circle, Ernakulam v. Sudarsanam lyengar & Sons : [1970]1SCR859 . In that case the relevant rule was rule 33(1) of the Travancore-Cochin General Sales Tax Rules, 1950, whose language is admittedly similar to the language of section 16(1)(a) of our Act. With regard to such a rule, the Supreme Court pointed out :

'The distinguishing feature on which emphasis has been laid by the counsel for the respondent is that the language employed in rule 33 is such as to lead to only one conclusion that the final determination of the turnover which has escaped assessment and the assessment of the tax have to be done within three years. It is pointed out that in the other sales tax provisions which came up for consideration in the cases mentioned above the words employed were 'proceed to assess', e.g., sub-sections (4) and (5) of section 11 of the Punjab General Sales Tax Act. Our attention has been invited to the appropriate dictionary meaning of the word 'determine' which is 'to settle or decide' - to come to a judicial decision - (Shorter Oxford English Dictionary). It is suggested that the word 'determine' was employed in rule 33 with a definite intention to set the limit within which the final order in the matter of assessment should be made, the limit being three years. We find it difficult to accept that in the context of sales tax legislation the use of the words 'proceed to assess' and 'determine' would lead to different consequences or results. In this connection the words which follow the word 'determine' in rule 33 must be accorded their due signification. The words 'assess the tax payable' cannot be ignored and it is clearly meant that the assessment has to be made within the period prescribed. Assessment is a comprehensive word and can denote the entirety of proceedings which are taken with regard to it. It cannot and does not mean a final order of assessment alone unless there is something in the context of a particular provision which compels such a meaning being attributed to it. In our judgment despite the phraseology employed in rule 33 the principle which has been laid in other cases relating to analogous provisions in sales tax statute must be followed as otherwise the purpose of a provision like rule 33 can be completely defeated by taking certain collateral proceedings and obtaining a stay order as was done in the present case or by unduly delaying assessment proceedings beyond a period of three years.'

5. The learned counsel for the appellant concedes that this decision is against his contention, but contends that that decision dealt with a statute where no provision corresponding to section 16(4) of the Tamil Nadu General Sales Tax Act, 1959, already extracted, was present. The learned counsel, however, did not place before us the Travancore-Cochin General Sales Tax Rules, 1950, for the purpose of substantiating his contention that the decision of the Supreme Court was rendered in the context of the absence of a provision like section 16(4) of our Act. Even assuming that section 16(4) could have a bearing on the scope and power under section 16(1)(a) of the Act, still, having regard to the language employed by the Supreme Court in the decision towards the end of the passage extracted above, namely, 'or by unduly delaying assessment proceedings beyond a period of three years', the existence or non-existence of a provision like section 16(4) will have no effect on the decision of the Supreme Court referred to above. As a matter of fact, the learned counsel himself admits that a Bench of this Court in W.P. Nos. 3939 to 3941 of 1971 (Anglo French Textiles Limited, Pondicherry v. State of Tamil Nadu) decided on 14th March, 1972, had considered this decision of the Supreme Court as well as section 16(4) of the Act and held that the provision in section 16(4) did not in any way restrict or limit the scope of the power under section 16(1)(a) of the Act and further pointed out that under the scheme of the Act, wherever the legislature intended that the final order should be passed within a particular period, it was specifically provided so. Having regard to this position, we reject the first contention of the learned counsel for the appellant.

6. As far as the second contention is concerned, the learned counsel submitted two features for our consideration. The first was that the notice under section 16(1)(a) being one which would ultimately involve a levy of penalty must satisfy at least two minimal requirements : (i) it must expressly state that the officer concerned proposed to reopen the assessment of the escaped turnover; and (ii) the notice itself must mention the turnover which is alleged to have escaped assessment and which the officer proposed to assess. As far as the first part of the above contention is concerned, the notice dated 30th March, 1976, itself states :

'Sub : TNGST Act, 1959, 1970-1971 - Transaction in jaggery - Assessment of escaped turnover under section 16 - Regarding.'

7. Consequently the notice makes it absolutely clear that the proceedings were initiated for the purpose of assessing the escaped turnover under section 16 of the Act. In addition to this, the facts of the present case clearly establish that after the original assessment was made, investigations were conducted and enquiries were made by the department on the information that the appellant had been indulging in benami transactions. In paragraph 3 of the counter-affidavit filed in the present case, it was actually stated that summons was issued to the appellant herein to appear on 26th March, 1976, that the appellant did appear on 26th March, 1976, and gave a statement and that thereafter only the notice dated 30th March, 1976, was issued. The learned counsel for the appellant did not produce before us the summons issued to the appellant asking him to appear on 26th March, 1976. Certainly the said summons would have referred to the assessment year 1970-71 and the investigation conducted for the purpose of assessing the escaped turnover. Hence we reject the first part of the above contention.

8. The second part of the contention was that the notice must mention the actual turnover alleged to have escaped and sought to be assessed. We have already extracted section 16(1)(a) of the Act. Admittedly there is no form prescribed by the statute or the Rules in which the notice should be issued calling upon the assessee to show cause with reference to the proposed assessment of the escaped turnover. In such a context, we are unable to hold that the notice must actually mention the turnover alleged to have escaped and sought to be assessed.

9. As a matter of fact, the very idea of giving a notice is to call upon the person concerned to produce whatever material is in his possession with regard to the proposed assessment, and as a result of such proposal the turnover may differ from the turnover mentioned in the notice.

10. Under these circumstances, we do not consider that it is a statutory requirement that the notice contemplated under section 16(1)(a) of the Act (in fact, the section merely refers to a reasonable opportunity) must mention the actual amount alleged to have escaped and proposed to be assessed. No other point was urged before us. Hence the writ appeal fails and is accordingly dismissed.

11. Appeal dismissed.


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