K. Veeraswami, J.
1. These writ appeals are placed before us or. a reference by a Division Bench of which two of us happened to be members. The question we are called upon to decide is whether Section 16 of the Madras General Sales Tax Act, 1959 includes the power to assess by best judgment escaped turnover.
2. The appellant was assessed to sales tax for the assessment years 1961-62 and 1962-63 by orders dated 5th October, 1962 and 29th August, 1963. In July, 1964 there was a surprise inspection of the residence of one K. Pichaimuthu which resulted in discovery of 29 slips of which eight were alleged to refer to the appellant. Some time later there was another inspection of the business premises of Messrs. R. Perumal and M. Palaniandi Chettiar under whom K. Pichimuthu was working as an Accountant, and this time 27 slips were recovered out of which 25 were said to relate to the appellant. On 6th December, 1964, the Assessing Authority concerned served notices on the appellant to show cause why a certain turnover for each of the years should not be treated as having escaped assessment and the same brought to tax. The appellant preferred various objections which were all overruled and by two different orders both, dated 15th December, 1964, the Assessing Authority brought to tax a turnover of Rs. 26,229-92 for the assessment year 1961-62 and a turnover of Rs. 41,34,821-00 for the next assessment year as having escaped assessment. For the first of these years, the process by which the Assessing Authority determined the turnover by best judgment was this. He referred to seven slips the turnover of which amounted to Rs. 20,312. He then proceeded to fix Rs. 2,901-70 as the average rate per pattial and finding that one of the pattials recovered contained the serial number 909, multiplied the average rate by that figure and thus arrived at the turnover which was supposed to have escaped assessment. In the other case, the Assessing Authority took up one of the slips which showed cash and credit sales for Rs. 1,064-06 and Rs. 4,378-64. As per the accounts the sales recorded for 1st August, 1962, amounted to only Rs. 447-84. The balance of the amount in that slips and the amounts found in the other slips were not, according to the Assessing Authority, brought into the appellant's account. He, therefore, proceeded to find that if on a particular date there were suppressions to the extent of Rs. 4,994-86, the turnover that might have escaped assessment in proportion to the turnover already assessed would be, so was the reasoning of the Assessing Authority, Rs. 5,443/448+3,40,327 which would come to Rs. 41,34,821. This the Assessing Authority fixed as turnover which should be taken to have escaped assessment for the assessment year 1962-63. The Assessing Authority further imposed penalties on the appellant. The assessee has filed regular appeals against the orders and they are said to be pending disposal. Nevertheless, he also filed two writ petitions which were heard by Srinivasan, J. The learned Judge summarily dismissed them on the ground that the petitioner had an alternative remedy which was all the more suitable in this case as factual matters had to be decided. The writ appeals from those orders raised a question of jurisdiction and in view of a conflict of decisions on the scope of Section 16 of the Madras General Sales Tax Act, 1959 and parallel provisions in like enactments in other States, the appeals were directed to be placed before us.
3. Two learned Judges of this Court Ramakrishnan and Ramamurti, JJ., in D. Srinivasappa v. State of Madras (1964) 2 M.L.J. 508 : (1964) 15 S.T.C 784, were of opinion that though Section 16 did not expressly include the power to assess by best judgment escaped turnover, still it was implicit in the section. A Division Bench of the High Court of Andhra Pradesh in State of Andhra Pradesh v. Ravuri Narasimloo (1965) 1 An.W.R. 175 : (1965) 16 S.T.C. 54, however, expressed a different view and held that Section 14(4) of the Andhra Pradesh General Sales Tax Act, 1957 was confined to escapement of turnover which was definitely established. That Court was inclined to think that the words in Section 14(4) ' which has escaped assessment ' would only imply turnover which was definitely proved to have escaped and did not include turnover which might have escaped assessment. Commissioner of Sales Tax v. Kunte Brothers (1962) 13 S.T.C. 366, a decision of the Madhya Pradesh High Court was referred to and dissented from by the Andhra Pradesh High Court. The Madhya Pradesh High Court had relied on an English case which, as the Andhra Pradesh High Court pointed out, was concerned with Section 36 of the English Income Tax Act which in terms conferred power to make assessment by best judgment. The question is which of the views represents the correct view.
4. The Madras General Sales Tax Act, 1959 defines ' turnover' as the aggregate amount for which goods are bought or sold, and charged, by Section 3, turnover when it exceeds the minimum limit. Section 11 provides that tax under the Act shall be assessed, levied and collected in such manner as may be prescribed. The next section contains the procedure to be followed by the Assessing Authority in making assessment. In cases where a return is filed and it is accepted, the assessment will be on that basis. But if no return is submitted or if a return submitted is incomplete or incorrect, the Assessing Authority may, after making such enquiry as it may consider necessary, assess the dealer to the best of its judgment. While making an assessment under this section, the Assessing Authority may also direct payment of penalty subject to certain limits. Section 13, which deals with provisional assessment also lays down the procedure for making such assessment which includes in cases of no return or a return which is incomplete or incorrect, the power to assess by best judgment. Where an assessment is made by best judgment under Section 12 the assessee may ask for cancellation under Section 14 of such assessment on certain grounds within a limited period. Section 16, with which we are concerned reacts:
16. Assessment of escaped turnover.-(i) Where for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax or has been assessed at a rate lower than the rate at which it is assessable, 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, assess, the tax payable on such turnover after service of notice on the dealer and after making such enquiry as it may consider necessary.
(2) In making an assessment under Sub-section (1), the assessing authority may, if it is satisfied that the escape from assessment is due to wilful non-disclosure of assessable turnover by the dealer direct the dealer to pay, in addition to the tax assessed under Sub-section (1), a penalty not exceeding one and a half times the tax so assessed:
Provided that no penalty under Sub-section (2) shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition. (3) The powers under Sub-section (1) may be exercised by the assessing authority even though the original order of assessment, if any, passed in the matter has been the subject-matter of an appeal or revision.
(4) In computing the period of limitation for assessment of the escaped turnover under this section, the time during which proceedings for assessment remained stayed under the orders of a civil Court or other competent authority shall be excluded.
Sub-section (1) of the section is concerned with two kinds of escapement: (1) turnover escaping assessment and (2) turnover being assessed at a rate lower than the rate at which it is assessable. In the second category of cases, there is, of course no question of best judgment, but in dealing with the first category, the question arises whether the Assessing Authority is confined to the turnover actually proved by evidence to have escaped assessment or can go beyond and determine the quantum of turnover by best judgment.
5. The Sub-section does not expressly provide for power to make assessment by best judgment. But this Court in D. Sreenivasappa v. State of Madras (1964) 2 M.L.J. 508 : (1964) 15 S.T.C. 784, proceeded on the view that the power was implicit in the section, though it was aware of the contrast that Section 12 expressly conferred such a power in making initial assessments. In our opinion, having regard to the scheme of the Act, particularly the provisions relating to the procedure of assessment, the language employed by Section 16(1) of the Act in contrast with Sections 12 and 13 in the background of the legislative history relating to procedural provisions for assessment of escaped turnover it is not with respect, possible to accept that view. Broadly speaking, in the taxation laws of this country, be it income-tax or sales tax, assessment by best judgment as a distinct category of power has come into practice and wherever the Legislature thought fit, it expressly conferred that power upon the Assessing Authority. In the Madras General Sales Tax Act, 1939, Section 9 contained the power and the procedure for assessment and, as it originally stood assessment by best judgment was not provided for. But this power in relation to initial assessments was conferred. for the first time by an amendment by Madras Act XXV of 1947. Section 9(2)(b), as it stood originally, read that if no return was submitted by a dealer, or if the return made was incorrect or incomplete, the assessing Authority was empowered, to deter mine the turnover in accordance with the rules made under Sub-section (2) of Section 3. But these were, by the Amending Act,' substituted by the words ''shall assess the dealer to the best of his judgment'. The power to assess escaped turnover was not to be found in the Act of 1939 itself, but. Section 19(2)(f) provided for rule-making power in respect of assessment to tax under the Act of any turnover which had escaped assessment and the period within which such assessment might be made. Pursuant to this power, the State Government made Rule 17 in the General Sales Tax Rules which, as it stood at the start, did not include the power, to assess escaped turnover by best judgment. It is interesting to note that Clause (1) of Rule 17 was more or less in the same terms as we find the present Section 16(1) in the Act of. 1959. But by G.O. No. 2204, Revenue, dated. 21st, August, 1961, the rule was amended by including the words. 'determine to the best: of his judgment the turnover which has escaped assessment'. Tax Rule 17i as amended thus incorporated the power for the Assessing Authority to assess escaped turnover by best judgment. It is clear from those provisions in the 1939 Act and the Rules made there under as amended as aforesaid as well as sections l2 and 13 of the 1959 Act that whenever the State Legislature or the rule-making authority intended that the Assessing Authority should have the power to assesse by best judgment in certain circumstances it conferred the power by express words. The amendments show not only the need there for to take the particular power but also the distinction made between the ordinary powers of assessment based on actual material and. ,am assessment by best judgment. It seems to us, therefore, that when Section 16 omitted the words 'determine the turnover by best judgment' which were found in Tax Rule 17, the predecessor of Section 16(1) the omission was deliberate. If it was intended that the Assessing Authority should have the power to determine such turnover by best judgment, it would have been easy for the State Legislature to have expressly said so, adopting the language of Tax Rule 17. Further, While the Legislature provided for the power specifically in Section 12 and by an amendment in Section 13 of the 1959 Act, there is no reason why if it intended to provide for the power in Section 16, it should have omitted to use similar or other appropriate express language.
6. It has been contended for the State that power to assess would include also power to assess by best judgment. But in the context of the other provisions like Sections 12 and 13 and the legislative history which we referred to, it is not possible to accept this contention. In a taxing statute, like any other statute, we are concerned with the express language used and there is hardly any room for implication in the section of power which is not there expressly given, for, the same statute clearly shows that whenever a power to assess by best judgment is contemplated, it is expressly given. The result of the contrast of the language of Sections 12 and 13 with that of Section 16(1) and the legislative history we referred to necessarily repels any possibility of implied power in Section 16(1) to assess by best judgment.
7. A case for best judgment arises at the initial stage of assessment either where no return is filed or where a return is filed, it is incomplete or incorrect. In such a case, it will not be expected that accounts or other materials will be forthcoming on which assessment can be directly based. The Assessing Authority who is charged with the duty of assessing the quantum of turnover will have, therefore, to deter mine the turnover to the best of his judgment. Best Judgment, however,, does not mean that the Assessing Authority can base the quantum determined by him on no material at all. If there is some material either in the form of direct evidence or circumstantial evidence or in the form of facts which may lead to a reasonable inference, the Assessing Authority may well be justified in relying on the same and fixing the quantum on an estimate. While the quantum fixed by best judgment should necessarily be based on some material at least its extent can be justified only if it is on a reasonable basis. It is, however, conceivable that in the nature of things, best judgment may involve a certain amount of guess. But that does not mean that 'the guess can be capricious or unreasonable or totally without a basis. It may be seen, therefore, that assessment by best judgment is a distinct procedure sanctioned by tax laws whenever it is intended. Evidently the framers of Section 16, as it stands today, intended that such a power need not be given to the Assessing Authority and that is why, as we are inclined to think the words in Tax Rule 17 under Act 1939, which, as we said, is the predecessor of Section 16, namely ' determine the turnover by best judgment', have been omitted in Section 16(1).
8. The Andhra Pradesh High Court rested its judgment on a comparison of the provisions relating to submission of no return or incomplete or incorrect returns in relation of the procedure for assessment with the provision for assessment of escaped turnover and came to the conclusion that in view of the difference in the phraseology employed by the relative sections, it was reasonable to conclude that the power under Sub-section (4) of Section 14 was limited to assessment of turnover which, was definitely established. With respect we find ourselves in agreement with that view. We also derive support for the view from the legislative history of the sales-tax provisions in this State.
9. We hold that Section 16(1) of the 1959 Act does not include the power to assess by best judgment. Inasmuch as the Assessing Authority proceeded in these cases on the basis that it had power to assess by best judgment, its orders are quashed. The writ appeals are allowed with costs, one set; Counsel's fees Rs. 250. The Assessing Authority will be at liberty to proceed further under Section 16 in the light of this judgment.