August 16 v. REGIONAL ASSIST ANT COMMISSIONER OF SALES

In the first case, therefore, the tribunal had no jurisdiction to issue a notice under s. 11-A with respect to the quarters other than that covered by return made by the appellant. In the se cond case, assess turnover in respect of the entire fourth quarter, but as it ·was done without showing separately the assessment of tax payable in respect of each quarter, this Court cannot confine the relief to be given to the appellant in these appeals to the period bar red under s. 11-A of therefore n1ust be allowed. the Act. The appeals, jurisdiction Per Raghubar Dayal, ).-The turnover for the years 1949-50 and 1950-51 could not be said turnover which csca· the meaning of that expression in s. ped assessment, within 11-A of the Act and therefore, the notices issued by the Assistant Commissioner of Sales Tax in 1954 under s. 11(2) cannot be said to be notices issued under s. 11-A beyond the period within which they could have been issued. to be The proceedings for the assessment commence against. the registered dealer from the prescribed date for his submitting the return \vhich he is required to submit by sub-section (1) of s. 10. No notice is necessary to be issued to him for the submitting of the return for the purpose of assessment. The statute, by the pro visions of sub-section, (1) of s. 10, gives him the required no tice to the effect that he is to submit the necessary returns by the dates prescribed by registration certificate issued. to him mentions the period of the dealer's year, the pres cribed return period ·and the dates by \vhich the dealer had to furnish the returns. The registered d~aler is, in this way, in no worse position than an ordinary dealer who receives a notice for submitting the returns by a certain date. In the case of the un registered dealer, the proceedings commence by the issue of a notice under sul>-seetion (!) of s. 10. rules. The There is no time limit fixed for the sales tax officer action against the registered dealer under sub-sections (2) and ( 4) <if '· 11. He does not contravene Art. 14, if he takes action - ·• 1963 Ghanshyam Das v . . Regional Assis tant Commis~ sioner of Sales Tax, Nagpu_r Subba Rao/. 4 S.C.R. SUPREME COURT REPORTS 439 against a registered dealer under sub-section (2) or sub-section 4 of s. 11 even after the expiry of three years from the period whose turnover is to be assessed. Crv1L APPELLATE JuR1smcnoN : Civil Appeals Nos. 101 and 102 of 1961. Appeals from the order dated December 13, 1957, of the Madhya Pradesh High Court in Letters Patent Ap peals Nos. 208 and 207 of 1956 respectively. /. M. Thakar, H. M. Thakar, 0. C. Mathur, /. B. Dadachanii _and Ravinder Narain, for the appellants. B. Sen and I. N. Shroff, for the respondents. August 16, 1%3. The Judgment of S. K. Das, Acting C.J., K. Subba Rao, N. Rajagopala Ayyangar and J. R. Mudholkar, JJ. was delivered by Subba Rao, J. Raghubar Dayal, J. delivered a dissenting Opinion. SuBBA RAo J.-These two appeals by certificate raise the question of the true interpretation of the meaning of the expression "escaped assessment" .in s. 11-A of the Cen tral Provinces & Berar Sales Tax Act, 1947 (XXI of 1947), hereinafter called the Act. The facts in Civil Appeal No. 101 of 1961 are as follows: the appellant is the manager of a joint hindu family firm carrying on business in bidis. He is register ed as a dealer under s. 8 of the Act. Every registered dealer under the Act is required to furnish quarterly re turns of his turnover within one month from the end of the quarter. For the year 1949-50, i.e., for the period from October 22, 1949 to November 9, 1950, he submitted a return of his turnover on October 5, 1950 for one quarter only and made a default in respect of the other quarters. The Assistant Commissioner of Sales-Tax, Nagpur, issu ed a notice to the appellant on August 13, 1954 in Form No. 11 under s. 11(1) and (2) of the Act in respect of the turnover of the firm for the said period. The appellant thereafter filed the returns for the three quarters in res pect of which he had made default, but in the assess ment proceedings he contended, inter alia, that the Assis tant Commissioner could not assess his escaped turnover as he could only do so within three years from the expiry of the period in respect whereof his turnover had escaped assessment. The Sales-tax Commissioner re- > .. ' 1963 Ghanshyam DRS v. Regional Assis tant Commis sioner of Sales Tax, Nagpur Subba Rao /. 440 SUPREME COURT REPORTS [1964] jected the said contention, proceeded with the assess ment and determined the tax liability at Rs. 15,846.00. Aggrieved by the said order, the appellant filed a peti tion under Art. 226 of the Constitution in the High Court of Judicature at Nagpur mainly on the ground that the proceedings before the Sales-tax Commissioner were bar red by time under s. 11-A of the Act. Civil Appeal No. 102 of 1961 is in respect of assess ment of sales-tax on the turnover of the appellant for the year 1950-51. The appellant had not filed any return for the whole year. The Assistant Commission'er of Sab tax, Nagpur, served a notice on the appellant on Octo ber 15, 1954 under s. 11 ( 4). of the Act. The appellant filed his returns and produced the account-books under protest and also raised objections that the assessment pro ceedings were barred by limitation under s. 11-A 0£ the Act. The Assistant Commissioner rejected his plea of limitation and determined his liability at Rs. 16,537-5-0. The appellant filed another petition under Art. 226 of the Constitution in the said High Court for a similar relief. Both the petitions were heard together by Kotwal J. The learned Judge, following the decision of a divi sion Bench of that Court in Firm Sheonarayan Matadin v. Sales-tax Officer, Raipur('), held that, as the notices were issued beyond three years from the expiry of the re levant periods, the Sales-tax Commissioner had no juri' diction to make the assessments. On that ground he quashed the said assessments. The respondent filed Letters Patent Appeals a division Bench of the said High Court. On the forma tion of the State of Madhya Pradesh, the above appeals were transferred to the Madhya Pradesh High Court and were heard by a division Bench consisting of Hidayatullah C.J. and Chaudhuri J. The Division Bench held that s. 11-A of the Act could apply only to a case where there was a final assessment and that in the instant cases the first assessment proceedings were pending and there In the said section had no application thereto. fore, the result, by a common judgment, they set aside orders of Kotwal J. Hence the present appeals. (1) 1956 S.T.C. 623. 1963 Ghanshyam Das v. Regional Assis tant Commis sioner of Stdes Tax, Nagpur Subba Rao/. > 4 S.C.R. SUPREME COURT REPORTS 441 (2) Even to a case where Mr. J. M. Thakar, learned counsel for the appellant raised before us the following four points : (I) The ex pression "escaped assessment" in s. 11-A of the Act would there was no assessment apply also at all. if the first assessment proceedings were pending before the appropriate authority, the said authority could only make the as:.cssment w'th:n three years from the date of the commencement of the proceedings, which, according to him, would start from the date of issue of notice by the said authority in the manner prescribed by the Central Provinces & Berar (3) Sales Tax Rules, 1947, hereinafter called the Rules. In the present case no proceedings in respect of the said assessments were pending before the said authority. And (4) as only a part of the fourth quarter in Civil Appeal the proceedings No. 102 of 1961 falls within three years, in respect of the said entire quarter would be barred un der s. 11-A of the Act and, in any view, only the turn over escaped in respect of the period between October 16, 1951 and October 31, 1951 could be a>sessed. Mr. B. Sen learned counsel for the re<pondent, con troverted the said argument and contended that in the case of registered dealers there was a statutory obligation to make a return and, therefore, the proceedings must be deemed to be pending from the date an assessee was bound to make his return and that as the proceedings in the pre sent case were pending by statutory force, there was no scope for invoking the provisions of s. 11-A of the Act. In Civil Appeal No. 102 of 1961 he raised the point that a calendar year in s. 11-A must be calculated from January to December and if so calculated no part of the fourth quarter would be beyond three years, but he did not pur sue the Ii ne of argument. The main question in the appeals is the true cons truction of the provisions of s. 11-A of the Act. The material provisions thereof may be set out. They read : Section 11-A (!) : If in consequence of any informa tion which has come into his possession, ·,he Com turnover of a dealer missioner is satisfied that any asse5'ment dui ing any period . . . . . . . . the Commissioner may, at any time within three calendar years from the expiry of such period . . . . . . . . has escaped 29-2 S. C. lndia:64 1963 Ghanshyam Das v. Regional Assis tant Commis sioner of Sales Tax, Nagpur Subba Rao /. 442 SUPREME COURT REPORTS [1964] proceed in such manner as may be prescribed to ...... assess ........ the tax payable on any such ,, ' turnover ..................... . Under this section if the turnover of a dealer during any period has escaped assessment, the Commissioner may at any time within three calendar years from the ex piry of such period proceed in the manner prescribed to assess the tax payable on the said turnover. The cru cial expression for the present purpose is "escaped assess ment". What does it mean? Does it include, as learn ed counsel for the appeliant contends, a case where no assessment has been made at all or, as learned counsel for the respondent contends, take in only the post-assess ment detection of evasion of tax? This problem has re ceived the attention of Courts in different contexts. In Commissioner of Income-tax, Bombay v. Pirojbai N. Contractor(1) the words "escaped assessment" in the It was held there Indian Income-tax Act were defined. in that the said words were wide enough to include cases where no notice under s. 22(2) of the Income-tax Act had been issued to the assessee and therefore his income had not been assessed at all under s. 23 thereof. The said view, has been assumed to be correct by this Court in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, Bihar & Orissa( 2 ) and Maharajadhiraj Sir Kameshwar Singh v. State of Bihar(3) and extended to cover a case where the first assessment was made in due course but a part of thereform. in Commissioner of Incomectax, Bombay This Court, v. Narsee Nagsee & Co.( 4 ), construing the provisions of s. 14 of the Business Profits Tax Act, 1947, reviewed the law on the subject and came to the following conclu- s10n : income escaped "All these cases show that. ,the ~ords "escaping as sessment" apply equally to cases where a notice was received by the assessee bl)t resulted in no assessment at all and to cases where ~ue to any reason no notice was issued to the assessee; · and, therefore, there W<\S - - ( 1 ) -(1937)5 I.T.R. 338. (') [1959] Supp. 1 S.C.R. 10. (') f 1960] 1 S.C.R. 332. (4) [1960] 3 S.C.R. 988. r )-~ 1963 Ghanshyam Das v. Regional Assis tant Commis sioner of Sales Tax, Nagpur Subba Rao f. r - ,. 4 S.C.R. SUPREME COURT REPORTS 443 no assessment of his income." It . is the said decisions were given with reference to either s. 34(1) of tb.e Income-tax Act or s. 14 of the Business Profits Tax Act, but so far as present enquiry is concerned the said sections are pari materia with s. 11-A of the Act. In construing the mean ing of the expression "escaped assessment" in s. 11-A of the Act there is no reason why the said expression should bear a more limited meaning than what it bears un der the said two Acts. All the three Acts are taxing statutes and the three relevant sections therein are inten ded to gather the revenue which has improperly escaped. A division Bench of the Madras High Court in The State of Madras v. Balu Chettiar('), following the deci sion of a Full Bench of that Court, held that where an assessee did not file at any time a return of his turn over for a year and, therefore, there was no assessment made, the turnover escaped assessment. It was observed therein: It was his default that "Whether it was a case of omission or of deliberate concealment on the part of the assessee, he did not submit anv return. the escape. of the turnover for 1951-52 from assess It was the whole of ment to the tax lawfully due. the turnover for that year that escaped assessment." It is not necessary th,:re fore, hold that the expression "escaped assessment" s. 11-A of the Act includes that of a turnover which has not been assessed at all, because for one reason or other no assessmq1t proceedings were initiated and therefore, no assessment was made in respect thereof. to multiply citations. We, The next question is whether a turnover could be said to escape assessment if proceedings in respect of the first assessment were pending and no final order of assessment was made therein. In In re Lachhiram Basantlal(') Rankin C.J. tersely observed: "Income has not escaped assessment if there are pend ing at the time proceedings for the assessment of the assessee's income which have not yet terminated ( 1 ) (1956) 7 S.T.C. 519, 522. !") (1930) l.L.R. 58 Cal. 909. 444 SUPREME COUR1 REPORTS [1964J 1963 m a final assessment thereof". Ghanshyam Das v. Regional Assis tant Cotnmis sioner of Sales Tax, Nagpur Subba Rao/. the assessment This dictum laid down a clearly understandable principle. How can an escape of a turnover from assessment be predicated before is completed? The Judicial Committee in Rajendra Nath Mukherjee v. [n .. come-tax Commissioner(') relied upon this dictum in re jecting the contention to the contrary raised by the asses- see before them, and endorsed the said view. That decision turned upon interpretation of s. 34 of the Indian Income-tax Act. . There, Burn & Co., an unregis tered firm, made a return of their total income on J anu ary 13, 1928. On February 25, 1928, Income-tax Officer made an assessment on Martin & Co., the part ners whereof purchased the business of Burn & Co., in respect of the combined incomes returned by Martin & Co. and Burn & Co. The High Court held that under the income-tax Act the income of the firms could not be aggregated and that the income of each must be separately assessed. Thereafter, on November 8, 1930, an assessment was made on Burn & Co. on their income as returned by them on January 13, 1928. It was con tended that under the Income-tax Act it was not compe tent to make any assessment to tax after the expiry of the year for which the tax was charged except in the cases provided for under s. 34 oE It was held by the Judicial Committee that the income of Burn & Co. had not escaped assessment within the meaning It was observed therein : of s. 34 of the Income-tax Act. the Income-Tax Act. "If . .an assessment is not made on income within the tax year then that income, they submit, ha·s escaped assessment within that year, and can be subsequent ly assessed only under s. 34 with its time limitation. This involves reading the expression "has escaped assessment" as equivalent to "has not been assess- to this read- ed". Their Lordships cannot assent ing. It gives too narrow a meaning to the word "as sessment" and too wide a meaning to the word "escaped". That the word "assessment" is not con- fined in the statute to the definite act of making an order of assessment appears from s. 66, which refers to ( 1 ) (1933) 61 I.A. 10, 15-16. t 1963 Ghanshyam Das v. Regional Assis tant Commis sioner of Sales Tar, Nagpur Subba Rao/. 'f S.C.R. SUPREME COURT REPORTS 445 "the course of any assessment". To say that the in come of Burn & Co., which in January, 1928, was returned for assessment and which was accepted as correctly returned, though it was erroneously in cluded in the assessment of Martin & Co., has escap ed assessment in 1927-28 seems to t11eir Lordships an inadmissible reading. The fact that s. 34 requires a notice to be served calling for a return of income which has escaped assessment strongly suggests that income which has already been duly returned for as sessment cannot be said to have "escaped" assessment within the statutory meaning." As s. 34 of the Income-tax Act had no application and as there was no other time limit prescribed or neces sarily implied under that Act, it held tl1at the assessment was not out of time. This decision is a clear authority for the position that if a return was duly made, the the statute assessment could be made at any time unless prescribed a time limit. This can only be reason that the proceedings duly initiated in time will be pending and can, therefore, be completed without time limit. A proceeding is said to be pending as soon as it is commenced and until it is concluded. On said analogy, the assessment proceedings under the Sales tax Act must be held to be pending from the time the said proceedings were initiated until they were termina ted by a final order of assessment. Before the final order of assessment, it could not be said that the entire turn over or a part thereof of a dealer had escaped assessment, for the assessment was not completed and if, comple ted, it might be that the entire turnover would be caught in the net. But the more difficult question is, when do the as sessment proceedings under the Act in respect of regis tered dealer commence and when do they terminate? While learned counsel for the appellant contends that the said proceedings under the Act start only after the ap propriate authority issued a notice under s. 10(1) or s. 11(2) or s. 11(5) of the Act, learned counsel for the res pondent contends case of an unregistered dealer, in the case of a register ed dealer the proceedings commence from the date iix- that whatever may be sait.1 1963 Ghanshyam Das y~ Regional Assis tant Commis sioner of Sales Tax, Nagpur Subba Rao/. 446 ·SUPREME· COURT REPORTS ' [1964] the Act, every dealer whose ed in the registration certificate within which ·the said to furnish his return. dealer has a statutory obligation To appreciate the rival contentions it is necessary to notice the relevant provisions of the Act and the Rules. Under s. 4 of turnover exceeds the specified limits prescribed under sub-section (5) thereof shall be liable to pay tax in accordance with the provisions of the Act on all sales effected by him. Under s. 8 no dealer shall, while being liable to pay tax under the Act, carry on business as a dealer unless he had been registered as such and possesses a registration certificate. Part IV of the Rules prescribes the manner in which a dealer shall get himself registered under the Act. Under s. 8, if the dealer satisfies the requirements regard, the Sales-tax Officer grants prescribed in that him a registration certificate in Form II, which specifies the particulars, such as, the location of the business, the nature of the business etc. The said Officer enters ledger main the name of every dealer registered in a tained under s. 9 and issues copies of registration cer tificates for exhibition in the places of their business. Under one of the columns in that Form the period for which and the date on which the return has to be fur nished has to be mentioned. A list of such registered dealer is also published under r. 17. Under the Act, no dealer, who is liable to pay tax thereunder, shall carry on business unless he has been registered as such and pos sesses a registration certificate. It is, therefore, clear that registration is mainly conceived in the interest of revenue, to facilitate collection of taxes and to prevent the evasion thereof. · Next we come to the provisions dealing with manner in which a registered dealer will be assessed to tax. Under s. 10 every registered dealer furnish such returns by such dates to such authority as may be prescribed. Rule 19 prescribes the manner in which such a return has to be furnished. Thereunder every register ed dealer shall furnish the appropriate Sales-tax Officer quarterly returns within one calendar month from the expiry of the quarter to which the return relates and in case he has more than one place of business in the Provi nee, he shall submit a consolidated return for all the ·' / 4 S.C.R. \ SUPREME'COURT REPORTS-. . . \, _,' . ' . ~-- . 447 ,- ···--------------·--. - "-. Y places of business aiid also a return separately for each of the places of -business within two calendar months · from the. said date. _ It also says that each of.'sueh re- Ghansh~~m Dos turns submitted shall be accompanied -by. a treasury re- &gional Assis-. ceipted chalan in Form V in respect of ·t1i_e tax due ac- . In short he has to file a re- cording to the return. tant Commis- sioner of Sales _ -- turn or ·returns in the prescribed form within the prescri- -. Tar, Nagpur · 1963 ·· - . Subba· Rao 1- ~:" . ; It may be stated that the mention of bed time and--also pay the tax payable by him along with the returns. Under s. Il(l) ·if the Commissioner is satisfied that the return. furnished by the dealer in~ res- pect of a period is correct and complete, he assesses the - If, he_ does not accept it, under cl. (2) dealer on it. thereof•-he shall serve the dealer with a notice appointing the place and date for enquiry ; _ and after . enquiry he shall assess him to tax under .r. 3. Rule 31 prescribes , that the notice under s. 11 (2) shall be served on the deal- · • er in Form II. sub-section (1) in that rule appears to be a mistake for _ no notice "is contemplated _under· that sub-section. If'the - registered dealer fails to furnish his return under s. 10(1) of the Act in the manner prescribed within the time prescribed under sub-section (3) -thereof,' the Com- -mis~ioner, after giving a reasonable opportunity of_ being heard, -may impose on him by way of peria lty a sum not exceeding one-fourth of the ;mount of the tax which may be assessed on him under s. 11. Rule 32, which is an_ omnibus provision, says that in such -an event, a notice in Form .XII has to be issued on- him. Under - sub-S::ction (4) of s. 11, if a registered dealer makes · > defaults mentioned therein the Commissioner sh"ll, in the preseribed manner, assess him to the best of his judg ment. Rule 32 also governs the procedure for making the said assessment. Rule 33 prescribes the mainten ance of -a rej:(ister of cases instituted under s. 11. Rule 34 gives -the form of the order to be made and .. r. 39 · provides for _ At this stage an argument advanced by learned coun- _. - sel for the appellant, namely, that under s. )0(1) of the Act_ the Commissioner has to give notice in the prescribed manner. to a_ registered dealer, may be considered. Sec- - tion 10(1) reads:· the preparation of assessment record. · · - "Every such dealer as may be required so to do by / . 1963 Ghanshyam Das v. Regional Assis tant Commis sioner of Sales Tax, Nagpur Subba Rao/. 448 SUPREME COURT REPORTS (1964] the Commissioner by notice served in the prescribed manner and every registered dealer shall furnish such returns by such dates and to such authority as may be prescribed." The word "dealer", unless is anything repug nant in the subject or context, means any person who car ries on the business of selling or supplying goods and in its wide meaning it certainly takes in both a registered dealer and a dealer who has not registered himself under the Act. The question, therefore, is whether anything repugnant in the subject or context of s. 10 to limit the word "dealer" in the first part of sub-section (1) to a dealer other than a registered dealer. Sub-section ( 1) is in two parts : the first part speaks of a dealer and the second part of a registered dealer and the sub section says that both of them shall furnish the returns. If the dealer in the first part includes a registered dealer, the mention of "every registered dealer" in the second part will become redundant, for a registered dealer is included in the expression "dealer". A construction which would attribute redundancy to a Legislature shall not be accepted excqJt for compelling reasons. This re dundancy disappears if the expression "dealer" in the first part exc:udes a regislertd dealer mentioned second part. This legislative intention is further made clear by the provisions of ss. 14 and 17 of the Act. Section 14 imposes a duty on every registered dealer or every dealer on whom notice has been served to furnish returns under sub-section (1) of s. 10 to keep a true ac count of the value of goods bought and sold by him ; and two categories of s. 17 imposes a duty on the said dealers the prescribed authority regarding changes of business. The distinction between the two categories of dealers is maintained not only in s. 10 It is, therefore, clear that but also in ss. 14 and 17. ' under sub-section (1) of s. 10, the Commissioner need not issue a notice to a registered dealer for furnishing the relevant returns, but a statutory obligation is impvsed on the said dealer to do so by such dates and to such antho rity as may be prescribed. inform Now coming to the case of a dealer who did not re is different. gister himself under the Act, the position -< I • 1!163 Ghanshyam Das v. Regional Assis tant Commis sioner of Sales Tax, Nagpur Subba Rao/. 4 S.C.R. SUPREME COURT REPORTS 449 the prescribed manner. to him requiring him There is no statutory obligation cast on him by any sec tion to submit a return. His is really a case of eva sion from his obligation to get himself registered under the Act. Section 10 (I) enables the Commissioner to issue a notice to furnish a return In his case also the same procedure as prescribed in ss. 10(3), 11(1) and 11(2) has to be followed in the matter of assessment. But sub section (5) of s. 11 introduces a stringent provision prevent evasion of tax. Under that sub-section if upon information the Commissioner is satisfied that any such dealer, who is liable to pay tax under the Act in respect of any period, has wilfully failed to apply for registra tion, he shall at any time within three calender years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed in manner as may be prescribed to assess to the best of his judgment the amount of tax due from the dealer in res pect of such period and of subsequent periods. He may also direct the dealer to pay, by way of penalty, in addi tion to the amount of tax so assessed a sum not ex ceeding 11: times that amount. So in the case of a deal tax, but who has failed to register er liable himself under the Act, the Commissioner may issue a notice to him under r. 22 and assess him under s. 11 ; and in the case of e\•asion, on subsequent information, Commissioner can assess him within three calendar years from the expiry of the period in respect of which he was liable to pay tax and for subsequent years and also im pose a penalty on him. It this provi sion that in the case of such a dealer the assessment can be made only within three calendar years from the ex piry of the period in respect whereof he has been liable If the contention of learned to pay tax under the Act. counsel for the respondent should prevail, in the case of a registered dealer there would be no limitation in the matter of assessment, whereas in the case of a dealer who evaded law, he would have the benefit of three years' li- · mitation. From the foregoing discussion it is seen that in the case of a registered dealer there are four variations in the matter of assessment of his turnover : ( l) He submits a is clear from to pay - - >- "-.J .1963 Ghanshyam Das v. Regional Assis tant Commis sioner of Sales Tar, Nagpur Subba Rao[. ..... 450 -SUPREME .COURT REPORTS [1%4] (3) The (2) The Commissioner is not satisfied with return by the date prescribed and pays the tax due terms of the said return ; the Commissioner accepts the the amount correctness of the return and appropriates paid towards the tax due for the period covered by the return. correctness of the return ; he issues a notice to him un der s. 11(2), and makes an enquiry as provided under the Act, but does not finalize the assessment. gistered dealer does not submit a return ; the Commis sioner issues a notice under s. 10(3) and s. 11 ( 4) of the Act. And ( 4) the registered dealer does not submit any return for any period and the Commissioner issues no If the return was accept tice to him beyond three years. ed and the amount paid was appropriated towards the tax due for the relevant period, it means that there has been a final assessment in regard to the said period . If any turnover escaped assessment, clearly it can be re opened only within the period prescribed in s. 11-A. In the case where a return has been made, but the Commis sioner has not accepted it, and has issued a notice for en the assessment proceedings will certainly be quiry, pending till the final assessment is made. Even in a case where no return has been made, but the Commis sioner initiated proceedings by issuing a relevant notice either under s. 1,0(3) or under s. 11(4), the proceedings will be pending thereafter before the Commissioner till the final assessment is made. But where no return has been made _and the Commissioner has not issued any notice under the Act, how can it be held that some pro ceedings are pending before the Commissioner when none existed as a matter of fact? We are concerned in this case with the last contingency. It is manifest that in the case of a registered dealer the proceedings before the Commissioner starts factual ly when a return is made or when a notice is issued to him either under s. 10(3) or under s. 11(2) of the Act. The acceptance of the contention that the statutory obli gation to file a return initiates the proceedings is to in voke a fiction not sanctioned by the Act. The obligation can be enforced by taking a suitable action under the Act. Taking of such an action may have the effect of the defaulter. The de- initiating proceedings against 1963 Ghanshyam Das v. Regional Assis tant Commis sioner of Sales Tax, Nagpur Subba Rao/. 4 S.C.R. SUPREME COURT REPORTS 451 taxable fault may be the occasion for initiating the proceedings, but the default itself proprio vi gore cannot initiate pro ceedings. Proceedings in respect of the assessment of the turnover for the relevant period cannot, therefore, he said to be pending before the Commissioner. Learned counsel for the respondent contends that the certificate of registra tion is itself a notio' to the registered dealer to furnish his returns within the prescribed time. Reliance is placed upon Form II wherein under the appropriate column the particulars in regard to a dealer's return and the date which he should submit it are given. The main purpose of the registration certificate to localize dealers with taxable turnovers and to facilitate the col lection of taxes. The registration certificate enables the dealer to carry on the business. Neither s. 8 which enjoins such registration on every dealer with over nor rule 8 which prescribes the particulars to be incorporated in a certificate suggests that the certificate itself is a statutory notice to a dealer. The objects of the certificate and the statutory notices under the Act are dif ferent and the former cannot be equated with the latter. Rule 33 provides that the assessing authority maintain a register in Form XIII in which he shall en ter the details of each case initiated under rr. 31 and 32. Rule 31 says that on receipt of a return or returns required under r. 19, 20 or 22 from any dealer, the assessing authority shall serve on him a notice in Form XI. Rule 32 prescribes, inter alft2, the manner of assessment under sub-section (3) of s. 10, cl. (a) of sub-section (4) of s. 11, sub-section (5) of s. 11. Form XII gives the serial number, name of the dealer, ·1ature of the business, gross turnover, taxable turnover as determined for the relevant years and the date of issue of notice in Form XI or Form XII. A perusal of the said rules and the forms discloses that the registered dealer start proceedings in the case of a only on the receipt of a return or returns required to be furnished under the rules. Under r. 33 a register is main tained giving the details of each case "instituted" . under rr. 31 and 32. Rule 34 enacts that a case instituted would be pending till an order of assessment was made. No doubt it would be pending till a final order of assessment was made by the highest tribunal or court under the Act. 1963 Ghanshyam Das v. Regi'onal Assis tant Comrnis siQner of Sales Tax, Nagpur Subba Rao f. 452 SUPREME COURT REPORTS [1964] At this stage some of the decisions cited at the Bar may conveniently be noticed. A Full Bench of the Bom bay High Court in Bisesar House v. State of Bombay(') held that a notice under sub-section (2) of s. 11 of the C.P. & Berar Sales Tax Act, 1947, could not be issued more than three years after the expiry of the period for which it was proposed to make the assessment ; but an assessment under sub-section ( 1) of s. 11 could be made more than three years after the expiry of such period. There, a dealer made his return and paid the tax, which according to him was due- for three chargeable accounting years. The Commissioner of Sales-tax served notices on him under s. 11 (2) in respect of the first two years more than three years after the end of the chargeable account ing years. The Court drew a distinction between sub-sec tions (1) and (2) of s. 11 and came to the conclusion that in the former case it was only a formal appropriation of the amounts paid towards the tax due and therefore it could be done even after three years,. but in the latter case the issue of notice under s. 11 (2) was in a substan tial sense an initiation of proceedings by the Commissioner and his failure turnovers would consti tute "escaped assessment" within the meaning of s. 11-A of the Act and therefore it could be reopened only within 3 years prescribed learned Judges, if we may say so with respect did not consider the question, in what circumstances assessment proceed ings could be held to be pending? As we have held that the submission of a statutory return would initiate the pro ceedings and that the proceedings would be pending till a final order of assessment was made on the said return, no question of limitation would arise. A Divi sion Bench of the same High Court, in Ramakrishna Ramnath v. Sales Tax Officer, Nagpur('), made a distinc tion between proceedings under s. 11 ( 4) (a) and those un der s. 11 (2) of the Act in that proceedings under s. 11 (2) are for the purpose of assessment whereas those under s. 11(4)(a) are taken in terrorem and the dealer is penalised by a best judgment assessment in default of com pliance. On that reasoning they held that the period of thereunder. The (') (1958) 9 S.T.C. 654. 2 ) (1960) 11 S.T.C. 811. ( ' 1963 Ghanshyam Das v. Regional Assis tant Commis sioner of Sales Tax, Nagpur Subba Rao/. 4 S.C.R. SUPREME COURT REPORTS 453 limitation prescribed under s. 11-A might apply to a pre> ceeding under s. 11 (2), but no such period of limitation was laid down in the Act in respect of a proceeding under rather s. 10(3) or s. 11(4)(a) of the Act. We find difficult to appreciate the reasoning on which the learned Judges distinguished the Full Bench decision. But question of pendency of proceedings was not raised be fore the Division Bench and was not considered by it. For the foregoing reasons we hold that a statutory obli gation to make a return within a prescribed time does not proprio vigore initiate the assessment proceedings be fore the Commissioner; but the proceedings would com mence after the return was submitted and would continue till a final order of assessment was made in regard to the said return. Now let us apply the said legal position to the facts of Civil Appeal No. 101 of 1961. The appellant has to submit quarterly returns and assessments are made on the basis of the said returns ; that is to say, he has to be as turnover separate! y in respect of each sessed for his quarter. Therefore, the question of escape of assessment has to he considered on the ground that each quarter is a separate period for the assessment. For the year 1949-50 i.e., for the period from October 22, 1949 to No vember 9, 1950, he had to submit 4 returns for the quarters. But he had submitted only one return on Oc tober 5, 1950 for one quarter. No assessment was made in respect of any of the four quarters. So the assessment proceedings must be held to be pending before the Com missioner only in respect of the quarter for which the appeUant had made the return. In respect of the other quarters no proceedings could be said to be pending before the Commissioner. The Tribunal has no jurisdiction to issue a notice under s. 11-A with respect to the quarters other than that covered by the return made by the appel lant. So far as Civil Appeal No. 102 of 1961 is concerned, the appellant had not submitted any returns for the year 1950-51 i.e., for the period from November 10, 1950 October 31, 1951. The Assistant Commissioner of Sales tax issued a notice to him on October 15, 1954 in Form XII purporting to be under s. 11 ( 4) of the Act. The said • , 1963 Ghanshyam Das v. Regional Assis tant Commis sioner of Sales Tax, Nagpur Subba Rao J- Raghubar Dayal /. 454 SUPREME COURT REPORTS [1964] notice was within 3 years from October 16, 1951 which fell within the 4th quarter of the concerned year. Under s. 11-A of the Act the period of 3 years has to be calcu lated from the expiry of the period in regard whereto any turnover has escaped assessment. As the unit of assess ment is a quarter, the period in s. 11-A can only mean a quarter and it cannot be further split up into months, weeks and days. The said period is the fourth quarter and it expired on October 31, 1951. If so, it follows that the Commissioner has jurisdiction to assess the turnover in respect of the entire fourth quarter as the notice was issued within three years from the expiry of the said quar ter. the assessment of But in this case the Commissioner assessed the appel lant in respect of the turnover of the entire year with out showing separately tax payable in respect of each quarter. We, cannot, therefore, confine the relief to be given to the appellant in these appeals to the period barred under s. 11-A of the Act. We would, the appeals therefore set aside the assessments in both giving liberty to the respondent to make the assessment separately for the periods not barred under s. 11-A of the Act either because a return was filed, as in the first case, or because the last quarter was within the period of three years, as in the second case. In the result, the appeals are allowed with costs throughout. RAGHUBAR DAYAL; J.-I am of opinion that the appeals should be dismissed as the turnover for the years 1949-50 and 1950-51 could not be said to be turnover which escaped assessment, within the meaning of that expression in s. 11-A of the Central Provinces & Berar Sales Tax Act, 1947 (XXI of 1947), hereinafter called the Act and there fore the notices issued by the Assistant Commissioner of Sales Tax in 1954 under s. 11(2) cannot be said to be notices issued under s. 11-A beyond the period within which they could have been issued. It is not disputed that a turnover cannot be said have escaped assessment if the proceedings for the assess ment of the sales tax on that turnover be pending. The question then is whether proceedings for assessment of the turnover for these two years were pending when the im- • -<. ... 1963 Ghanshyam Das v. Regional Assis tant Commis sioner of Sales Tax, Nagpur Raghubar Dayal/. ]" • ,• • 4 S.CR. SUPREME COURT REPORTS 455 pugned notices were issued. To determine this question we have to see when such proceedings for the assessment of the sales tax on the turnover of a dealer in a certain period commences . All dealers whose turnover during a year exceeds the limits laid down in sub-section (5) of s. 4 of the Act are liable to pay sale> tax in accordatlce with the provisions to get themselves of the Act. All such dealers have registered and obtain a registration certificate : vide s. 8. The registered dea!er is required by s. 10( 1) to furnish the prescribed returns by prescribed dates to the prescri bed authority. Rule 19 of the Rules provides furnishing to th~ Sales Tax Officer quarterly returns in Form IV withitr one calendar month from the expiry of the quarter to which the return relates. In certain cases, two calendar such a return is to be submitted within months. The amount of tax calculated on the turnover show:i in the return is to be deposited in the treasury and the treasury receipt in Form V is to accompany the return. If the registered dealer furnishes the necessary return, the Sales Tax Officer can assess on the amount of turnover shown in the returns :n case he considers them to be cor rect and complete: vic'.e s. 11(1). If he be not so satisfied he has to serve a notice under sub-section (2) of s. 11 on the registered dealer to take the various steps he requires for satisfying him about the correct amount of the turnover and, on his computing this amount, he has to asseS' the tax in accordance with sub-section (3) of s. 11 of the Act. The Sales Tax Officer can also require an unregister ed dealer to furnish returns by a certain date, in view of the provisions of sub-section (1) of s. 10 and, if the dealer submits such returns, he can make the assessment on the basis of the returns if satisfied with their correct ness, or he may serve another notice under s. 11 (2) on the dealer to take steps to satisfy him about the correct amount of the turnover and, if the dealer responds to the se cond notice, he assesses him, after necessary inquiry, to tax under s. 11(3). So far, the procedure for assessment of tax is the same, both for the registered dealer and the ordinary dealer, in case both of them furnish the returns of the turn- • -4 ., 1963 Ghanshyam Das v. Regional Assis~ tant Commis~ sioner of Sales Tax, Nagpur Raghubar Dayal/. 456 SUPREME COURT REPORTS [1964} · · over as required by the provisions of sub-section ( 1) of s. 10 and also comply, if required, with the provisions of sub-section (2) of s. 11. Different procedures, however, have to be followed if the two types of dealers do not file returns or, after filing returns, do not respond to the notice issued under sub-section (2) of s. 11. The Act does not provide for the the assessment of Sales Tax Officer's taking steps for the tax on the_ ground of the unregistered dealer's not complying with either notice, i.e., when the unregistered dealer does not submit a return, or, after submitting a re turn which is not accepted, does not respond to the notice issued under sub-section (2) of s. 11. The Sales Tax Officer can however, proceed against such a dealer under sub-section (5) of s. 11 and will probably do so as the conduct of the unregistered dealer would tend to confirm the information which led him to issue notice under s. 10( 1) ; but his action will be not on the ground that the dealer had made default in fur nishing the return or had failed to comply with the nC> tice issued under sub-section (2) of s. 11 but will be on the ground that according to his information the dealer had been liable to pay tax under the Act respect of that to apply period and had, nevertheless, wilfully failed for registration. Under the provisions of sub-section (5) of s. 11 he, after giving the dealer reasonable opportunity of being heard, can proceed to assess the tax to the best of his judgment within three calendar years from the expiry of the period in respect of the turnover of which he was liable to be assessed to tax. The dealer, in such a case, has not only to pay the tax assessed, but has to pay the penalty which is not to exceed one and a half times the amount of the tax assessed. If such a dealer had been one to whom a notice under sub-section ( 1) of s. 10 had been issued and had failed, without any sufficient cause, to comply with the requirements of that notice, he could also be ordered to pay, by way of penalty, a sum not ex ceeding one-fourth tax which be assessed on him under s. 11, in view of the provisions of sub-section ( 3) of s. 10. the amount of the It will be seen that though the Sales Tax Officer has to proceed to make the assessment w!thin three calendar 1963 Ghanshyam DtJS •• Regional Assis- tant Commis· ;ioner of S41es Tax, Nagpur Raghubar Dayal f. > - ' .. 4 S.C.R. SUPREME COURT REl'ORTS 457 years of the period whose turnover was liable to tax, there is no time limit within which he must simply to be started assessment proceedings. They are within the prescribed period of time, but can be finished at any later period. finish It may also be noticed here that the 'period of three years' in sub-section (5) of s. 11 was substituted by the Amending Act XX of 1953 in place of the expression 'from the commencement of this Act and thereafter within twelve months' and that s. 11-A which deals with the as sessment of the turnover escaping assessment was also in troduced by the same Act and that these amendments were given retrospective effect from the 1st of June 1947, the date when the Act originally came into force. Sec tion 11-A empowers the Sales Tax Officer to proceed assess or re-assess certain turnover, including turnover which escaped assessment, within three years from the ex piry of that period. The procedure to b~ followed against the registered dealer, in case he does not furnish the return in respect of any period by the prescribed date-which he is required to do by sub-section (1) of s. 10-or, having furnished such returns, failed to comply with the notice issued under sub-section (2) of s. 11, is different. Sub-section ( 4) of s. 11 empowers the Sales T ~ Officer, in such circumstances, to assess the registered dealer to the best of his judgment, in the prescribed manner. He has, however, to give a further notice to the registered dealer in case the register the return at all. The ed dealer has not furnished registered dealer can also be made to pay penalty, to furnish the return is without any sulli his failure cient cause, in accordance with the provisions of sub section (3) of s. 10. There is no time limit fixed for the Sales Tax Officer take action against the registered dealer under sub-sections (2) and (4) of s. 11. The question then is, when do the proceedings the ~ssessment of sales tax, commence against the regis tered dealer? I am of the view that they commence from the prescribed date for his submitting the return which he is required to submit by sub-section (1) of s. 10. No Hotice is necessary to be issued to him for the submitting &f the return for the purpoie of assessment. The statute, 30-2 SC India/64 1963 Ghanshyam Das v. Regional Assis tant Com 1nis~ · sioner of Sales Tax, Nagpur Raghubar Dayal/. - 458 SUPREME COURT REPORTS [1964] by the provisions in sub-section (1) of s. 10, gives him the required notice to the effect that be is to submit the necessary returns by the dates prescribed by the rules. The registration certificate issued to him mentions the period of the dealer's year, the prescribed return period and the dates by which the dealer had to furnish the returns. The registered dealer is, in this way, in no worse position than an ordinary dealer who receives a notice from the Sales Tax Officer for submitting the returns by a cer tain date. The object of the notice to submit a return is nothing but the obtaining of the material for the Sales Tax Officer to determine the amount of the turnover and, if assessable to tax, to assess the tax due on that turn over. The notice is a step towards the proceedings for In the case of the unre the assessment of the sales tax. gi•tered dealer, the Sales Tax Officer commences the pro ceedings for assessment by the issue of a notice under sub section (1) of s. 10, and, in the case of a registered the statute has already fixed the date for the fur dealer, nishing of the return and therefore has set in motion the process for the assessment of the sales tax by the Sales 'Tax Officer. I do not see any good reason why the sta tutory notice to the registered dealer be not considered to be at par with the notice issued to the ordinary dealer by the Sales Tax Officer and why it should not be taken to initiate the assessment proceedings just as the issue of a notice bv the Sales Tax Officer would have initiated the proceedings against the ordinary dealer. The failure of the registered dealer to furnish the return enables the Sales Tax Officer to assess the tax to the best of his judg ment, of course, after giving an oportunity to the regis It would be incongruom if tered dealer of being heard. . the Sales Tax Officer be held not to have initiated assessment proceedings against the registered dealer and yet, on the failure of such a dealer to furnish the returns, to proceed in the very first instance to assess tax on the dealer to the best of his judgment. Such a power of tax ing to the best of his judgment is an indication of the fact that the dealer had defaulted in respect of some proceed ings connected with the assessment of tax and thus has made himself liable to tax on the best judgment basis inste;i<l of a taK on the computed amount of turnover ac- 1963 Ghanshyam Das v. Regional Assis~ tant Commis· sioner of Sales Tax, Nagpur Raghubar Dayal f. 4 S.C.R. SUPREME COURT REPORTS 459 cording to the records. His default lies in his not submit ting, the return o,f turnover and not depositing the tax <lue on the turnover shown in the return. The payment of tax as a result of the statutory notice under s. 10(1) and r. 19 well points to the conclusion that the statutory notice and rule initiate the assessment proceedings against the registered dealer at least from the date of the close of the quarter for which the turnover is to be furnished and tax is to be paid. The mere fact that the Sales Tax Officer cannot pro ceed against an unregistered dealer who, though liable to pay a tax, did not get himself registered, after the expiry of three years from the period the turnover in which was liable to tax, cannot lead to the conclusion that the Saks Tax Officer cannot take necessary steps to assess a register ed dealer under sub-section (2) and ( 4) of s. 11 after the expiry of three years from the period whose turnover he proceeds to assess, for the simple reason that s. 11 or any other provision of the Act does not lay down any such restriction on the Sales Tax Officer's powers under these sub-sections. - Such a power in the Sales Tax Officer does not con- · travene the provisions of Art. 14 of the Constitution. The registered dealer and the unregistered dealer belong different classes. The former is one whose liabilitv to tax is admitted. The other has admitted no such liab; lity. The Sales Tax Officer can find out about the liability of the unregistered dealer to tax only by issuing a no tice to him under sub-section (1) of s. 10 when he thinks that such a dealer might be liable to tax. It is only when the information in his possession is sufficiently strong and trustWorthy as to satisfy him that a certain unregister ed dealer is liable to pay sales tax and has wilfully failed to apply for registration that he can take action under sub-section (5) of s. I I. The circumstances in which the Sales Tax Officer can take action against the unregistered dealer are different from the circumstances in which he takes action against the registered dealer. I am therefore of opinion that the Sales Tax Officer does not contravene Art. 14 of the Constitution as contended for the appellant, if he takes action against a registered dealer under sub-section (2) or ( 4) of s. 11 even after the expiry of 1 1963 Ghanshyam Du v. Regional Assis tant Commis~ sioner of Sales Tax, Nagpur Raghubar Dayal/. ,l - 460 SUPREME COURT REPORTS [1964] tllfet years from assessed. the period whose turnover 1s to be , It is to be noticed that the Act, as originally enacted, did not have s. 11-A. That was intrdduced in 1953 and made retrospective from June 1, 1947.· Amendment was made in 1953 in s. 11 (5) and it made tl1e period· of limi tation for proceeding to assess tax three years. No amend ment providing limitation was however made in s. 11(2) and (4) in 1953. This must be deliberate and in dicates the intention of the Legislature not to limit period during which action can be taken under s. 11 (2) and ( 4). The Register of Cases in Form XIII of the Rules & Forms is for cases instituted under ss. 10(3), 11, 11-A and Its columns do not show when the as 22-C of the Act. sessment of tax proceedings commence. Still its column 14 is meant for 'Amount of penalty imposed, if any, with relevant section under which it is imposed and reference to defaulters' list'. This shows that the Sales Tax Officer 111aintains a list of registered dealers who had defaulted in not complying with the notices under s. 10(1) or 11(2) or under any other provision which makes the regis tered dealer liable to penalty. The maintenance of the ' defaulters' list indicates that the Sales Tax Officer ini tiates proceedings for tax assessment prior to his issu ing notices under s. 10(3) and that this must be after the expiry of the date for furnishing returns referred to in s. 10(1). In view of the opinion I have expressed above, it is not necessary to decide what the precise scope of the ex pression 'turnover escaping assessment' in s. 11-A is .. It follows that the impugned notices were properly is sued by the Assistant Commissioner of Sales Tax to the I would accordingly appellant and that these appeals fail. dismiss these appeals with costs. ORDER BY COURT In accordance with the opinion of the ma1onty, the throughout, one hear-

3.ppeals are allowed with costs ing fee. -4. •