Bharat Wood Products Co. vs Commissioner Of Sales Tax, New ...
1986 Latest Caselaw 166 Del

JUDGMENT

T.P.S. Chawla, J.

1. Bharat Wood Products Co. was registered as a "dealer" under the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi (the "Act"). It was required to file quarterly returns. As enjoined by section 10(3) of the Act, the tax due according to the returns had to be paid before the returns were filed. For the year 1971-72, all its quarterly returns were filed beyond the prescribed time. The tax due, according to the returns, was also paid late. The amounts of tax payable for the first, second, third and fourth quarters were Rs. 8,782.75, Rs. 8,063.20, Rs. 14,469.15 and Rs. 21,043.10 respectively. These amounts were paid late respectively by 26 days, 12 days, 2 days and 38 days.

2. The Sales Tax Officer was satisfied that the returns were correct and made an assessment on that basis. However, he imposed a consolidated penalty of Rs. 15,000 for the late filing of all the four quarterly returns and the delayed payments of the tax. A heavy penalty was imposed because the dealer was an habitual defaulter.

3. The dealer appealed against the imposition of the penalty, but the Assistant Commissioner of Sales Tax dismissed the same. A further appeal to the Sales Tax Appellate Tribunal met the same fate. At the instance of the dealer, the Sales Tax Appellate Tribunal has referred the following question of law for decision by this Court :

"Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the penalty under section 11 of the Bengal Finance (Sales Tax) Act was legally levied ?"

4. There were three grounds on which, it was said, that the imposition of the penalty was illegal.

5. The first can be disposed of quite shortly. Section 11(1) of the Act reads as follows :

"If no returns are furnished by a registered dealer in respect of any period by the prescribed date, or if the Commissioner is not satisfied that the returns furnished are correct and complete, the Commissioner shall, within eighteen months after the expiry of such period, proceed in such manner as may be prescribed to assess to the best of his judgment the amount of the tax due from the dealer and in making such assessment shall give the dealer a reasonable opportunity of being heard and in the case of failure by a registered dealer to submit in respect of any period, a return accompanied by a receipt from a Government treasury or the Reserve Bank of India as required under sub-section (3) of section 10, by the prescribed date, the Commissioner may, if he is satisfied that the default was made without reasonable cause, direct that the dealer shall pay by way of penalty in addition to the amount of the tax so assessed a sum not exceeding one and a half times that amount."

6. It was contended that proceedings to impose a penalty could be commenced only after an assessment had been made, and the two proceedings could not be simultaneous, as in the present case. There is no warrant for this proposition in the sub-section. It only requires, by implication, that an opportunity should be afforded to the dealer to show whether there was "reasonable cause" for the default in filing the return, and paying the tax, within the prescribed time. Provided that is done, the proceeding for imposing a penalty may concur with the proceeding for making an assessment. The Delhi Sales Tax Rules, 1951, adopt that as the ordinary procedure, Form S.T. XIV prescribed by rule 32 is a combined notice both for making the assessment and imposing a penalty. It tells the dealer "also to show cause ............... as to why in addition to the amount of tax to be assessed ........... a penalty as prescribed under section 11 should not be imposed" on him. Such a notice was sent to the dealer in the present case. In answer, counsel for the dealer submitted an application dated 12th March, 1976, giving reasons for the delay. So, the opportunity implied by section 11(1), was in fact given to the dealer and, indeed, was availed of by him. The procedure was perfectly in order, and there is no substance in this contention of the dealer.

7. The second ground urged on behalf of the dealer is rather subtle and turns on the construction of the words "to the best of his judgment" in section 11(1). I have already quoted that sub-section. It will be observed that it really has two parts. The first half of the sub-section gives the assessing authority power to make an assessment "to the best of his judgment". This power can be exercised in two eventualities : (i) "if no returns are furnished by a registered dealer in respect of any period by the prescribed date", and (ii) "if the Commissioner is not satisfied that the returns furnished are correct and complete".

8. The second half of the sub-section gives the assessing authority power to impose a penalty. But, this power can be exercised only when the first of the two eventualities contemplated by the first half of the sub-section occurs : that is to say, when the returns are not filed by the prescribed date. The power is not available in the second eventuality envisaged.

9. In specifying the quantum of the penalty which can be imposed, the closing words of the sub-section put the limit at one and a half times the "amount of the tax so assessed".

10. The argument of counsel for the dealer is that the words "so assessed" refer to and mean an assessment of the nature of a best judgment. Consequently, he says, if the assessment actually made does not amount to a best judgment, the penalty cannot be imposed. According to him, a best judgment necessarily means an estimate. And since in the present case the returns and the account books of the dealer were accepted, the assessment could not be styled a best judgment. Hence, the power to impose a penalty never arose.

11. So, the question is : what do the words "to the best of his judgment" mean and include ?

12. Before I deal with that question, it is necessary to get a side-issue out of the way so that it does not befog the discussion. Section 11(1) does not deal with the case where valid returns are filed within time and the tax has been paid. Nor does any other section in the Act provide for an assessment being made when such is the case. J. D. Jain, J., takes the view that this is a casus omissus, and goes on to fill the omission by interpreting section 11(1) in the way in which he has done. In my opinion, there is no lacuna because no assessment need be made in such a case. Therefore, it was not necessary to provide for such a case at all.

13. In support of my view, I would refer to M. P. Singh, Deputy Transport Commissioner, M.P. v. Anand Transport Co. P. Ltd. . Although it was the Madhya Pradesh Motor Vehicles (Taxation of Passengers) Act, 1959, which was there under consideration, the provisions were very similar to those of the Bengal Finance (Sales Tax) Act, 1941, as applied to Delhi. The scheme of that Act was that the operator of a stage carriage had to file returns and pay the tax either daily or at such intervals as may be prescribed. One of the questions which arose was whether a notice of demand could be issued when true returns had been filed in time but the tax had not been deposited, and no assessment had been made. There was no provision in the Madhya Pradesh Act giving power to make an assessment in such a case. The High Court took the view that "even where returns had been filed and accepted as correct the Tax Officer has to pass a proper assessment order holding the operator liable for payment of tax in accordance with the return submitted by him". The Supreme Court reversed that judgment, and said :

"No question can arise of any assessment order being made under section 7 by the Tax Officer where the returns are found to be correct and complete."

14. After distinguishing other possible situations, the court again said :

"But, where returns have been accepted as correct nothing more need be done except to recover the tax due which has not been paid and no assessment order need be passed in view of the express language of section 7."

The reason was that "the amount sought to be realised was quantified in the returns themselves".

15. Under the Act applicable in Delhi, likewise, returns were required to be filed at the prescribed intervals. The tax had to be deposited before the returns were filed. The Sales Tax Acts are largely based on the theory of self-assessment : see Madan Mohan v. District Excise and Taxation Officer, Bhatinda [1964] 15 STC 648 (Punj). If the returns are accepted as correct, it means that the assessment made by the assessed himself is accepted, and no order of assessment is necessary to be made. I think, the Bengal Finance (Sales Tax) Act, 1941, was drafted on that understanding of the scheme of things.

16. I revert to the question what is meant by the words "to the best of his judgment" in section 11(1). In any provision of law, the words used must be interpreted in consonance with the context. Of course, one must start by giving them the meaning which they ordinarily convey; but, if there is any doubt, it is the context which dictates the meaning. Whilst one may seek assistance from dictionaries, lexicons, precedents and statutes in pari materia and so forth, the ultimate principle for determining the meaning of the words is to gather it from the context.

17. As regards the present question, the crucial point is that section 11(1) describes the assessment made by the assessing authority, when no returns are furnished by the prescribed date, as an assessment "to the best of his judgment". Therefore, the meaning attributed to the words "to the best of his judgment" must be such as can cover all possible kinds of assessment that may be made in that eventuality.

18. The decided cases show that even when making a best judgment assessment the assessing authority must give a reasonable opportunity to the dealer to produce material which will assist in making the judgment. Even if the dealer produces no material, the assessing authority must act on such material as it can find. The assessment must not be capricious, whimsical or arbitrary. No doubt, there is bound to be some guess-work. But the guess must be based on some material, and should be the "best" possible in the circumstances. The less there is of the speculative element, the better the judgment.

19. Now, suppose a dealer who has not filed his returns in time, files them when the assessing authority proceeds to make an assessment "to the best of his judgment". Should the assessing authority ignore those returns ? Or, decline to took at the account books which he produces ? Both on principle and authority, I think, he should not. On principle, because he must give the assessed an opportunity of producing material relevant for making the best judgment. Indeed, section 11(1) itself says that "in making such assessment" the assessing authority shall give the dealer "a reasonable opportunity of being heard". As to the authorities, I would cite only three. In Bata Shoe Co. P. Ltd. v. Joint Commercial Tax Officer, Harbour Division II, Madras [1968] 21 STC 135 (Mad), it was said :

"Where a true and complete return is filed, though out of time, we do not think that the Act compels the assessing officer to ignore it, indulge in imagination and arrive at something which is not related to facts as shown by the return."

20. Similarly, in R. S. Seth Gopikisan Agrawal and Sons v. C. L. Sharma, Assistant Commissioner of Sales Tax, Jabalpur Region [1971] 28 STC 106 (MP), it was said :

"Of course, for such late filing of returns, the requisite penalty can be imposed by the assessing authorities. But once an assessed is permitted to file a return, although late, that becomes a part of the record and thereafter the assessing authority has to pass an order of assessment on whatever material there might be or on whatever material the assessed might be able to produce."

21. And, there are observations to the same effect in State of Andhra Pradesh v. Donthala Rajaiah [1960] 11 STC 819 (AP).

22. It would, surely, be a starting proposition that merely because a return is filed late, the assessing authority is bound to hold that it is not correct. There will be many a case of an honest dealer filing a return late due to inadvertence or oversight or circumstances beyond his control. Must his return be rejected as incorrect simply because of the delay ? There is no logic in such reasoning, Conversely, if the assessing authority can accept a return filed late as being correct, then he must be able to make an assessment on that basis. Which, then, is the section under which the assessing authority would make such an assessment under the Act ? There is no other section available except section 11(1). From which, it follows, that the words "to the best of his judgment" used in section 11(1) are, in the context, intended, also, cover a case where the assessing authority accepts an correct a return filed late.

23. It is true in common parlance the words "best judgment" carry the connotation that what is being done is to make an "estimate". This is what the Supreme Court said in State of Madras v. S. G. Jayaraj Nadar & Sons [1971] 28 STC 700 (SC). No doubt, they went on to say : "Where account books are accepted along with other records there can be no ground for making a best judgment assessment". But, in my opinion, that observation has to be understood in the context of the case before the court and not treated as an abstract proposition of law. There, it was the Madras General Sales Tax Act, 1959, which was under consideration. Section 12(1) of that Act specifically provided for the making of an assessment in a case where the returns were filed in time and were accepted. That sub-section, though not quoted in the judgment, was obviously known to the court. It was, probably, with that sub-section in mind that they made the observation which I have quoted. There was no similar provision in the Act which was applicable to Delhi.

24. An exact authority for the view I take is Bengal Behar Construction Co. P. Ltd. v. State of Tamil Nadu [1983] 54 STC 176 (Mad.). That, too, was a case under the Madras General Sales Tax Act, 1959. I would endorse the following passage from that case in its entirety :

"According to the learned counsel for the assessed, once the figures furnished by the assessed are accepted and are taken as the basis for the assessments, the assessment cannot be said to be one of best judgment. We are of the view that the term 'best judgment assessment' is not a term of art. Section 12(2) contemplates making best judgment assessment in two circumstances : (i) if no return is filed by the dealer under section 12(1) within the prescribed period; or (ii) if the return submitted by the dealer is found to be incomplete or incorrect. Therefore any assessment made under either of the two contingencies mentioned above will have to be taken as a best judgment assessment. When the section itself refers to the assessment made under either of the two contingencies as a best judgment assessment, we will not be justified in interpreting the expression 'best judgment assessment' with reference to the general principle bearing on the question as to when an assessment can be said to be based on best judgment. Even though the assessment in this case may be based on the figures furnished by the assessed, so long as no return was submitted by the assessed under section 12(1), the assessment made by the assessing authority is one made under section 12(2) which is referred to therein as a best judgment assessment. Once the assessment in this case is taken as one made under section 12(2) of the Act, section 12(3) is automatically attracted."

25. Thus, in my opinion, the assessment made by the assessing authority in the present case was "to the best of his judgment" within the meaning of those words as used in section 11(1). Penalty for late filing of returns could, therefore, be imposed under that sub-section.

26. The third argument was that, since a consolidated sum of Rs. 15,000 had been levied as penalty for the late filing of returns for all the four quarters, it was not possible to know what amount of penalty had been levied for the late filing of each particular return, and, thus, to judge whether the limit stated in section 11(1) had been exceeded or not.

27. The fallacy, here, is to equate a return period with the assessment period. The two periods may, or may not, coincide. There is nothing in the Act which suggests that they must. On the contrary, the Delhi Sales Tax Rules, 1951, clearly indicate that they need not. The return period is dealt with by rules 17 to 23. Those rules show that, for different categories of dealers, different return periods are or may be fixed.

28. The assessment period is dealt with by rule 32. Clause (b) of that rule requires the assessing authority to state, in the notice which he issues in form S.T. XIV, "the period or the return periods in respect of which assessment is proposed". The use of the plural "return periods" plainly shows that the assessment may relate to more return periods than one. Hence, there is no necessary identity between the two.

29. Obviously, in fixing the period for which assessment is proposed, the assessing authority will have regard to administrative convenience and other relevant circumstances. The matter is left to his discretion. In the present case, the assessing authority proposed the usual assessment period of one year, and an assessment was made accordingly. Since, the assessing authority was dealing with the whole year, he could, in law, impose one consolidated penalty, provided, of course, the limit stated in section 11(1) of the Act was not exceeded. In Commercial Tax Officer, Central Section, West Bengal v. B. C. Nawn & Bros. P. Ltd. [1973] 31 STC 379 (Cal), it was held, after examining the provisions of the very same Act, that a consolidated assessment for several return periods was valid. The same must hold true with regard to the imposition of penalties. Perhaps, it would have been better if the penalty imposed for the late filing of each return had been separately indicated. But, we are concerned only with the question of law, and that has to be decided according to the statute and the rules as they existed.

30. A consolidated sum having been imposed as penalty, it is not open to the dealer, or to us, to dissect it, and allocate portions to the late filing of each particular return. No one can say how exactly the mind of the assessing authority operated. The only way in which the consolidated penalty could have been assailed was to demonstrate that it was not possible arithmetically to allocate portions without infringing the limit. But, counsel for the assessed conceded that portions of the sum of Rs. 15,000 could be allocated to the four quarters in a manner that the limit would not be violated. Hence, in my opinion, this argument of the assessed cannot, in law, be sustained.

31. For these reasons, I would answer the question referred in the affirmative. Having regard to the difficulty of some of the questions involved, I would leave the parties to bear their own costs.

J.D. Jain, J.

32. The Appellate Tribunal, Sales Tax, Delhi, has referred the following question of law for decision of this Court as envisaged in section 45 of the Delhi Sales Tax Act, 1975 [corresponding to section 21 of the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi] (hereinafter referred to as "the Act").

"Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the penalty under section 11 of the Bengal Finance (Sales Tax) Act was legally levied ?"

33. The facts germane to the decision of the aforesaid question succinctly are that the assessed M/s. Bharat Wood Products Co. was a registered dealer under the Act at the relevant time, viz., assessment year 1971-72. It was carrying on the business of sale and purchase of plywood, hard board and laminated sheets. The assessed was required to furnish quarterly returns in respect of its taxable turnover. The assessed furnished the following returns :

(i) Rs. 8,782.75 for the first quarter, payment made late by 26 days;

(ii) Rs. 8,063.20 for the second quarter, deposited late by 12 days;

(iii) Rs. 14,469.15 for the third quarter, deposited late by two days; and

(iv) Rs. 21,043.10 for the fourth quarter, paid late by 38 days.

34. The assessing authority framed the assessment for the year 1971-72 vide order dated 23rd March, 1976. The returns furnished by the assessed were accepted as correct but certain deductions claimed by the assessed by way of sales to registered dealers were disallowed for want of requisite declarations. The amounts involved were only Rs. 78.40, Rs. 375.40 and Rs. 189.60 in respect of first, third and fourth quarters respectively and the same were subjected to tax at the rate of 5 per cent. The claim of the dealer with regard to inter-State sales was also accepted vide separate assessment order made under the Central Sales Tax Act. The assessing authority, however, imposed a consolidated penalty of Rs. 15,000 on the assessed on account of the delay in filing the returns as indicated above.

35. Feeling aggrieved, the assessed challenged the imposition of penalty in appeal but met with no success. He went in second appeal to the Appellate Tribunal, Sales Tax, but that too was dismissed by the Tribunal vide order dated 22nd August, 1977. The assessed then sought reference of certain questions said to be of law to the High Court for opinion. Upon hearing the assessed the Tribunal formulated the foregoing question of law and referred the same to this Court for opinion.

36. The learned counsel for the assessed has strenuously canvassed that under the provision of the Act a penalty can be imposed only when assessment is framed by the assessing authority to the best of his judgment and not when the returns furnished by the assessed are accepted and the assessment order is based thereon. In order to appreciate this contention in proper perspective, some relevant provisions of the Act are reproduced below.

"10. Payment of tax and returns. - (1) Tax payable under this Act shall be paid in the manner hereinafter provided at such intervals as may be prescribed.

(2) Such dealers as may be required so to do by 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.

(3) Before any registered dealer furnishes the returns required by sub-section (2), he shall pay into a Government treasury or the Reserve Bank of India or in such other manner as may be prescribed the full amount of tax due from him under this Act according to such returns, and shall furnish along with the returns a receipt from such treasury or bank showing the payment of such amount ....

11. If no returns are furnished by a registered dealer in respect of any period by the prescribed date, or

if the Commissioner is not satisfied that the returns furnished are correct and complete, the Commissioner shall, within eighteen months after the expiry of such period, proceed in such manner as may be prescribed to assess to the best of his judgment the amount of the tax due from the dealer, and

in making such assessment shall give the dealer a reasonable opportunity of being heard, and

in the case of failure by a registered dealer to submit in respect of any period a return accompanied by a receipt from a Government treasury or the Reserve Bank of India as required under sub-section (3) of section 10, by the prescribed date, the Commissioner may, if he is satisfied that the default was made without reasonable cause, direct that the dealer shall pay by way of penalty in addition to the amount of tax so assessed a sum not exceeding one and a half times that amount."

37. It is common ground between the parties that the assessed was required to furnish sales tax returns quarterly and as stated above, the same were furnished by the assessed quarterly although the amount of sales tax for each quarter was deposited late by a few days. So, the crucial question for determination is whether the assessing authority was competent to impose penalty for late filing of the returns/deposit of the amounts in respect of each quarters, even though the assessment was framed on the basis of the returns filed by the assessed and not to the best of his judgment. The submission of the learned counsel for the assessed is that it is only when an assessment is made to the best of his judgment that the assessing authority has the jurisdiction and competence to impose a penalty as would appear from the words "in addition to the amount of the tax so assessed" occurring in the latter part of section 11, but on a careful perusal and consideration of section 11, I do not feel persuaded to subscribe to this view.

38. A dichotomy of section 11 would reveal that it consists of two parts. The first part enables the assessing authority to proceed to assess to the best of his judgment the amount of tax due from the dealer in two events : (i) if no returns are furnished by a registered dealer in respect of any period by the prescribed date, or (ii) if the Commissioner is not satisfied that the returns furnished are correct and complete. The second part empowers the assessing authority to impose a penalty in the case of failure by a registered dealer to submit in respect of any period a return accompanied by a receipt from a Government treasury or the Reserve Bank of India as required under sub-section (3) of section 10 by the prescribed date. Of course, before imposing a penalty the assessing authority must satisfy himself that the default was made without reasonable cause. It may be pertinent to notice here that on its plain language this section envisages imposition of penalty only if there is a delay in filing the return and payment of the amount due by the prescribed date but it does not confer any power on the assessing authority to impose penalty if he is not satisfied that the returns are correct and complete even though he can proceed to make assessment to the best of his judgment in such an eventuality also. This vital omission, to my mind, would in itself be enough to repel the contention of the petitioner's counsel that penalty can be levied only when assessment is based on best judgment and not otherwise. There is, however, another important factor to reckon with. It is that apart from section 11 there is absolutely no other provision in the Act which empowers the assessing authority to frame assessment. This section does not in terms peak of the power of the assessing authority to frame assessment when returns are furnished and the amounts due are deposited by an assessed well within time, and the same are found to be correct and complete in all respects. Can it be said to be a case of casus omissus ? As a general rule a court of law will not readily read into a statute casus omissus nor has it power to fill any gaps disclosed an Act. To do so would be to usurp the function of the legislature. Said Lord Atkinson :

"The intention of the legislature, however obvious it may be, must, no doubt, in the construction of statutes, be defeated where the language it has chosen to use compels to that result, but only where the language compels to it." (See London & India Docks Co. v. Thames Steam Tug & Lighterage Co. Ltd. [1909] AC 15 (23).

39. In other words, the language of an Act of Parliament must neither be extended beyond its natural and proper limits in order to supply omissions or defects nor strained to meet the justice of an individual case. Another sound rule of construction of statutes is that :

"Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity which can hardly have been intended, a construction may be put upon it which modifies the meaning of the words and even structure of the sentence. This may be done departing from the rules of grammar, by giving an unusual meaning to particular words, or by rejecting them altogether, on the ground that the legislature could not possibly have intended what its words signify, and that the modifications made are mere corrections of careless language and really give the true meaning. Where the main object and intention of a statute are clear, it must not be reduced to a nullity by the draftsman's unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used." (see Maxwell on "Interpretation of Statutes" 12th Edition, page 228).

40. The court should, therefore, avoid interpretation which will narrow down an enactment designed to prevent tax evasion. So, even though this part of section 11 is not happily worded the court cannot ignore the basic fact that the provision is intended to provide for assessment of sales tax, whether on the basis of the returns and the account books filed by the assessed or to the best of the judgment of the assessing authority. The heading of the section "Assessment of tax" affords ample guidance in this respect. Generally speaking headings of sections and marginal notes form no part of the statute and as such they cannot control the plain meaning of the enactment but where the language of the enactment is not clear the court is entitled to took at the heading of a statutory provision in order to resolve any doubt that it may have as to ambiguous words. In other words, the heading of a section may sometimes serve as a key to the construction of an ambiguous statutory provision. (see Craies on "Statute Law", 6th Edition, pages 207 and 210). The contention of the learned of the learned counsel for the petitioner is that no formal order of assessment is at all necessary when returns are filed in time and the same are accepted as correct by the assessing authority. Argues he that after all the purpose of making an assessment is to quantify the amount of sales tax payable by a dealer and no specific order would be necessary when the returns and the accounts submitted by the dealer are accepted as correct by the assessing authority. To say the least, acceptance of accounts itself amounts to an assessment. Although the expression "assessment" is not defined in the Act but it obviously implies an investigation into and ascertainment of the correctness of the returns and the accounts filed by an assessed. So the process of assessment would evidently involve determination of the quantum of taxable turnover as also the quantum of tax amount, if any, payable by the assessed. Unfortunately the extreme conciseness of the provision contained in first part of section is responsible for this sort of confusion but there can be no manner of doubt that the court has to make a sense out of it and not a noneense of it. It has to be construed rationally in consonance with the legislative intendment, i.e., the words of the statute must be construed, if possible, so as to give a sensible meaning to them and a slight inexactitude in the language has to be ignored. If literal construction of a statute leads to manifest contradiction of the apparent purpose of the enactment or to absurdity which can hardly have been intended, the court may place a construction which would make the provision workable by departing from the literal rule.

41. The petitioner heavily relies on a rule of construction applicable to taxing statutes in this context, viz., ".... in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." Per Rowlatt, J., in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64 at page 71.

42. Likewise Bhagwati, J., said in A. V. Fernandez v. State of Kerala [1957] 8 STC 561 at page 570 (SC) that :

"If .... the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter."

43. However, it is well-settled that the aforesaid rule of construction applies only to a taxing provision and has no application to all provisions in a taxing statute. As held by the Supreme Court in Gursahai Saigal v. Commissioner of Income-tax [1963] 48 ITR 1 (SC) :

"It is well recognised that the rule of construction that if a case is not covered within the four corners of the provisions of a taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter applies only to a taxing provision and has no applications to all provisions in a taxing statute. It does not apply to a provision not creating a charge for the tax but laying down the machinery for its calculation or procedure for its collection. The provisions in a taxing statute dealing with machinery for assessment have to be construed by the ordinary rules of construction, that is to say, in accordance with the clear intention of the legislature, which is to make charge levied effective." (see also Banarsi Debi v. Income-tax Officer, District IV, Calcutta .

44. I need hardly say that the first part of section 11 simply provides for the machinery for the assessment of sales tax. It does not in itself create or fasten liability for payment of sales tax on the assessed. It is section 4 of the Act which deals with incidence of taxation under the Act and fastens liability to pay tax under the Act. Further, section 5 deals with the rates of tax. So, on a mere juxtaposition of the said sections with sections 10 and 11 which provide for payment of tax, furnishing of returns and assessment of sales tax it would be manifest that the first part of section 11 which we are concerned at present cannot strictly speaking be termed as a taxing provision so as to warrant stringent construction.

45. Section 11 would, therefore, cover all cases of assessment of sales tax, whether based on the returns and accounts furnished by the assessed or made to the best of judgment of the assessing authority. It simply enables the assessing authority to proceed to make best judgment assessments under certain events. It is one thing to say that the assessing authority shall proceed to make assessment to the best of his judgment under certain conditions, but another to say that every assessment made under such a situation must inevitably be a best judgment assessment, e.g., where returns furnished by an assessed although belated is accepted on verification of accounts, etc., it would be totally wrong to call it "best judgment assessment". There is thus no correlation between the making of best judgment assessment and the imposition of penalty and the penalty is leviable only if there is delay in furnishing the return and depositing the amounts due by the prescribed date. It is expressly so stated in the second part of section 11. On a parity of reasoning the words "the amount of the tax so assessed" occurring in the second part of the section cannot be said to relate to or refer to best judgment assessment only. The penalty can, therefore, be imposed by the assessing authority whenever there is delay in filing the returns/depositing the amounts due irrespective of whether the assessing authority makes assessment on the basis of the returns furnished by the assessed or to the best of his judgment. The contention of the learned counsel for the petitioner that penalty can be imposed only in the event of the assessing authority resorting to best judgment assessment, is, therefore, devoid of any merit.

46. I may now notice various decisions on which reliance is placed by the learned counsel for the petitioner. In State of Madras v. S. G. Jayaraj Nadar & Sons [1971] 28 STC 700 (SC), it was held by the Supreme Court that :

"Penalty can be levied under section 12(3) of the Madras General Sales Tax Act, 1959, on the ground that the dealer has submitted an incomplete or incorrect return only if the assessment had to be made to the best of his judgment by the assessing authority. Where certain items which are not included in the turnover are discovered from the dealer's own account books and the assessing authority includes these items in the dealer's turnover, the assessment cannot be regarded as based on best judgment and penalty cannot be levied in respect of such items."

47. The Supreme Court further said that where the quantum of turnovers was based on the assessed's account books which are accepted along with other records there can be no ground for making a best judgment assessment, it being well-known that the best judgment assessment has to be on an estimate. In other words, an element of guess-work is bound to be present in best judgment assessment although it must have a reasonable nexus to the available material and the circumstances of each case. To the same effect are the decisions in Bata Shoe Co. P. Ltd. v. Joint Commercial Tax Officer [1968] 21 STC 135 (Mad.) and Deputy Commissioner of Commercial Taxes v. P. V. Perumal Swami [1983] 53 STC 221 (Mad.), which decisions are also under the Madras (Tamil Nadu) General Sales Tax Act, 1959. Assessment was made by the assessing authority in all the said cases under section 12(2) of the said Act which empowers the assessing authority to assess the dealer to the best of its judgment in two events : (i) if no return has been submitted by the dealer under sub-section (1) within the prescribed period, and (ii) if the return submitted by him appears to be incomplete or incorrect. Sub-section (3) of section 12 empowers the assessing authority to levy the penalty only when it makes an assessment under sub-section (2). In other words, when the assessing authority makes an assessment to the best of its judgment, it can levy a penalty. This is explicit from the opening words of sub-section (3) which reads as under :

"When making any assessment under sub-section (2), the assessing authority may also direct the dealer to pay, in addition to the tax assessed, a penalty not exceeding one a half times the amount of tax due on the turnover ......"

48. It may also be pertinent to notice here sub-section (1) of section 12 of the said Act which states in terms that the assessment of a dealer shall be on the basis of the prescribed return relating to his turnover submitted in the prescribed manner within the prescribed period.

49. The learned counsel for the Revenue has on the other hand canvassed that any assessment made under section 11 of the Act will of necessity be only a best judgment assessment and as such the assessing authority will be competent to impose penalty in every case of assessment made pursuant to the foregoing provisions contained in section 11 of the Act. His line of argument is that best judgment assessment is contemplated in two situations, namely, (1) where no returns are furnished by the prescribed date, and (2) the returns furnished are not correct and complete to the satisfaction of the assessing authority and, therefore, it would follow as a necessary corollary that any assessment made in any of these contingencies is bound to be best judgment assessment. In other words, when the statutory provision itself calls such an assessment "best judgment assessment" the court need not look into anything more. Reliance in this context has been placed by him on Bengal Behar Construction Co. P. Ltd. v. State of Tamil Nadu [1983] 54 STC 176 (Mad.). In that case the assessed had not filed any return at all. However, sales effected by the assessed were discovered by the assessing authority in the course of investigation and verification of the accounts of one M/s. Ranga Structurals and on an enquiry being made in respect of the turnovers of the assessed, the latter furnished details of the sales effected during the assessment year 1971-72 and 1972-73. With the figures so furnished by the assessed, the assessing authority completed the assessment. The question arose whether the assessment made under the circumstances could be said to be one of best judgment. A Division Bench of the Madras High Court answered this question in the affirmative observing that :

"We are of the view that the term 'best judgment assessment' is not a term of art. Section 12(2) contemplates making best judgment assessment in two circumstances : (i) if no return is filed by the dealer under section 12(1) within the prescribed period; or (ii) if the return submitted by the dealer is found to be incomplete or incorrect. Therefore, any assessment made under either of the two contingencies mentioned above will have to be taken as a best judgment assessment. When the section itself refers to the assessment made under either of two contingencies as a best judgment assessment, we will not be justified in interpreting the expression 'best judgment assessment' with reference to the general principle bearing on the question as to when an assessment can be said to be based on best judgment."

50. With all the respect at my command, if I may say so, I do not feel persuaded to subscribe to the reasoning of their Lordships. In legal parlance the expression "best judgment assessment" has come to stay as a definite and precise concept connoting that the assessment is made not on the basis of returns and the accounts furnished by an assessed in support thereof but on an estimate made by the assessing authority which may, of course, be based inter alia, on the accounts and documents furnished by the assessed. As observed by the Supreme Court in S. G. Jayaraj Nadar & Sons [1971] 28 STC 700 (SC), an element of guesswork is bound to be present in best judgment assessment but it must have a reasonable nexus to the available material and the circumstances of each case. Where account books are accepted along with other records there is no question of a best judgment assessment. Significantly, the Supreme Court was very much concerned with the true construction of the self-same provision of the Madras General Sales Tax Act, 1959, which had come up for interpretation before the Division Bench in Bengal Behar Construction Co. P. Ltd. [1983] 54 STC 176 (Mad.). So the view expressed by their Lordship of Supreme Court was binding on the Madras High Court. Unfortunately, however, the Bench did not notice either the judgment of the Supreme Court in S. G. Jayaraj Nadar & Sons [1971] 28 STC 700 (SC) or the decision of another Division Bench of their own High Court in Deputy Commissioner of Commercial Taxes, Tiruchirapalli v. P. V. Perumal Swami [1983] 53 STC 221 (Mad.) which was prior in point of time. Hence, the Bench decision of the Madras High Court in Bengal Behar Construction Co. P. Ltd. [1983] 54 STC 176 which flies in the face of the aforesaid Supreme Court judgment can be of no avail to the Revenue.

51. It is thus manifest that sub-section (3) of section 12 of the Madras General Sales Tax Act expressly provides for the contingencies in which the assessing authority may impose a penalty, namely, that when an assessment is made under sub-section (2) and not under sub-section (1) of section 12. Delay in filing the sales tax return is not in itself sufficient to attract penal action by way of imposition of penalty and it is only when the assessing authority takes recourse to the best judgment assessment that it can levy the penalty also. Best judgment assessment is, therefore, a condition precedent to the levy of penalty under the said Act. However, section 11 of the Act does not envisage any such limitation or restriction on the power of the assessing authority to impose penalty. Hence, the levy of penalty cannot be linked to best judgment assessment and mere delay on the part of the assessed in filing the return/depositing the amount of tax due without any reasonable cause would be enough per se to warrant imposition of penalty. The decision adverted to above, therefore, can have no bearing on the case on hand in view of the clear distinction in the relevant provisions of the Madras General Sales Tax Act and section 11 of the Act.

52. The learned counsel for the petitioner next submitted that under the provisions of the Act and the Rules made there under called "the Delhi Sales Tax Rules, 1951" the returns to be filed by registered dealer are quarterly, the amounts of sales tax due from the assessed have also to be paid/deposited quarterly before filing the returns and as such a quarter of a year would constitute a unit of assessment for the purpose of sales tax. Consequently the assessing authority, in the instant case, acted illegally in imposing a consolidated penalty of Rs. 15,000 for the whole year even though the delay in filing the returns differed from quarter. Thus, according to him, the levy of consolidated penalty has resulted in prejudice to the petitioner inasmuch as the assessing authority would have considered the delay in filing each quarterly return as also the question if there was sufficient cause for the same separately had he proceeded to determine quantum of penalty for each quarter separately, but he not having done so consciously or sub-consciously magnified the quantum of delay in submitting all quarterly returns and imposed a heavy penalty of Rs. 15,000 as lump sum.

53. It is no doubt true that there are certain provisions in the Act and the Rules made there under which would warrant an inference that the assessing authority may treat each quarter for which returns are filed by a registered dealer as a separate period for assessment of sales tax. However, as shall be presently seen, the liability to pay sales tax is annual although manner of calculation of sales tax as provided in the Act and the rules made there under in the case of registered dealers is quarterly.

54. As stated above, section 4 of the Act deals with incidence of taxation and creates liability for payment of sales tax. Sub-section (1) of the said section provides that every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded taxable quantum shall be liable to pay tax under the Act on all sales effected after the date was notified. As per clause (j) of section 2 of the Act, "year" means the financial year. It is therefore, manifest that before a dealer incurs liability to pay sales tax his gross turnover during the year immediately preceding the commencement of the Act should have exceeded the taxable quantum. Sub-section (2) of section 4 provides that every dealer to whom sub-section (1) thereof does not apply, shall be liable to pay tax under the Act provided his gross turnover calculated from the commencement of any year exceeds the taxable quantum at any time within such year. Sub-section (3) of section 4 lays down that every dealer who has become liable to pay tax under the Act shall continue to be so liable until the expiry of three consecutive years during each of which his gross turnover has failed to exceed the taxable quantum and such further period after the date of such expiry as may be prescribed, and on the expiry of the latter period his liability to pay tax shall cease. [See also rule 12(1)(a)]. Sub-section (4) of section 4 provides for revival of liability to pay tax. It states that every dealer whose liability to pay tax under this Act has ceased under the provisions of sub-section (3), shall, if his gross turnover calculated from the commencement of any year again exceeds the taxable quantum at any time within such year be liable to pay such tax on the expiry of two months from the date on which such gross turnover again first exceeds the taxable quantum on all sales effected after such expiry. On a conjoint reading of these provisions, therefore, it is crystal clear that a dealer incurs liability to pay sales tax if his gross turnover in a year exceeds the taxable quantum and he ceases to be so liable if his gross turnover does not exceed the taxable quantum for three consecutive years but he renders himself liable to pay tax again if his gross turnover exceeds the taxable quantum at any time during a year calculated from the commencement of that year which would obviously mean financial year. Thus, section 4 which, as stated above, deals with incidence of tax leaves no room for doubt that sales tax is a yearly tax and not a quarterly tax as is sought to be made out. This conclusion is further fortified on a perusal of sections 7 and 8. Sub-section (1) of section 7 prohibits a dealer who has incurred liability to pay tax under section 4 of the Act to carry on business as a dealer unless he has been registered and possesses a registration certificate. Section 8 of the Act provides for voluntary registration of certain categories of dealers. Under it a dealer of the category specified therein whose gross turnover during a year exceeds Rs. 10,000 may notwithstanding that he may not be liable to pay tax under section 4, apply in the prescribed manner to the prescribed authority for registration under the Act. Here too, a dealer who is not compulsorily registrable under section 7 of the Act can apply for voluntary registration provided he possesses the necessary qualification of having a gross turnover exceeding Rs. 10,000 during a year. As seen above, section 11(1) deals with assessment of sales tax in the case of registered dealer. Section 11(2) deals with assessment of sales tax in the case of a dealer who has become liable to pay tax under the Act in respect of any period but has failed to get himself registered. This sub-section empowers the assessing authority to assess the amount of tax due from the dealer in respect of such period and all subsequent periods to the best of his judgment after giving the dealer a reasonable opportunity of being heard. He may also impose penalty on the dealer in addition to the amount of tax so assessed. Sub-section (2a) of section 11 days down that no assessment under sub-section (1) shall be made after the expiry of four years and no assessment under sub-section (2) shall be made after the expiry of six years from end of the year in respect of which or part of which or part of which the assessment is made. Lastly, section 11A which deals with assessment and reassessment of tax is pertinent to notice in this context. It empowers the assessing authority to assess or reassess, as the case may be, the sales tax if he is satisfied that the turnover of the business of a dealer has escaped assessment or has been under-assessed in any year. A combined reading of all these provisions leaves no room for doubt that assessment of sales tax is annual in nature. It is a yearly affairs in the sense that a dealer incurs liability to pay sales tax on the basis of his gross turnover in a year. His liability to pay sales tax ceases only if the gross turnover falls below the taxable quantum in three consecutive years. Further the liability for assessment under section 11A on account of escaped assessment or under-assessment is also determined in relation to a year. Finally the terminus a quo for commencement of the overall period within which assessment can be made under sub-section (1) or sub-section (2) of section 11 is also the end of the year in respect of which or part of which the assessment is made. This is one side of the picture.

55. As for the other side, which is sought to be highlighted by the learned counsel for the petitioner, section 10 of the Act comes first. As seen above, under sub-section (1) of this section the tax payable under the Act is to be paid at such intervals and in the manner as may be prescribed. The expression "prescribed" means prescribed by rules made under the Act. [See clause (e) of section 2]. Under sub-section (2) of section 10, the dealers are required to furnish returns by such dates and to such authority as may be prescribed. Sub-section (3) thereof mandates that a registered dealer shall pay into Government treasury or the Reserve Bank of India in such manner as may be prescribed the full amount of tax due from him under the Act before he furnishes the returns as required by sub-section (2). The amount to be deposited should be in accordance with the return which he files. Rules 17 to 31 of the Delhi Sales Tax Rules deal with returns of taxable turnover. Under rule 17 every registered dealer whose taxable turnover, in the opinion of the appropriate assessing authority during the first three years after the commencement of the Act is not likely to exceed 10 per cent of his gross turnover is required to furnish return in form S.T. VIII annually within thirty days from the expiry of each year and under rule 18 every registered dealer whose taxable turnover does not exceed 10 per cent of his gross turnover calculated over the latest three years for which figures are available, after the expiry of three years from the commencement of the Act, is also required to furnish returns in form S.T. VIII annually within thirty days from the expiry of each year. On a plain reading of these two rules, it is obvious that the return period under both these rules is a year and not quarter. This is abundantly clear from the reading of the next following rule, viz., rule 19, which empowers the appropriate assessing authority to fix fresh return periods for a registered dealer referred to under rule 18 whose taxable turnover exceeds in any year 10 per cent of the average gross turnover calculated in the manner provided in the aforesaid rule (rule 18). Ordinarily the assessing authority shall not reduce the return period unless rule he is satisfied that the excess over 10 per cent is likely to continue. Then comes rule 20 which admittedly applies to the petitioner. It provides that every registered dealer other than those referred to in rules 17, 18 and 19 shall furnish, returns in form S.T. VIII quarterly within thirty days from the expiry of each quarter. Rule 21 further provides that the return periods fixed for any dealer shall remain in force for not less than three years and shall continue to remain in force even thereafter until the appropriate assessing authority fixes a different return period in accordance with these rules. This is subject to provisions of rule 23 which empowers the appropriate assessing authority for reasons to be recorded in writing to fix monthly returns for a dealer, who is, may or would otherwise be required to file returns quarterly or annually under the aforesaid rules. Rule 6(1) provides that the registration certificate shall, inter alia, specify the return periods and the intervals at which the tax shall be payable.

56. On a conjoint reading of the aforesaid provisions of the Act and the Rules, it is manifest that they relate to the manner and the procedure for furnishing periodical returns and payment of sales tax due from an assessed on the basis of such returns. They have absolutely no bearing on the basic question whether liability to pay tax is yearly or quarterly. Indeed, an analytical examination of the various rules leaves no room for doubt that while rules 17 and 18 talk of annual returns, rule 20 provides for furnishing quarterly returns and rule 23 empowers the appropriate assessing authority to even order furnishing of monthly returns by a registered dealer. That is why the certificate of registration is required to state the returns periods as also the periods for which tax is to be paid by a registered dealer. By its very definition "return period" means the period for which returns are prescribed to be furnished by a dealer and it need not coincide with the assessment period. Obviously these provisions cannot be construed to imply that the liability to pay sales tax would itself be yearly, quarterly or monthly, as the case may be, depending on the period for which a registered dealer is required to furnish returns or deposit the amount of tax due in respect thereof. Resort to quarterly or monthly furnishing of returns and payments of sales tax amount due thereon is obviously made to ensure that the tax is paid by every registered dealer promptly at short intervals. It leads to efficiency in collection of revenue and minimises the chances of default on the part of assesseds. Certainly this procedure which is based on considerations of expediency and convenience cannot impinge upon the annual nature of the tax liability.

57. No doubt, as section 11(1) of the Act provides if no returns are furnished by a registered dealer in respect of any period by the prescribed date or if the Commissioner is not satisfied that the returns furnished are correct and complete, he has to proceed in such manner as may be prescribed within eighteen months after the expiry of such period to assess to the best of his judgment the amount of tax due from the dealer. The expression "such period" in this context obviously implies return period. The span of eighteen months has, therefore, to be computed from the expiry of the return period and not the year as in the case of outer limit prescribed under sub-section (2a) of section 11 on the expiry of which no assessment can at all be made but again this provision does not in any manner detract from the fundamental position that the sales tax is an annual feature; even though there is no bar to the assessing authority making assessment in respect of each quarterly return separately.

58. It may be useful at this stage to notice also amended rule 25B(i) which permits a dealer under certain circumstances to compound tax assessable on his taxable turnover for the following year by paying a lump sum in lieu thereof. This provision certainly militates against the proposition that the return period must necessarily be a unit of assessment and emphasises that the composition can be for the whole of the ensuing year and not a part of it.

59. This very question came up for consideration before a Division Bench of the Calcutta High Court in Commercial Tax Officer, Central Section, West Bengal v. B. C. Nawn & Bros. P. Ltd. [1973] 31 STC 379. On a consideration of the various provisions of the Act and the Rules made there under by the Bengal Government, especially sections 4, 5, 7, 8, 10 and 11 of the Act and Rules 17, 19, 21, 24, 30 and 32 of the Bengal Sales Tax Rules, their Lordship held that :

"Under the Bengal Finance (Sales Tax) Act, 1941, the tax is annual and the assessment is also annual, though returns may be made by dealers quarterly or half-yearly. It is, therefore, competent for the sales tax authorities to consolidate the demands for four quarters in one assessment proceeding."

60. It may be pertinent to notice here that though rules 30 and 32 of the Bengal Sales Tax Rules specifically provide for assessment of tax payable by a dealer for the whole year but that is in respect of a dealer for whom annual return periods have been prescribed. So the said rules can have possibly no bearing on the proper construction of the provisions of the Act and the Rules as applicable to Delhi.

61. In Mathra Parshad and Sons v. State of Punjab [1962] 13 STC 180 (SC), the appellant was a registered dealer under section 7 of the East Punjab General Sales Tax Act, 1948, and was selling manufactured tobacco. On 1st April, 1954, the Punjab Tobacco Vend Fees Act, 1954, came into force. On 27th September, 1954, the Government issued a notification exempting manufactured tobacco from the levy of sales tax. As the notification did not mention the date from which the exemption operated, the question arose whether the notification had effect only from the 27th September, 1954, or the beginning of the financial year. It was held by the Supreme Court (Kapur, J., dissenting) that :

"There is no doubt that the tax is a yearly tax. It was payable, in the firs instance, by a dealer whose gross turnover during the financial year immediately preceding May 1, 1949, was above the taxable quantum. The tax is to be levied on the taxable turnover of a dealer every year ........ The method of collection allows collection of tax at intervals; in some cases, the tax is collected at the end of the year; in some others, the tax is collected quarterly and in still other cases, even monthly ........ The divisions of the year and the taxable turnover into different parts are to make easy the collection of tax, and form part of the machinery sections. If the tax is yearly and is to be paid on the taxable turnover of a dealer, then the exemption, whenever it comes in, in the year for which the tax is payable, would exempt sales of those goods throughout the year, unless ........"

62. Needless to say that the charging sections in the said Act were couched in almost identical language as those in the Act. In Om Parkash Rajinder Kumar v. K. K. Opal, Excise and Taxation Officer (Enforcement), Amritsar [1967] 19 STC 153, it was held by a Full Bench of the Punjab High Court that the sales tax may be assessed under section 11 of the Punjab General Sales Tax Act on the basis of quarterly returns submitted by the dealer pursuant to the notice served on him under section 10(3) thereof before the close of the relevant financial year. While affixing its seal of approval on the aforesaid decision, the Supreme Court in State of Punjab v. Sant Singh Kanwarjit Singh [1970] 25 STC 525 (SC), made it clear that :

"Under the Punjab General Sales Tax Act, 1948, sales tax is an yearly tax, but the provisions relating to assessments contemplate assessment for periods shorter than a complete year, and for that purpose the tax payers are required by the Act to submit periodical returns of their turnover and to pay tax due thereon. Assessment proceedings under that Act may be started even before the expiry of the year, where provision is made for submission of periodical returns, and such assessments are not provisional. Adjustment may possibly have to be made when the assessment of the final quarter is made, but the taxing authorities are not debarred from determining and assessing the quarterly turnover of tax."

63. The correct legal position which would thus emerge on a consideration of various provisions of the Act and the Rules appears to be that sales tax is a yearly tax even though return periods may vary being annual, quarterly or even monthly. Further, it would be open to the assessing authority if he so deems fit to even assess sales tax on quarterly basis but that would not in any way alter the nature of the sales tax being yearly one because the liability to pay tax accrues on the basis of gross/taxable turnover during a year and not on the footing of gross/taxable turnover during a return period whether it be a year, quarter or a month. Hence, I am of the considered view that the assessing authority is competent to make a single assessment with regard to sales tax payable during a year even though returns are required to be filed quarterly on monthly.

64. Reliance has been placed by the learned counsel for the petitioner on Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur [1963] 14 STC 976 (SC), Anandji Haridas & Co. P. Ltd. v. S. P. Kushare, Sales Tax Officer, Nagpur [1968] 21 STC 326 (SC) and Shyama Charan Shukla v. State of Madhya Pradesh [1974] 34 STC 504 (MP) [FB]. All these cases were concerned with the interpretation of certain provisions of the C.P. and Berar Sales Tax Act and on a consideration of the same, it was held that as tax was levied by section 5 on a dealer's taxable turnover and as the taxable turnover meant taxable turnover for a quarter, a quarter was a unit of assessment under the said Act. However, a perusal of these decisions would show that the relevant provisions of the said Act differ in material respects from the corresponding provisions of the Act. For instance, section 11(1) thereof clearly provides that, "If the Commissioner is satisfied that the returns furnished by a dealer in respect of any period are correct and complete, he shall assess the dealer on them". This provision itself renders the return period a unit of assessment. Further sub-section (5) of section 11 of the said Act which deals with non-registration of a dealer lays down that :

"If upon information which has come into his possession, the Commissioner is satisfied that any dealer has been liable to pay tax under this Act in respect of any period and has nevertheless willfully failed to apply for registration, the Commissioner shall, at any time within three calendar years from the expiry of such period ......."

65. Likewise section 11A of the said Act which deals with escaped assessment/under-assessment provides that :

"If in consequence of any information which has come into his possession the Commissioner is satisfied that any turnover of a dealer during any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made there from, the Commissioner may, at any time within three calendar years from the expiry of such period ........"

66. It bears repetition that in contrast to the aforesaid provisions section 11A of the Act which deals with escaped assessment/under-assessment in any year the assessing authority can proceed to assess or reassess the sales tax, as the case may be, within a period of three years following the close of the year for which the turnover is proposed to be assessed or reassessed. So the terminus a quo under section 11A of the Act is the close of the year of escaped assessment/under-assessment and not the return period. Likewise, assessment can be made under sub-section (2) of section 11 in the case of a dealer who has failed to get himself registered within six years form the date of the year in respect of which or part of which the assessment is made. Hence, these authorities are clearly distinguishable and are of absolutely no avail to the petitioner.

67. I now revert to the contention of the learned counsel for the petitioner that the penalty ought to have been imposed by the assessing authority for each quarter separately having regard to the amount of delay in filing the return for the particular quarter. Cumulative imposition of penalty, according to the learned counsel, is likely to prejudice the mind of the assessing authority inasmuch as combining delay in filing the returns for all the quarters tends to magnify the default beyond proportion an that may perhaps be the reason for imposition of heavy penalty in the instant case. He has also pointed out that no show cause notice was served upon the assessed before levy of penalty. His line of argument precisely is that after the assessing authority had determined the quantum of delay and sufficiency or otherwise, therefore, it was imperative for him to call upon the assessed to show cause against imposition of proposed penalty. Reliance in this context has been placed by him on Khem Chand v. Union of India . In the said case while interpreting what is meant by "reasonable opportunity" as contemplated in article 311(2) of the Constitution of India, the Supreme Court had held that :

"The reasonable opportunity envisaged to the Government servant by the provision contained in article 311(2) includes (a) an opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based; (b) an opportunity to defend himself by cross-examining the witnesses produced against him and by examining himself or any other witnesses in support of his defense; and finally (c) an opportunity to make his representation as to why the proposed punishment should not be inflicted on him, which he can only do if the competent authority, after the enquiry is over and after applying his mind to the gravity or otherwise of the charges proved against the Government servant tentatively proposes to inflict one of the three punishments and communicates the same to the Government servant."

68. To say the least, there is absolutely no analogy between the constitutional provisions of article 311(2) which are designed to punish delinquent/erring Government servants and the imposition of penalty under section 11(1) of the Act which is in the nature of a fine and is in addition to the amount of tax payable by the assessed. The provisions of the Act and the Rules made there under contain ample safeguards against arbitrary exercise of this power by the assessing authority. Rule 32 requires service of a notice in form S.T. XIV upon a dealer when it appears to the appropriate assessing authority to be necessary to make an assessment under section 11,

(a) calling upon him to produce his books of accounts and other documents, which such authority wishes to examine, together with any objection which the dealer may wish to prefer and any evidence which he may wish to produce in support thereof; and

(b) stating the period or the return periods in respect of which assessment is proposed, and he shall fix a date, giving reasonable time for producing such accounts and documents and for considering any objection which the dealer may prefer.

69. Rule 36 lays down that after considering any objection made by the dealer and any evidence produced in support thereof, the assessing authority after giving the dealer an opportunity of being heard, shall assess the amount of tax (if any), and impose a penalty (if any) if he is satisfied that the default in submitting the returns were made without reasonable cause.

70. It is thus abundantly clear that the assessing authority is bound to afford an opportunity to the assessed to be heard before assessing the amount of tax and imposing a penalty on him under section 11(1) of the Act. This is perfectly in conformity with the principle of natural justice. True, there is no specific provision in the Act or the rules for a separate notice to show cause against imposition of the proposed penalty but that would hardly be a ground to render levy of penalty illegal or invalid. Obviously the aforesaid provisions envisage that inviting abjections, if any, by service of notice in form S.T. XIV and giving an opportunity to the assessed for hearing are sufficient safeguards against arbitrary exercise of power by the assessing authority in making assessment and levying penalty. Evidently no useful purpose is likely to be served by issuing a separate notice for showing cause against imposition of proposed penalty. It bears repetition that section 11(1) explicitly says that the penalty is to be imposed only if the default is made without sufficient cause. It may be pertinent to notice in this context that the petitioner was fully conscious of his duty to explain the delay in filing the quarterly return and in his application dated 12th May, 1976, to the Sales Tax Officer which was apparently filed in reply to the show cause notice in form S.T. XIV, he explicitly stated that the delay was caused due to non-availability of his accountant who was ill. It is a different matter that this explanation did not find favor with the assessing authority an he thought it fit to impose a heavy penalty of Rs. 15,000. So, there is no question of any prejudice to the petitioner. The assessing authority, inter alia, took into account the fact that the petitioner was guilty of delay in filing quarterly returns of the previous year also. Perhaps he was influenced by this consideration in imposing a heavy penalty. So even though there may be some merit in the submission of the learned counsel for the petitioner that the amount of penalty is rather high having regard to all the circumstances of the case there can be no manner of doubt that the assessing authority had the jurisdiction and was competent to impose penalty cumulatively for the delay in filing all the four quarterly returns in the relevant year. Since the jurisdiction of this Court is advisory and not supervisory in a matter like this, we are unable to afford any relief to the petitioner in the matter so long as action of the assessing authority is within the four corners of law.

71. To sum up, therefore, my answer to the question referred is in the affirmative.

72. Having regard to all the circumstances of the case an the complicated nature of the question involved therein, I leave the parties to bear their own costs.

73. Reference answered in the affirmative.