Full Judgment Text
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PETITIONER:
THE STATE OF ANDHRA PRADESH
Vs.
RESPONDENT:
NAV SWADESHI OIL MILLS
DATE OF JUDGMENT03/11/1987
BENCH:
VENKATARAMIAH, E.S. (J)
BENCH:
VENKATARAMIAH, E.S. (J)
RANGNATHAN, S.
CITATION:
1988 AIR 97 1988 SCR (1) 736
1987 SCC Supl. 388 JT 1987 (4) 234
1987 SCALE (2)920
ACT:
Andhra Pradesh General Sales Tax Act, 1957: ss. 13 &
14(1) & 14(3)/Central Sales Tax Act, 1956: s. 9(2)-
Applicability of-Returns not filed within the prescribed
period-Assessments made after expiry of four years from
assessment year-Held, cases fall under s. 14(3) and
assessment can be made within six years from expiry of the
assessment year.
HEADNOTE:
%
Sub-section (2) of s. 9 of the Central Sales Tax Act,
1956 makes the assessment procedure prescribed under the
general sales tax law of the appropriate State applicable to
the assessment to be made under the Central Act. Section 13
of the Andhra Pradesh General Sales Tax Act, 1957 requires
the dealer to submit returns in such manner, within such
period and to such authority as may be prescribed. Sub-
section (1) of s. 14 permits the assessing authority to
assess the amount of tax due on the returns submitted under
s. 13 only within a period of four years from the expiry of
the year to which the assessment relates. Sub-section (3)
permits the assessing authority to make best judgment
assessment where a dealer (i) fails to submit return before
the date prescribed; (ii) produces the accounts registers
and other documents after inspection and (iii) submits a
return subsequent to the date of inspection, within a period
of six years from the expiry of the year to which the
assessment relates.
In the main appeal before this Court the assessee-
respondent filed its return relating to the quarter ending
31st March, 1969 on 7th August, 1969 under the Central Sales
Tax Act. The last date prescribed by law was 24th May, 1969.
The Commercial Tax officer passed the assessment order on
3rd August, 1973, beyond four years from 31st March, 1969,
the last day of the assessment year 1968-69. The assessee’s
appeals against that order were dismissed by the Assistant
Commissioner and the Sales Tax Appellate Tribunal. The High
Court in revision, however, held that the assessment made
after four years from the last day of the assessment year
was not a valid assessment.
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737
In the connected appeal the respondent who was the
assessee filed the annual return in respect of the
assessment year 1968-69 under the A provisions of the
Central Act on 19th August, 1969 after the expiry of the
prescribed date. The order of assessment was passed on 2nd
August, 1973 beyond four years from the last day of the
assessment year 196869. An appeal against that order was
dismissed by the Assistant Commissioner. The Sales Tax
Appellate Tribunal, however, allowed the appeal holding that
the assessment had been passed beyond four years from the
last day of the assessment year. The revision petition
preferred by the State was dismissed in limine by the High
Court.
In the appeals by special leave filed by the State, it
was contended for the respondent that since the returns in
the cases had been accepted, even though they had filed been
beyond the prescribed date, the assessments made thereon
could not be considered as best judgment assessments and,
therefore, sub-section (3) of s. 14 of the Act under which
it is permissible to make best judgment assessments would be
inapplicable.
Allowing the appeals. D
^
HELD: 1.1 on a true construction of sub-s. (1) and sub-
s. (3) of s. 14 of the Andhra Pradesh General Sales Tax Act,
1957 it is apparent that where a return is not filed by a
dealer before the date prescribed in that behalf under the
Act the assessing authority has jurisdiction to complete the
assessment within a period of six years from the expiry of
the year to which the assessment relates. [744C]
1.2 The two types of cases which fall under sub-s. (1)
and sub-s. (3) of s. 14 of the Act respectively are mutually
exclusive. The return on the basis of which an assessment is
to be made under s. 14(1) is a return filed within the
prescribed period and in such a case the assessment has to
be completed within a period of four years from the expiry
of the period to which the assessment relates. The Act
confers a distinct advantage on such a dealer who is prompt
in filing his return inasmuch as he acquires immunity
against assessment on the expiry of the said period of four
years. All cases where the return is submitted beyond the
prescribed date fall under sub-s. (3) of s. 14 of the Act.
Assessment in such cases may be completed within six years
from the expiry of the year to which the assessment relates.
When once it is established in a case that a return has not
been filed within the prescribed period such case falls
outside s. 14(1) of the Act and therefore the period of four
years prescribed therein becomes automatically inapplicable.
It clearly falls under cl. (i) of sub-s. (3) of s. 14 of the
Act and assessment can be H
738
made in such a case within the expiry of the period of
six years. In the instant cases the returns were not filed
within the prescribed dates. The assessments have,
therefore, been rightly made within six years from the
expiry of the year to which the assessments relate. [742G-H;
743A-B; 744C]
2. Whether the assessment made is the best judgment or
not has no bearing at all on the period within which an
assessment can be made under the Act. It depends upon the
other conditions mentioned in sub-s. (1) and (3) of s. 14.
Best judgment assessment can be made even in a case falling
under sub-s. (1), as is evident from the latter part of that
sub-section which reads: "but if the return appears to him
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to be incorrect or incomplete he shall after giving the
dealer a reasonable opportunity of proving the correctness
and completeness of the return submitted by him and making
such inquiry as he deems necessary, to assess to the best of
his judgment, the amount of tax due from the dealer." Yet
such best judgment assessment has to be completed within a
period of four years from the expiry of the year to which
the assessment relates. Therefore, in the instant case
merely because the assessments are not best judgment
assessments, it cannot be said that sub-s. (3) of s. 14 is
inapplicable. Neither the High Court nor the Tribunal gave
adequate attention to the words ’before the date prescribed
in that behalf’ in cl. (i) of sub-s. (3) of s. 14. They laid
emphasis only on the words ’fails to submit return’ in the
said sub-clause to arrive at a wrong conclusion. [743C, H;
744A-B]
State of Andhra Pradesh v. Pyarelal Malhotra, (13
S.T.C. 946), and State of Madras v. S.G. Jayaraj Nadar &
Sons, 28 S.T.C. 700, distinguished.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4448 of
1985.
From the Judgment and order dated 26. 10. 1982 of the
Andhra Pradesh High Court in Tax Revision Case No. 23 of
1978.
WITH
Civil Appeal No. 694 of 1986.
From the Judgment and order dated 31.7.1985 of the
Andhra Pradesh High Court in Tax Revision Case No. 205 of
1985.
T.V.S.N. Chari for the Appellant.
739
R. Ramachandran for the Respondents.
The Judgment of the Court was delivered by
VENKATARAMIAH, J. The question of law which arises in
these two appeals by special leave being a common, they are
disposed of by this common judgment. The said question
relates to the time within which an assessment can be made
under the provisions of the Andhra Pradesh General Sales Tax
Act, 1957 (hereinafter referred to as ’the Act’) where the
return is not filed by the dealer within the time prescribed
in that behalf.
The assessee in Civil Appeal No. 4448 of 1985 is M/s.
Nav Swadeshi oil Mills, Jadcharla, Mahboobnagar district.
For assessment year 1968-69 the assessee filed its return
relating to the quarter ending 31.3. ,969 on 7.8.1969 before
the Commercial Tax Officer of Mahboobnagar under the Central
Sales Tax Act, 1956 even though the last date for submission
of return prescribed by law was 24.5. 1969. The return filed
by the assessee showing a taxable turnover of Rs.
18,25,410.72 was accepted and it was called upon to pay
sales tax of Rs.45,424.48 under the Act. The assessment
order was passed on 3.8.1973 beyond four years from
31.3.1969 which was the last day of the assessment year
1968-69. Aggrieved by the assessment order which had been
passed beyond the period of four years from the last day of
the assessment year the assessee filed an appeal before the
Assistant Commissioner (CT) Appeals, Warangal in Appeal No.
5 75-76 and that appeal was dismissed on 14.9.1976. Against
the order of the Assistant Commissioner (CT) Appeals.
Warangal the assessee filed an appeal before the Sales Tax
Appellate Tribunal, Andhra Pradesh at Hyderabad in Tribunal
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Appeal No. 183 of 1977. That appeal also was dismissed. The
assessee thereafter filed a revision petition in Tax
Revision Case No. 23 of 1978 before the High Court of Andhra
Pradesh. The High Court by its order dated October 26, 1982
set aside the order of the Tribunal and also the assessment
on the ground that the assessment which had been passed
after four years from the last day of the assessment year
was not a valid assessment. Aggrieved by the decision of the
High Court the State of Andhra Pradesh has filed this appeal
by special leave.
The assessee in Civil Appeal No. 694 of 1986 is M s.
Nav Swadeshi oil Mills and Refinery at Jadcharla. In respect
of the assessment year 1968-69 the assessee filed an annual
return under the provisions of the Central Sales Tax Act,
1956 on 19.8. 1969 after the expiry
740
Of the prescribed period. The order of assessment was passed
on 2.8.1973 beyond four years from the last day of the
assessment year 1968-69. Aggrieved by the assessment order
which had been passed by the assessing authority the
assessee filed an appeal before the Assistant Commissioner
(CT) Appeals, Warangal on the ground that the asssessment
order passed beyond four years from the last day of the
assessment year was barred by time. That appeal was
dismissed. Against the order passed in that appeal the
assessee filed an appeal before the Sales Tax Appellate
Tribunal, Andhra Pradesh in Tribunal Appeal No. 206 of 1977.
The Tribunal allowed the appeal and set aside the assessment
holding that the assessment had been passed beyond time.
Aggrieved by the decision of the Tribunal the State of
Andhra Pradesh filed a Revision Petition in Tax Revision
Case No. 205 of 1985 on the file of the High Court of Andhra
Pradesh. That Revision Petition was dismissed in limine by
the High Court. Aggrieved by the decision of the High Court
the State of Andhra Pradesh has filed this appeal by special
leave.
The only question which arises for consideration in
these appeals is whether the orders of assessment in the
above two cases which had admittedly been passed beyond four
years from the last day of the assessment year but within
the period of six years from that date had been validly
passed. By virtue of section 9 of the Central Sales Tax Act,
1956 the procedure prescribed for making an assessment under
the Act is applicable to the assessments to be made under
the Central Sales Tax Act, 1956. Section 13 of the Act
prescribes that every dealer who is liable to get himself
registered under section 12 or section 12-A as the case may
be under the Act shall submit such return or returns
relating to his turnover in such manner within such period
and to such authority as may be prescribed. The material
part of section 14 which is relevant for purposes of these
cases reads thus:
"14. Assessment of tax: ( I) If the assessing
authority is satisfied that any return submitted
under section 13 is correct and complete, he shall
assess the amount of tax payable by the dealer on
the basis thereof, but if the return appears to
him to be incorrect or incomplete he shall, after
giving the dealer a reasonable opportunity of
proving the correctness and completeness of the
return submitted by him and making such inquiry as
he deems necessary, assess to the best of his
judgment, the amount of tax due from the dealer.
An assessment under this section shall be made
only within a period of four years from the expiry
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of the
741
year to which the assessment relates.
...................
(3) Where any dealer liable to tax under this Act-
(i) fails to submit return before the date
prescribed in that behalf, or
(ii) produces the accounts, registered and other
documents after inspection, or
(iii) submits a return subsequent to the date of
inspection, the assessing authority may, at any
time within a period of six years from the expiry
of the year to which assessment relates, after
issuing a notice to the dealer and after such
enquiry as he considers necessary, assess to the
best of his judgment, the amount of tax due from
the dealer on his turnover for that year, and may
direct the dealer to pay in addition to the tax so
assessed penalty as specified in subsection (8)."
It is necessary to analyse sub-section (1) and sub-
section (3) of section 14 of the Act for purposes of
determining the issue involved in these cases. Sub-section (
]) of section 14 of the Act provides that if the assessing
authority is satisfied that any return submitted under
section 13 is correct and complete, he shall assess the
amount of tax payable by the dealer on the basis thereof but
if the return appears to the assessing authority to be
incorrect or incomplete he shall after giving the dealer
reasonable opportunity of proving the correctness and
completeness of the return submitted and making such inquiry
as he deems necessary, assess to the best of his judgment,
the amount of tax due from the dealer. In both these cases
the return contemplated is one which has been filed in
accordance with section 13 of the Act within the time
prescribed for that purpose. Such an assessment under sub-
section ( 1) of section 14 of the Act can be made within a
period of four years from the expiry of the period to which
the assessment relates. Sub-section (3) of section 14 of the
Act authorises the assessing authority to make an assessment
to the best of his judgment in three cases: (i) where a
dealer under the Act fails to submit return before the date
prescribed in that behalf, (ii) where a dealer produces the
accounts. registers and other documents after inspection and
(iii) where a dealer submits a return subsequent to the date
of inspection. In these three cases the
742
assessing authority is empowered to make an assessment to
the best of ’4 his judgment at any time within a period of
six years from the expiry of the year to which the
assessment relates after issuing a notice to the dealer and
after such inquiry which he considers necessary to make the
assessment.
The crucial question which arises for consideration in
these cases is whether in a case where the assessee submits
a true and complete return after the prescribed date the
assessment should be completed within a period of four years
prescribed by sub-section ( 1) of section 14 of the Act or
within a period of six years permitted under sub-section (3)
of section 14 of the Act. Sub-section (1) of section 14 of
the Act relates to an assessment which may be made on the
basis of a return submitted under section 13 of the Act.
Section 13 of the Act as stated above provides that every
dealer shall submit such return or returns relating to his
turnover in such manner within such period and to such
authority as may be prescribed. The return on the basis of
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which an assessment is to be made under section 14(1) of the
Act is, therefore, a return filed within the prescribed
period and in such a case the assessment has to be completed
within a period of four years from the expiry of the year to
which the assessment relates. The return referred to in sub-
section ( 1) of section 14 of the Act cannot be a return
filed beyond the prescribed date is emphasised by clause (i)
of sub-section (3) of section 14 of the Act which refers to
a case where a dealer liable to pay tax fails to submit
return before the date prescribed in that behalf. All cases
where the return is submitted beyond the prescribed date
fall under sub-section (3) of section 14 of the Act.
The scheme of the Act regarding the period within which
assessments can be made is very simple. Assessments in cases
falling under sub-section (1) of section 14 of the Act have
to be completed within four years from the expiry of the
year to which the assessment relates and assessments in
cases falling under sub-section (3) of section 14 of the Act
may be completed within six years from the expiry of the
year to which the assessment relates. The two types of cases
which fall under sub-section (l) and sub-section (3) of
section 14 of the Act respectively are mutually exclusive.
When once it is established in case that a return has not
been filed within the prescribed period such case falls
outside section 14 ( l) of the Act and therefore the period
of four years prescribed therein becomes automatically
inapplicable. It clearly falls under clause (i) of sub-
section (3) of section 14 of the Act and assessment can be
made in such a case within the expiry of the period of six
years. While a dealer who files a return within the
prescribed
743
period acquires immunity against assessment on the expiry of
four years from the last day of the assessment year, a
dealer who fails to file a return within the prescribed
period has to wait for six years to be over to acquire such
immunity. Thus the Act confers a distinct advantage on a
dealer who is prompt in filing his return.
We are not impressed by the argument that since the
returns in the cases before us had been accepted even though
they had been filed beyond the prescribed date the
assessments made thereon cannot be considered as best
judgment assessment and therefore sub-section (3) of section
14 of the Act under which it is permissible to make best
judgment assessments would be inapplicable. The period
within which assessments can be made under the Act does not
depend upon the answer to the question whether the
assessment in question is a best judgment assessment or it
is an assessment made treating the return as correct and
complete but it depends upon the other conditions mentioned
in sub-section ( 1) and in sub-section (3) of section 14 of
the Act. We may here point out that even in a case falling
under subsection (1) of section 14 of the Act it is possible
for the assessing authority to make a best judgment
assessment as can be seen from the latter part of the said
sub-section which reads: "but if the return appears to him
to be incorrect or incomplete he shall after giving the
dealer a reasonable opportunity of proving the correctness
and completeness of the return submitted by him and making
such inquiry as he deems necessary, assess to the best of
his judgment, the amount of tax due from the dealer." Yet
such best judgment assessment has to be completed within a
period of four years from the expiry of the year to which
the assessment relates. Hence it cannot be held that merely
because the assessments in question are not best judgment
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assessments sub-section (3) of section 14 of the Act is
inapplicable for best judgment assessments can be made both
under sub-section (1) and subsection (3) of section 14 of
the Act. That the assessment is a best judgment assessment
is not, therefore, decisive of the question involved in
these appeals.
The decision of the Andhra Pradesh High Court in the
State of Andhra Pradesh v. Pyarelal Malhotra 13 S.T.C. 946
and the decision of this Court in the State of Madras v.
S.G. Jayaraj Nadar & Sons 28 S.T.C. 700 which dealt with the
question as to when a best judgment assessment could be made
are not relevant for purposes of deciding the question which
has arisen before us. As we have already pointed out the
question whether the assessment made is the best judgment
assessment or not has no bearing at all on the period within
which an assess-
744
ment can be made under the Act. Neither in the judgment of
the High Court against which Civil Appeal No. 4448 of 1985
is filed nor in the judgment of the Tribunal out of which
Civil Appeal No. 694 of 1986 arises adequate attention is
given to the words ’before the date prescribed in that
behalf in clause (i) of sub-section (3) of section 14 of the
Act. The High Court and the Tribunal laid emphasis only on
the words "fails to submit return" in the said sub-clause
and it is on this account they arrived at a wrong
conclusion.
On a true construction of sub-section (I) and sub-
section (3) of section 14 of the Act we are of opinion that
where a return is not filed by a dealer before the date
prescribed in that behalf under the Act, the assessing
authority has got jurisdiction to complete the assessment
within a period of six years from the expiry of the year to
which the assessment relates. Admittedly, in these cases the
returns were not filed within the prescribed date and the
assessments have been made within six years from the expiry
of the year to which the assessments relate. The orders of
the High Court against which these appeals have been filed
are therefore liable to be set aside. In Civil Appeal No.
4448 or 1985 the judgment of the High Court is set aside and
the judgment of the Tribunal is restored. In Civil Appeal
No. 694 of 1986 the order of the High Court and the judgment
of the tribunal are set aside and judgment of the Assistant
Commissioner (CT) Appeals, Warangal is restored. The
respondent shall pay the costs of the Appellant in both the
appeals.
P.S.S. Appeals allowed.
745