Prem Nath Motors (P) Ltd. vs Commissioner Of Sales Tax
1991 Latest Caselaw 298 Del

JUDGMENT

B.N. Kirpal, J.

1. This is a reference under section 21(1) of the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi in respect of the assessment year 1967-68.

2. For the aforesaid assessment year 1967-68 the dealer filed his returns of sales late. Along with the returns the tax which was due was paid. There was a delay in the filing of the returns and depositing the tax in respect of each of the four quarters.

3. On 31st December, 1971, the assessing authority passed the assessment order. The returns which were filed by the dealer were accepted and it was noted that the total amount of outstanding sales tax was only Rs. 3.40. For the reason that there had been a delay in filing the return and paying the tax in respect of the first three quarters a penalty of Rs. 23,000 was levied. No penalty was levied in respect of the 4th quarter because extension for filing the return had been granted. By the said assessment order the total tax, including penalty, was computed at Rs. 23,003.40. The dealer was directed to deposit this sum in terms of the demand notice and challan which was issued.

4. Notice of demand which was issued specified the aforesaid amount of Rs. 23,003.40. Like the assessment order this notice of demand was also dated 31st December, 1971. An appeal was filed against the said demand notice and it was contended that the demand notice was not valid as the date by which the payment of tax was to be made was not mentioned by the assessing authority. The Assistant Commissioner accepted this contention and vide order dated 15th May, 1972, he directed the assessing authority to issue a fresh demand notice in accordance with law. A fresh demand notice was issued and the dealer was required to pay the amount due on or before 20th July, 1972.

5. The dealer filed an appeal and contended that the notice of demand which was now issued was barred by time. It was contended that the limitation expired on 31st March, 1972 and a valid demand should have been issued prior to that date. This contention was not accepted and the appeal was dismissed. A revision was filed before the Deputy Commissioner which met with the same fate. A second revision was filed before the Financial Commissioner. Vide order dated 18th November, 1974, the Financial Commissioner dismissed the revision petition.

6. The dealer then filed an application requiring the Appellate Tribunal, which succeeded the Financial Commissioner, to state the case and refer the question of law to this Court. The Appellate Tribunal stated the case and referred the following question to this Court :

"Whether, on the facts and circumstances of the case, the Financial Commissioner was right in holding that the assessment order was within limitation ?"

7. As would be evident the short question which is involved in this case is whether the demand notice is also required to be issued within the period of four years which is prescribed for completion of the assessment. In order to decide this question it is necessary to refer to relevant provisions of the said Act which are section 11(2a) and (3) as well as section 20(1) :

8. Section 11(2a) :

9. 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 the end of the year in respect of which or part of which the assessment is made :

10. Provided that where such assessment is made in consequence of or to give effect to any order of an appellate or revisional authority or of a court, the period of four years or six years, as the case may be, shall be reckoned from the date of such order;

(3) The amount of tax -

(a) due where the returns are furnished without receipt showing full payment thereof, or

(b) assessed under sub-section (1), less the sum, if any, already paid by the dealer in respect of the said period, or

(c) assessed under sub-section (2), shall, together with any penalty that may be directed, to be paid under any of the provisions of this section (or section 22A), be paid by the dealer into a Government treasury or the Reserve Bank of India (or in such other manner as may be prescribed) by such date as may be specified in a notice issued by the Commissioner for this purpose and the date to be so specified shall be not less than thirty days from the date of service of such notice :

11. Provided that the Commissioner may, in respect of any particular dealer and for reasons to be recorded in writing extend the date of such payment or allow such dealer to pay the tax due and the penalty, if any, by Installments.

12. Section 20(1) :

13. Any dealer may in the prescribed manner appeal to the prescribed authority against any assessment within sixty days or such further period as may be allowed by the Commissioner for cause shown to his satisfaction from the receipt of notice issued under sub-section (3) of section 11 in respect thereof :

14. Provided that no appeal shall be entertained by the said authority unless he is satisfied that such amount of the tax as the appellant may admit to be due from him has been paid.

15. The reading of section 11(2a) clearly shows that the period which is prescribed is for making of an assessment. It is specifically mentioned that no assessment order will be made, inter alia, after the expiry of four years. Sub-section (3) provides that the amount of tax which is assessed or due shall be directed to be paid by the dealer by such date as may be specified in a notice issued in this behalf. As we read the said two provisions it is clear that sub-section (2a) requires an assessment order being passed whereby the tax has to be computed. The tax so computed is required to be paid pursuant to a notice which is issued under section 11(3). The notice which is issued under sub-section (3) of section 11 is a ministerial act to give effect to the assessment which is made under sub-section (2a) of section 11. The period of limitation which is prescribed is in respect of the assessment and not in respect of notice which is issued under section 11(3).

16. For the purpose of filing of an appeal, however, it is a notice which is issued under section 11(3) which becomes relevant. This is because section 20 prescribes the period of limitation within which the appeal can be filed. According to the said provision appeal can be filed within 60 days of the receipt of the notice issued under section 11(3). Therefore, whereas an appeal can be filed only after the receipt of the notice of demand the assessment order has to be passed within the prescribed period in terms of section 11(2a).

17. Relying upon the decision of the Supreme Court in the case of Commissioner of Income-tax v. Balkrishna Malhotra [1971] 81 ITR 759 and the decisions of the Calcutta High Court in the cases of Commissioner of Income-tax v. Krishwanti Punjabi [1983] 139 ITR 703 and Mohendra J. Thacker and Co. v. Commissioner of Income-tax [1983] 139 ITR 793, it has been contended by the learned counsel for the dealer that the word assessment is comprehensive and means not merely the computation of the income of the assessed, in the present case the sale, but also the determination of the tax payable by him.

18. Apart from the fact the aforesaid decisions were rendered in respect of the Income-tax Act, the provisions of which are not pari materia with the Sales Tax Act, nevertheless, we do not see how the aforesaid decisions can be of any assistant to the dealer. In the present case the tax has been determined by the assessment order which was passed on 31st December, 1971. According to the said assessment order the amount of tax due and payable was Rs. 3.40 and the amount of penalty leviable and payable was Rs. 23,000. Whatever meaning may be given to the word assessment occurring in section 11(2a) it is clear that with the assessment order having been passed on 31st December, 1971, the amount of tax which was due and payable was determined by the assessing authority. It is not as if the assessing authority had merely determined as to what was the taxable turnover. The assessment order quantified the amount of tax and penalty due and paid. This was done within the period of four years. Admittedly, the assessment order dated 31st December, 1971, was served on the dealer prior to the expiry of limitation which was on 31st March, 1972. Merely because the notice of demand initially issued on 31st December, 1971, was not in terms of sub-section (3) of section 11 of the said Act cannot vitiate the assessment order which was passed on that very day. The assessment order was passed within the period of limitation and we see no merit in the contention of the learned counsel for the dealer that the assessment order is to be ignored and what is relevant is the notice of demand. There is no warrant for saying so as the taxing statute has to be literally construed and so construed it is evident that it is the assessment order which is to be passed within the time prescribed by sub-section (2a) of section 11 and it is by the said assessment order by which the tax is determined. No other contention has been raised on behalf of the dealer.

19. For the aforesaid reason we answer the aforesaid question of law in the affirmative and in favor of the department. There will be no order as to costs.

20. Question answered in the affirmative.