Full Judgment Text
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PETITIONER:
TAX OFFICER-CUM-REGIONAL TRANSPORT OFFICER & ORS.
Vs.
RESPONDENT:
DURG TRANSPORT COMPANY (PVT.) LTD. DURG
DATE OF JUDGMENT30/07/1971
BENCH:
[K. S. HEGDE AND A. N. GROVER, JJ.]
ACT:
Madhya Pradesh Motor Vehicles (Taxation of Passengers) Act.
1959 ss. 6, 7 and 8-Assessee not filing return-Proceedings
under s. 7 have to be taken within one year-Escaped
assessment, meaning of.
HEADNOTE:
Where an assessee liable to pay passenger tax under the
Madhya Pradesh Motor Vehicles (Taxation of Passengers) Act,
1959 submits no return as required by s. 5 nor makes the
required deposit under s. 6 the assessee escapes assessment
and proceedings under s. 7 will have to be taken within the
period of one year mentioned in s. 8. [991A]
When the liability to tax is evaded by one method or the
other there is an escaped assessment. The term escaped
assessment includes both non. assessment as well as under
assessment. [990G]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2289 of
1968.
Appeal from the judgment and order dated August 18, 1967 of
the Madhya Pradesh High Court in Misc. Petition No. 640 of
1966.
I. N. Shroff, for the appellants.
M, N. Phadke, and K. L. Hathi, for the respondent.
The Judgment of the Court was delivered by
Hegde, J.-This is an appeal by certificate arising from the
decision of the High Court of Madhya Pradesh in
Miscellaneous Petition No. 640 of 1966 on its file. The
assessee is a Transport Operator. It was liable to pay
passenger tax under Madhya Prakash Motor Vehicles (Taxation
of Passengers) Act, 1959-hereinafter referred to as "the
Act". It is said that it failed to pay the tax due from it
for the period from October 1, 1961 to May 6, 1962.
Admittedly it submitted no return as required by section 5
of the Act, nor did it make the required deposit under
section 6 of that Act. No action appears to have been taken
against it till November 6, 1963 on which date the Tax
Officer issued to it a notice under section 7 of the Act.
Thereafter he proceeded to assess it. The impugned
assessment order was made on June 19, 1965. That order was
challenged before the Madhya Pradesh
589
High Court by means of a writ petition under sections 226
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and 227 of the Constitution. The High Court accepted that
petition and quashed the impugned order.
The question before this Court is whether the order of the
High Court is sustainable’. The only question that calls
for decision in this appeal is whether the proceedings
initiated by the Tax Officer by means of a notice under
section 7 of the Act was beyond the time prescribed and
therefore the proceedings taken were not maintainable
against the assessee. In order to answer this question, we
shall read sections 5, 6, 7 and 8 of the Act.
Section (5) Submission of returns.-(1) In respect of the
stage carriage or stage carries held by him, the operator
shall deliver or cause to be delivered to the Tax Officer or
to such prescribed officer as the Tax Officer may specify a
return in the prescribed form and manner, either daily or at
such intervals as may be prescribed
Provided that different rules may be prescribed for the pur-
pose of this sub-section in relation to fleet-owner from
those in relation to other operators.
(2)When any return is received by a prescribed officer he
shall forward it to the Tax Officer within the prescribed
period and in the prescribed manner.
Section (6) Tax to be paid every month into Government Trea-
sury.-The tax payable during any month in accordance with
the returns submitted under section 5 shall be paid into a
Government treasury by the operator and the receipt
evidencing such payment forwarded to the Tax Officer, on or
before such date or dates of the month immediately
succeeding as may be prescribed in the case of fleet-owners
and other operators.
Section (7) Procedure where no returns are submitted, etc.-
In the following cases, that is to say-
(a)Where no returns have been submitted, by
the operator in respect of any stage carriage
for any month or portion thereof, or
(b)where the returns submitted by the
operator in respect of any stage carriage for
any month or portion thereof appear to the Tax
Officer to be incorrect or incomplete;
the Tax Officer shall, after giving the operator a
responsible op. opportunity, in case (a) of making his
representation if any, and in case (b) of establishing the
correctness and correctness of
990
the returns submitted by him, determine the sum payable to
the State Government by the operator by way of tax during
such month or portion thereof :
Provided that the sum so determined shall not exceed the
maximum tax which would have been payable to the State
Government if the stage carriage had carried its full
complement of passengers during such month or portion
thereof.
Section (8) Fares escaping assessment.-If, for any reason,
the whole or any portion of the tax leviable under this Act,
for any month has escaped assessment, the Tax Officer may,
at any time within, but not beyond, one year from the expiry
of that month, assess the tax which has escaped assessment,
after issuing a notice to the operator and making such
inquiry as the officer may consider necessary.
It may be noted that the expression "escaped assessment" has
not been defined in the Act. Therefore we have to consider
whether an assessment that was not made as a result of the
assessee not submitting his return can be considered as an
escaped assessment. According to Mr. Shroff, learned
counsel for the State of Madhya Pradesh, "escaped
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assessment" means an amount that had escaped from being
included in the tax assessed. According to him no amount
can be considered as "escaped assessment" unless there has
been an assessment anterior to the finding out of the amount
that had escaped from being included in the assessment made.
He submitted that only such cases come within the scope of
section 8. According to his submission when a return is not
submitted as a consequence of which there was no assessment
the tax thus evaded does not become escaped assessment.
This contention does not appeal to us. In our opinion, when
the liability to pay tax is evaded by one method or other
there is an escapement of assessment. The term "escaped
assessment" includes both non-assessment as well as under-
assessment. When a person is not assessed to tax though he
is liable to be taxed he escapes assessment.
We are unable to agree with Mr. Shroff that while the legis-
lature fixed one year time within which a reassessment has
to be made it fixed no time limit for making the assessment.
This is a prima facie unacceptable argument. The provisions
of the Act are somewhat similar to the Madhya Bharat Sales
Tax Act, 950. While considering the meaning to be given to
the expression "escaped assessment" this Court in Regional
Assistant Commissioner of Sales Tax, Indore v. Malwa
Vanaspati & Chemical
991
Company Ltd.(1) held that where a dealer has not filed the
prescribed return of his turnover at all, it would be a case
of "escaped assessment" and the proceedings for assessment
must be commenced in respect of that turnover within the
period of three years prescribed by s. 10. We are of the
opinion that the ratio of decision apply to the facts in
the present case. Reading sections 6 to 8 together, we come
to the conclusion that the proceedings under section 7 or
section 8 will have to be taken within the period of one
year mentioned in section 8.
For the reasons mentioned above, this appeal fails and the
same is dismissed. Under the circumstances we make no order
as to costs.
K. B. N. Appeal
Dismissed.
(1) [1968]2 S.C.R. 431.
GIPN--S4-1 S. C. India/71-14-10-72-2500.