Full Judgment Text
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PETITIONER:
SUPERINTENDENT OF TAXES, TEZPUR AND ORS.
Vs.
RESPONDENT:
M/s. BORMAHAJAN TEA CO. LTD.
DATE OF JUDGMENT17/01/1978
BENCH:
KAILASAM, P.S.
BENCH:
KAILASAM, P.S.
UNTWALIA, N.L.
CITATION:
1978 AIR 533 1978 SCR (2) 573
1978 SCC (1) 513
ACT:
Constitution of India Art. 136-The discretion of the Court
at the final hearing to decide whether the court would
interfere taking the totality of the facts into
consideration.
Assam Taxation (On Goods Carried by Road or on Inland
Waterways) Act. 1961. Section 7, 9, 11, 20-The return filed
beyond the period prescribed whether non est.-Return filed
without payment of the tax due whether non est.--Whether
Revenue can treat the return as invalid and thereafter
contend before this Court that the return was valid.
HEADNOTE:
The respondent is an assessee under the Assam Taxation (On
Goods Carried by Road or on Inland Waterways) Act, 1961.
The respondent in C. A. 602 of 1974 submitted the return
under section 7(1) of the Act for the period ending
September 30, 1960, without paying the tax on the return as
required under section 20(2) of the Act. The respondent in
C. A. No. 603 of 1974 submitted his return under section
7(1) for the quarter ending 31st December 1960. The return
was filed beyond the period of 30 days as required by
section 7(3). No tax was paid along with the submission of
the return in this case also. The assessing authorities
treated the returns filed as invalid and therefore,
proceeded with the best judgment assessment. The assessing
authorities passed assessment orders in both the cases under
section 9(4) of the Act. No notices either under section
7(2) or section 11 of the Act were served on the respon-
dents.
The respondent filed a Writ Petition in the High Court and
challenged the assessment orders on the grounds
1.Since the return was filed without depositing the tax
in both cases and filed beyond time in one case the returns
are not returns within the meaning of section 7(1) and no
assessment proceedings can be made on that.
2.Since no notice as contemplated by section 7(2) and
section 11 of the Act directing the assessee to show cause
why assessment proceedings should not be initiated within
two years from the date of the expiry of the return period
,:as issued no proceedings could be validly initiated ,is
it had become time-barred under section 7(2) of the Act.
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The appellant contended that the demand by the Taxing
Officer under section 9(3) of the Act is in pursuance of
the return filed voluntarily by the assessee though without
payment of the tax and that it can be taken as a return and
assessment made under section 9 of the Act.
The High Court held that under section 7(1) the return must
be submitted within a period of 30 days after the completion
of the return quarter and that the return submitted after
the statutory period must be held to be non est for the
purpose of initiating assessment proceedings. The High
Court also held that the return submitted without the
payment of due on the return which is a mandatory
requirement makes the return non est and, therefore, no
further proceedings could be taken on such a defective
return.
In appeal by Special Leave the appellant contended
574
1. The High Court was in error in holding
that the return submitted by the respondent is
non est.
2. The return is complete and valid when it
is submitted in such form to such authorities
as prescribed by the rule and the fact that
there was any defect in the return such as
nonpayment of tax required under section 20(2)
or delay in filing the return within the time
prescribed under section 7(3) does not make
the return non est.
The respondent contended that this Court should not allow
the plea put forward on behalf of the appellant that the
return was a valid one as it was admitted that the
assessment did not proceed on the return submitted. That
the appellant treated both the returns as invalid ones; that
the Tax Authorities cannot be allowed to change their front
and submit that they proceeded on the ?oasis of the returns
furnished by the respondent.
Dismissing the appeal, the Court
HELD : 1. On a reading of section 7(1) and section 20(2) of
the Act it cannot be said that the submission of the learned
Counsel for the appellant that it is not necessary that the
tax should be paid before valid return is submitted is
without substance. This Court in the decision of
Superintendent of Taxes v. Onkarmal Nathman has held that
before proceedings could be taken under section 9(4) it is
mandatory that notice under section 7(2) will have to be
issued.
Therefore, the only approach which is available to the
appellant and which has been taken by it before this Court
is that the assessment proceedings are valid as the return
is not non est. This Court should not allow the appellant
to take this plea-. It was admitted before the High Court
that the assessment was not based on the returns filed.
This Court under Article 136 of the Constitution cannot
permit the State to contend that it can proceed on the basis
that the returns were valid especially when the plea before
the High Court was that the returns were invalid. [579 A, D,
F-G]
Superintendent of Taxes, Dhubri and Ors. v. Onkarmal Nathmal
Trust etc. 1975 Supp. S.C.R. 365 at p. 375 referred to.
2.The exercise of powers under Article 136 is
discretionary. Even though there may be substance in the
argument put forward on behalf of the appellant the Court
taking the totality of the circumstances may decline to
interfere in an appeal by special leave. [579 G-H, 580 A]
Trivedi v. Nagrashra, [1961] 1 SCR 113 at 117 and State of
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Gujarat and Ors. v. Gujarat Revenue Tribunal and Ors.,
[1976] 3 SCR 565 at 578, followed.
The Court found that on the facts of the case the court is
not called upon to decide this question. [579 A]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 602 and
603 of 1974.
Appeals by Special Leave, from the Judgment and Order dated
the 3rd July, 1973 of the, Assam & Nagaland High Court in
Civil Rule Nos. 1000 and 1001 of 1969.
L. N. Sinha and S. N. Chowdhary for the Appellant.
A. K. Sen, J. P. Bhattacharjee, P. H. Parekh and Miss
Manju Jetley for Respondent.
The Judgment of the Court was delivered by
KAILASAM, J. These appeals are preferred by the
Superintendent of Taxes, Tezpur, by special leave against
the judgment and order passed
575
by the High Court of Assam and Nagaland at Gauhati in- Civil
Rule Nos. 1000 and 1001 of 1969.
The respondent is M/s. Bormahajan Tea Co,. Ltd., who is
assessee under the Assam Taxation (On Goods Carried by Road
or on Inland Water-ways) Act, 1961. The Assam Taxation (On
Goods Carried by Road or on Inland Water-ways) Act was
passed in 19 5 4. The validity of the Act was challenged by
various parties before the Assam High Court and this Court.
This Court on September 26, 1960 held that-the Act was ultra
vires of the Constitution as the previous sanction of the
President was not taken as required under Art. 304 of the
Constitution. The present Act, The Assam Taxation (On Goods
Carried by Road or Inland Water-ways) Act, 1961 (hereinafter
called as "the Act"), was passed by the Assam Legislature
with the sanction of the President for the purpose of
validating the tax that had been imposed under the 1954 Act
The Act received the assent of the President.., on April 6,
1961 and was published in the Assam Gazette on April, 15,
1961 and was to be in force only up to March. 31, 1962. The
Validity of this Act was also challenged and the High Court
of Assam by its order dated August 1, 1963 held that this
Act was also ultra vires. The State Government appealed to
this Court against this judgment. While the appeal was
pending before this Court two writ petitions filed by
different assessees under Art. 32 of the Constitution before
this Court were disposed of on December 13, 1963 holding
that the Act was valid. On an application made by the
Government of Assam pending the appeal against the order
dated August 1, 1963 of the Assam High Court this Court
granted stay of the operation of the judgment of the High
Court and on January 29, 1965 made the stay absolute subject
to the condition that the assessment proceedings, could
continue but no levy should be made. On April 1, 1968 this
Court reversed the judgment dated August 1, 1963 of the
Assam High Court and held the present Act to be valid.
Though the present Act was passed in 1961 as the matter was
pending before the Courts the assessment proceedings could
not be taken up till January 29, 1965 when this Court
allowed the assessment proceedings to be continued.
The two appeals before us relate to the assessment quarter
ending September 30, 1960 and December 31, 1960. In Civil
Rule No. 1000 of 1969, Assam High Court, out of which Civil
Appeal No. 602 of 1974 before this Court arises, the
respondent company submitted the return on October 27, 1960
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under section 7(1) of the Act for the period ending
September 30, 1960. The respondent submitted the return
without paying tax on the return as required under section
20 (2) of the Act. In Civil Rule No. 1001 of 1969 in the
Assam High Court, out of which Civil Appeal No. 603 of 1974
arises in this Court, the respondent submitted a return on
February 14, 1961 for the quarter ending December 31, 1960
under, section 7(1) of the Act. The return under section
7(1) has to be, submitted under section 7(3) within 30 days
of the completion of the quarter in respect of which the
returns are to be filed. In this return also no tax as
required was paid prior to the submission of the return. It
may be noted that
576
while in Civil Appeal, No. 602 of 1974 the return was filed
within time but without payment of tax, in Civil Appeal No.
603 of 1974 the return was filed out of time and without
payment of the tax.
Orders of assessments were passed in both the cases on June
19, 1969 in pursuance of the provisions of section 9(4) of
the Act. It is the common case that no notice either under
section 7(2) or Section 1 1 of the Act was served on the
respondent for the submission of the return for the periods
in question. In the High Court the respondent-submitted
that order of assessment made by the Revenue on June 19,
1969 is not valid in law on two grounds. Firstly, it was
contended that as the return in Civil Rule No. 1000 of 1969
was filed without the necessary deposit of the tax the
return is not a return within the meaning of section 7(1)
and no assessment proceedings can be taken on that, It was
further submitted that as no notice as contemplated under
section 7(2) and section 11 of the Act directing the
assessee to show cause why assessment proceedings should not
be initiated within 2 years from the date of the expiry of
the return period was issued, no assessment proceedings
could be validly initiated as. it became time-barred under
section 7(2) of the Act. The plea on behalf of the
Government was that the demand by the taxing officer under
section 9(3) of the Act is in pursuance of the return filed
voluntarily by the assessee though without payment of the
tax and out of time and that it can be taken as a return and
assessment made under section 9 of the Act. In this view
the submission was that it is not necessary for the tax
authorities to issue any notice under section 7(2) within 2
years from the date, on which the return ought to have been
submitted. The High Court held that as under section 7(1)
the return must be submitted within a period of 30 days
after the completion of the return quarter, the return
submitted after the statutory period must be held to be non-
est for the purpose of initiating assessment proceedings
based thereon and as no action had been taken, either under
section 7 (2) or section 11 of the Act, in the present case,
the assessment order dated June 19, 1969 is beyond the
competence of the authorities. With regard to Civil Rule
No. 1000 of 1969 the High Court came to the same conclusion
on the ground that though the return was admittedly
submitted within the prescribed time, the tax due on that
return was not paid and as payment of tax before,
furnishing a return under section 7_(1) of the Act is
mandatory such failure would result in making the return
non-est and therefore no further proceedings can be taken or
such a defective return. In the result the High Court held
that the return submitted in Civil Rule No. 1000 of 1969
although within the, prescribed period is not a return
within the meaning of section 7(1) and that the return in
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Civil Rule No. 1001 of 1969 as it was beyond the prescribed
period and Without payment of tax cannot be treated as a
return under section 7(1) of the Act and as admittedly no
proceedings were taken under section 7(2) of the Act the tax
authorities were not competent to proceed with the
assessment.
In the appeals before us Mr. Lal Narain Sinha, the learned
counsel for the appellant, submitted that the High Court was
in error in hold-
577
ing that the return submitted by the respondent is non est.
The learn-, ed counsel referred to section 7(1) which
requires that the return shall be furnished in such form and
to such authorities as may be prescribed The form is
prescribed by Assam Taxation (On Goods Carried by Road or on
Inland Water-ways) Rules, 1961. Rule 6 prescribes that the
return shall be furnished in Form No. 1 and Rule 7 requires
,that return shall be signed and verified by the dealer or
producer or his agent. Form No. 1 under the Rules requires
in Column E that ,the amount paid with the Challan No. and
date should be noted. Section 20 prescribes the manner in
which the tax shall be paid. Section 20(2) provides that
before any producer or dealer furnishes’the return required
by sub-section (1) of section 7, he shall in the prescribed
manner pay into the Government Treasury the full amount of
tax due from him under this Act on the basis of such return
and shall furnish along with the returns a receipt from such
Treasury in token of payment of such tax. Section 13
provides penalty for failure to pay tax. It was submitted
by Mr. Lal Narain Sinha that a return is complete and valid
when it is submitted in such form and to such authority as
prescribed by the Rules and the fact that there was any
defect in the return such as non-payment of tax as required
under section 20(2) or delay in filing the return within the
time prescribed under section 7(3) the return will not
become non est. The consequence of filing a defective
return is not to make the return non est but to make the as-
sessee liable to penalty under section 13 of to other
proceedings. So long as ther is a return the learned
counsel submitted that it was not necessary for the tax
authorities to proceed under section 7(2) which is
applicable to cases where no return has been submitted. In
support of his contention that any defect in the return
would not make the return non est, the learned counsel
referred us to three decisions. A.I.R. 1931 Cal. 476,
A.I.R. 1932 P. C. 165 and 48 I.T.R. 1. In Chandra Nath
Bagchi vs. Nabadwip Chandra Dutt and Others(l) the judgment
debtor pleaded want of notice under Order 21, Rule 22 of the
Civil Procedure, Code, which requires that an opportunity
should be given to the judgment-debtors against whom
execution is taken out more than a year after the decree to
show cause why execution should not proceed. It was
admitted, that no such notice was in fact given but as the
judgment-debtor in that case was actively litigating
objecting to the execution being taken against him, he
cannot be permitted to plead failure of notice under 0.21
Rule 22. Chief Justice Rankin while accepting the
requirement that a notice under 0.21, Rule 22, is necessary
found that in the case before him the parties have been
litigating actively with each other upon the question
whether the execution should proceed and how it should
proceed. In the circumstances the learned C. J. observed :
"It appears to me to be merely piling unreason upon
technicality to hold upon the circumstances of this case
that it is open to the judgment-debtors on these grounds to
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object to the jurisdiction of the Court because they have
not got a formal notice to do something, namely to dispute
the execution of the decree when in point of fact they were
busy disputing about it in all the courts for the best part
of the last two years." Relying on the above observation the
learned counsel submitted that the respondent who challenged
the
A.T.R. 1931 Cal. 476.
578
validity of the assessment for several years and who have
the return (cannot now contend that the assessment is not
valid having been filed beyond time or without payment of
the tax.
In Nagendra Nath Dey and Anr. vs. Suresh Chandra Dey and
Others,(1) the Judicial Committee held that any,application
by a party to an appellate Court, asking it to set aside or
revise a decision of a Subordinate Court, is an appeal
within the ordinary acceptation of the term, and that it is
no less an appeal because it is irregular or incompetent.
Relying on this decision it was submitted that the return is
no less a return though it was defective in that tax was not
paid and was presented out of time.
In Gursahari Saigal vs. Commissioner of Income-tax, Punjab
(2) the Supreme Court was construing section 18A(6) and (8)
ofthe Indian Income-tax Act, 1922. Sub-section
(6) provided thatwhen the tax paid on the basis of his
own estimate is less than 80% of the tax determined on the
basis of the regular assessment simple interest at the rate
of 6% per annum from the first day of January in the finan-
cial year in which the tax was paid up to the date of the
said regular assessment shall be payable by the assessee
upon the amount by which the tax so paid falls short of the
said eighty per cent. According to the sub-section interest
has to be calculated from first January in the financial
year in which the tax mentioned was paid and such
calculation has to be made on the short-fall between the
amount paid and 80 per cent of the tax which was found
payable on the regular assessment. According to sub-section
(8) where on making the regular assessment Income-tax
Officer finds that no payment of tax has been made in
accordance with the provisions of this section, interest
calculated in the manner laid down in sub-section (6) ’shall
be, added to the tax as determined on the basis of regular
assessment. The assessee’s contention was that since he had
not paid any tax at all it is not possible to calculate
interest in the manner laid down in sub-section (6). The
plea was that in a case in which no tax had been paid at
all, sub-section (6) will have no application as there is no
short-fall between 80 per cent of the tax payable, on
regular assessment and the amount actually paid. The Court
rejected the plea and held that sub-section (6) should be
read according to the provisions of which interest has to be
calculated as provided in sub-section (8), in farmer which
makes it workable and thereby prevent the clear intention of
sub-section (8) being defeated. The Court further held
that the intention was that interest should becharged
from first January of the financial year in which the tax
oughtto have been paid and those who paid the tax but a
smaller amount and those who did not pay tax at all would
then be put in the same position substantially. On the
strength of the decision it was submitted that the
respondent who had not paid the tax cannot take advantage of
his omission and say that the assessment proceedings cannot
be proceeded with on the return submitted.
(1) [1932] P.C. 165.
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(2) 48 I.T.R. 1.
579
On a reading of section 7(1) and section 20(2) of the Act it
cannot be said that the submission of the learned counsel
for the appellant that it is not necessary that the tax
should be paid before valid return is submitted is without
substance. On the facts of the case we feel we are not
called upon to decide this question. Certain enactments, as
pointed out by the High Court, provide that the return
submitted will not be valid unless it is accompanied by
Treasury Receipt showing payment of tax (vide sub-section
(6) of section 19 of the Assam Agricultural Income-tax Act,
1939). Section 16 of the Assam Sales-tax Act, 1947
providesthat no return submitted under this section shall
be valid unless it isaccompanied by a Treasury Receipt
showing payment of the tax due. Section 7( l) of the Act
merely requires that the return should be furnished in such
form and to such authority as may be prescribed. The
returns were admittedly submitted to the authorities.
Though the form requires mentioning of the particulars of
the Treasury challan for the payment of the tax, it was
submitted that the return furnished without payment of the
tax cannot be said to be return at all. It was further
pleaded that the failure to pay the tax as required under
section 20(2) will not make the return non-est. We, refrain
from deciding this question.
Mr. A. K. Sen, the learned counsel for the, respondent,
submitted that this Court should not allow the plea put
forward on behalf of the appellant that the return was a
valid ode as it was admitted that the assessment did not
proceed on the return submitted. He referred to the
judgment of the High Court wherein it is stated :"It is
also the admitted position in both these cases, the
Superintendent of Taxes treated the returns filed as invalid
ones." It was submitted that the tax authorities cannot now
be allowed to change their front and submit that they
proceeded to assess on the basis of the returns furnished by
the respondent. It is common ground that no notice under
section 7(2) of the Act within 2 years of the expiry of the
return period was issued to the respondent. This Court, by
a majority in Supdt. of Taxes, Dhubri and Others vs.
Onkarmal Nathmal Trust etc.,(1) has held that before
proceedings could be taken under section 9(4) it is manda-
tory that notice under section 7(2) will have to be issued.
Therefore, the only approach that is available to the State
and which has been taken by the learned counsel, is that the
assessment proceedings are valid as the return is not non-
est. The question that arises for consideration is whether
we should allow this plea to be taken by the State when it
admitted before the High Court that the assessment was not
based on the return. It has to be seen that the ground that
was urged by the respondent was that the returns were non-
est which was accepted by the High Court. We do not think
we will be justified in these appeals under Art. 136of
the Constitution to permit the State to contend that it can
proceed onthe basis that the returns were valid,
especially when the plea before the High Court was that the
returns were invalid. this Court has repeatedly held that
the exercise of power under Art. 1.36 is discretionary.
(vide Trivedi vs. Nagrashra (2) In State of Gujarat & Ors
vs. Gujarat Revenue Tribunal & Ors. (3) this Court
(1)[1975] Supp. S.C.R. 365 at p. 375,
(2) [1961] S.C.R. 113, 117.
(3) [1976] 3 S.C.R. 565, 578.
580
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held that ever though there may be substance in the argument
Pat forward on behalf of the appellant the Court taking the
totality of the circumstances may decline to interfere in an
appeal filed by special leave of the Court under Art. 136 of
the Constitution.
In the result the appeals are dismissed. No order as to
costs,
P.H.P. Appeals dismissed.
581