Patna High Court
Rajpur Farms Ltd. And Anr. vs Commissioner Of Commercial Taxes on 17 September, 1971
Equivalent citations: [1972]29STC177(PAT)
JUDGMENT Shiveshwar Prasad Sinha, J.
1. These references under Section 25(1) of the Bihar Sales Tax Act, 1947 (hereinafter referred to as the Act), raise certain important questions of law. One of these references is by Lala Kailashpat Singhania (hereinafter referred to as the dealer) and another by the Commissioner of Commercial Taxes, Bihar (hereinafter referred to as the department).
The question referred by the Commercial Taxes Tribunal (hereinafter referred to as the Tribunal) on the application by the department is: "Whether on the facts and in the circumstances of the case the decision of the Tribunal on the question of initiation of the proceeding under Section 13(5) of the Act is correct or not."
The questions referred on the application by the dealer are: "(1) Whether on the facts and in the circumstances of the case any part of the assessment under Section 13(5) of the Act for the period 1st April, 1955, to 30th June, 1959, is barred by limitation under the provisions of Section 13(6) of the Act" and "(ii) whether on the facts and in the circumstances of the case Section 29(1) of the Bihar Sugar Factories Control Act, 1937, bars imposition of tax on the sale of the sugarcane under the Act." (The Bihar Sugar Factories Control Act, 1937, will be referred to hereinafter as "the Control Act").
2. The facts leading to the aforesaid references are few :- Shri Lala Kailashpat Singhania, the dealer, grew sugarcane in his agricultural farm and had been supplying the same to a local sugar mill, the value of which exceeded Rs. 15,000 (Rupees fifteen thousand) each year and yet the dealer had not got itself registered under the Act. During the period of the twelve months ending on the 30th of June, 1954, similar amount was received on the sale of sugarcane. Consequent upon this information, the Superintendent of Commercial Taxes, Champaran Circle, Motihari, within whose jurisdiction the dealer made the sales, recorded an order dated the 28th September, 1959, directing the issue of notice under Section 13(5) of the Act requiring the dealer to produce its books of accounts for the period from 1st April, 1955, to 30th June, 1959, at Motihari. The date fixed for the production of the books of accounts as per the said order was the 30th November, 1959. The notice required to be issued under the said order dated 28th September, 1959, was, however, not issued then. The Superintendent of Commercial Taxes discovered the omission only when the records of the case were put up before him on the 30th October, 1961. He then directed the office to send the notice immediately requiring the dealer to produce the books of accounts for the above period on the 29th of January, 1962. A notice under Section 13(5) of the Act was accordingly issued on the 10th January, 1962, and it is not in dispute that the said notice was duly served on the dealer. After seeking a few adjournments, the dealer filed a petition before the Superintendent of Commercial Taxes on the 13th October, 1962, denying his liability to be assessed in respect of his sales of sugarcane. Of the various objections raised denying his liability to be assessed, the two, which are relevant for the purposes of these references, were : (i) The levy of sales tax under the Act on sale of sugarcane crushed in a sugar factory was barred in view of the provisions of Section 29 of the Control Act, inasmuch as it amounted to double imposition of tax on the sale of one and the same commodity, and (ii) the proposed assessment for the period sought to be assessed by the proceedings of Section 13(5) of the Act was time-barred in view of the proviso to Section 13(6) of the Act. ' The Superintendent of Commercial Taxes by his order dated the 1st October, 1962, rejected all the objections against the proposed assessment including the aforesaid two objections. With regard to the first of the two objections referred to above he held that the levy of sales tax under the Act and the levy of tax under the Control Act were two separate imposts authorised by two different enactments, both of which were constitutionally valid. With regard to the next of the two objections he held that the proceeding under Section 13(5) of the Act was initiated against the dealer on 28th September, 1959, and consequently the period for which the assessment made was not beyond time. He made a consolidated assessment under Section 13(5) of the Act for the period 1st April, 1955, to 30th June, 1959, after separately allocating the turnover on the sale of sugarcane into five parts: (a) from 1st April, 1955, to 31st March, 1956, (b) from 1st April, 1956, to 31st March, 1957, (c) from 1st April, 1957, to 31st March, 1958, (d) from 1st April, 1958, to 31st March, 1959, and (e) from 1st April, 1959, to 30th June, 1959. The rate of sales tax as applicable to the aforesaid periods of allocation was levied.
After an unsuccessful appeal to the Deputy Commissioner of Commercial Taxes, Tirhut Division, Muzaffarpur, on the validity of the assessment, the dealer appealed to the Tribunal. The aforesaid two objections were pointedly raised by the dealer before it. With regard to the question of limitation the dealer's case before the Tribunal was that the proceeding under Section 13(5) of the Act was initiated not by the order dated the 28th September, 1959, but only when a notice dated 10th January, 1962, under Section 13(5) of the Act was issued. It was urged that any period prior to 4 years from the said date could not, therefore, be assessed to sales tax in view of the proviso to Section 13(6) of the Act. It was further argued that even if the date of initiation of the proceeding under Section 13(5) of the Act was taken to be 28th September, 1959, namely, the date on which the order was made calling upon the office to issue notice under Section 13(5) against the dealer, even then the first few months of the year 1955-56 would be barred inasmuch as that period fell beyond four years from the date of the initiation of the proceedings. The dealer's contention that levy of sales tax on sale of sugarcane amounted to double taxation on the identical commodity at identical point, was reiterated.
The Tribunal held : (i) that the proceeding under Section 13(5) of the Act would be deemed to have been initiated on the 10th January, 1962, that is, when a notice under Section 13(5) of the Act was issued to the dealer. To quote the words of the Tribunal, ...We accordingly hold that the proceeding will initiate when the competent officer after applying his mind judicially to the facts of a case records an order in the order sheet and actually issues notice against the assessee or person on whom it is proposed to assess tax....
(ii) that no part of the assessment for the period 1st April, 1955, to 30th June, 1959, was barred by limitation. According to the Tribunal the expression "period" occurring in Section 13(5) of the Act meant the whole block of period, taking the block as one unit, during which period the dealer though liable to pay tax under the Act had nevertheless wilfully failed to apply for registration. In such view of the interpretation of the expression "period" the Tribunal held that since the last part of the period fell within four years from the date of the initiation of the proceeding for assessment under Section 13(5) of the Act, no part of the period for which the assessment was made under Section 13(5) would be barred by time. To quote the Tribunal's observations in this regard :
...The limitation of four years as provided in proviso to Section 13(6) of the Act has to be computed in this case from the end of this period, i.e., from the end of June, 1959. That being so, no part of the assessment for the entire period from 1st April, 1955, to 30th June, 1959, made on the basis of a proceeding initiated in 1961-62 was barred by time.
With regard to the aforesaid second objection the Tribunal held that there was no illegality in the imposition of sales tax on the sale and supply of sugarcane to a sugar mill, even though cess be levied under the Control Act on the same transaction. In coming to this conclusion the Tribunal was of the opinion that the imposition of cess under the Control Act and the imposition of sales tax under the Act were two separate imposts authorised under two different entries, namely, entries 52 and 54 of VII Schedule, State List II, of the Constitution of India, and that the two separate impositions were valid. The Tribunal further found that in fact no cess under the Control Act had been levied during the period.
3. The Tribunal has, therefore, asked for the opinion of this court on the questions mentioned above under Section 25(1) of the Act in the aforesaid Tax Cases Nos. 61 and 62 of 1966. Both these cases were heard by a Bench of this court along with Tax Case No. 57 of 1966 and all the three cases were referred to a Full Bench, as the following important questions arose for decision in them-"Whether when a dealer fails to get himself registered under the Act and as such evades payment of sales tax in respect of his turnover and ultimately notice is issued to him for assessment of tax, the period for which he is liable to sales tax would be the entire period however long it may be from the date from which he would be liable to sales tax or this would be subject to the period of limitation provided under the Act itself." I will deal with Tax Case No. 57 of 1966 in a separate part of this judgment. For the present I am confining myself to Tax Cases Nos. 61 and 62 of 1966.
4. It was urged by Mr. Sudhir Chandra Ghose, appearing for the dealer, that the expression "period" occurring in the aforesaid Sub-sections (5) and (6) of Section 13 of the Act must retain the same meaning throughout the Act irrespective of the fact whether the assessment was that of a registered dealer or of a dealer who though liable to pay sales tax had wilfully failed to apply for registration. It was contended that one of the cardinal principles of interpretation of statutes was that it should connote the same meaning wherever that expression occurred in the statute unless a different meaning in one or more of the provisions was a compelling necessity. It was further submitted that since the Act imposed pecuniary burden upon the subject, the construction most beneficial to the subject must be adopted. In other words, according to the learned counsel for the dealer the expression "period" occurring in Section 13(5) must be understood in the same sense as was the meaning in the case of a registered dealer. If it was attributed a meaning different than that, as was done by the sales tax authorities, it would not only be a violation of the rules of interpretation of statutes but would also lead to an avoidable pecuniary burden on the dealer, namely, the subject. It was, therefore, submitted that the expression "period" in Section 13(5) of the Act must be understood as meaning "quarter of a year" or "a year" because according to the provisions of the charging Section 4 read with Rule 22 of the Act, a dealer was required to submit quarterly returns of its turnover and also an annual consolidated return in respect of the whole year. It was submitted that if this part of his contention was accepted then even in the case of a dealer whose assessment was proposed to be made under Section 13(5) of the Act, the period could not be the whole block of period howsoever long it was but would only be the units of a quarter of a year or a year during which the dealer, though liable to pay tax, had nevertheless wilfully failed to apply for registration. According to the learned counsel for the dealer the period even for an assessment under Section 13(5) of the Act must, therefore, be a quarter of a year or a year. The block of time during which the dealer failed to get itself registered must be split up into units of time as was unit of time in the case of a registered dealer.
Referring to the facts of the case it was submitted that since the proceedings for assessment under Section 13(5) had been initiated only on the 10th January, 1962, when a notice under Section 13(5) of the Act was issued to the dealer, all periods falling beyond four years from the said date were barred for the purposes of assessment. In other words, according to the learned counsel for the dealer no assessment could be made in respect of any period falling beyond four years from the 10th January, 1962.
5. Mr. Shreenath Singh, appearing for the department, in reply to the above arguments, submitted that the expression "period" occurring in Section 13(5) of the Act had to be understood in the context of the purpose for which that particular provision had been enacted. If that was done, according to Mr. Singh, the entire period during which the dealer, though liable to pay tax had wilfully failed to apply for registration had to be taken as one unit for the purposes of assessment of sales tax. According to him, the proceedings for assessing a dealer under Section 13(5) was a proceeding in terrorem; in the nature of penalty for having wilfully failed to apply for registration notwithstanding there being a liability to pay sales tax. According to him, therefore, if the purpose behind the enactment of Section 13(5) of the Act was to be carried into effect it could not but be held that the expression "period" occurring in the said section had a meaning distinctly different from the meaning of the expression attributed in other parts of the Act.
With regard to the question of initiation of proceedings, which is a question specially raised in the reference application of the department, it was submitted that initiation meant taking the first step towards making an assessment. In the case of initiation of proceeding for assessment under Section 13(5) of the Act, it was submitted that a direction to the office to issue notice under Section 13(5) on the dealer amounted to initiation of the proceeding for the assessment. According to the learned counsel for the department, therefore, the proceedings for the assessment would be deemed to have been initiated when the Superintendent of Commercial Taxes passed an order on the 28th September, 1959, to start proceedings under Section 13(5) of the Act against the dealer. He submitted that the Tribunal was, therefore, in error in holding that the proceedings for the assessment were not initiated by the order dated 28th September, 1959, but would be deemed to have been initiated only when the notice dated the 10th of January, 1962, was sent out to the dealer. According to him, therefore, question No. (1) in both the references must be answered against the dealer.
6. In order to appreciate the rival contentions of the parties it would be relevant to read the provisions of Section 13(5) and 13(6) of the Act, as they stood for the relevant period, in so far as they are relevant for the purposes of these references. Sub-section (5) of Section 13 reads as under :
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 wilfully failed to apply for registration, or having applied for registration, failed to furnish any particulars or information required by the prescribed authority for the purposes of Section 9, the Commissioner shall, after giving the dealer a reasonable opportunity of being heard, assess, to the best of his judgment, the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods and the Commissioner may direct that the dealer shall pay, by way of penalty, in addition to the amount so assessed, a sum not exceeding one and a half times that amount.
The proviso to Sub-section (6) reads as under :
Provided that no proceeding for assessment of the tax due from a dealer in respect of any period shall be initiated later than four years from the expiry of such period or later than two years from the date of -disposal of the appeal, revision, review or reference directing fresh assessment.
The expression in the said two provisions which need proper interpretation are: "period" and "initiation of proceeding for assessment".
7. The question would be as to whether the expression "period" occurring in Section 13(5) of the Act had the,, same meaning as understood in respect of the other provisions of the Act or that it had a special meaning for the purposes of Section 13(5) of the Act alone. Similarly whether the initiation of proceedings for assessment as occurring in the proviso of Sub-section (6) of Section 13 of the Act would mean when the assessing officer directed the office to issue notice to the dealer under Section 13(5) of the Act or when actually a notice was issued to the dealer under Section 13(5) of the Act.
8. I will first deal with the meaning of the expression "period". This expression has not been defined in the Act. In order, therefore, to appreciate the correct meaning of the said expression, it is necessary to refer to those provisions of the Act which, in my opinion, are relevant in this respect. Section 4 of the Act is the charging section, the provisions relevant of which are:
(1) Subject to the provisions of Sections 5, 6, 7 and 8 and with effect from the commencement of this Act, every dealer whose gross turnover during the year immediately preceding the date of such commencement on sales which have taken place both in and outside Bihar exceeded Rs. 10,000 shall be liable to pay tax under this Act on sales which have taken place in Bihar on and from the date of such commencement:
Provided that the tax shall not be payable on sales involved in the execution of a contract which is shown to the satisfaction of the Commissioner to have been entered into by the dealer concerned on or before the 1st day of October, 1944.
(2) Subject as aforesaid every dealer to whom Sub-section (1) does not apply shall be liable to pay tax under this Act with effect from the commencement of the quarter immediately following a period not exceeding twelve months during which his gross turnover, on sales which have taken place both in and outside Bihar, first exceeded Rs. 10,000.
(3) Every dealer who has become liable to pay tax under this Act shall continue to be so liable until the expiry of three consecutive years, during each of which his gross turnover, on sales which have taken place both in and outside Bihar, has failed to exceed Rs. 10,000 and such further period after the date of such expiry as may be prescribed and on the expiry of this latter period his liability to pay tax shall cease.
(4) Every dealer whose liability to pay tax has ceased under the provisions of Sub-section (3) shall again be liable to pay tax under this Act with effect from the commencement of the quarter immediately following a period not exceeding twelve months during which his gross turnover on sales which have taken place both in and outside Bihar again exceeds Rs. 10,000.
Sub-section (1) deals with cases of such dealers whose gross turnover exceeded Rs. 10,000 during the year immediately preceding the date on which the Sales Tax Act commenced. Sub-section (2) deals with the cases of such dealers whose turnover exceeded Rs. 10,000 not during the year immediately preceding the date of the commencement of the Act but on some later date. In such cases also, however, the tax becomes chargeable "with effect from the commencement of the quarter immediately following a period not exceeding twelve months". Sub-section (3) deals with the circumstances under which the dealer, liable to pay tax under the Act, would be deregistered and would not be liable to pay tax. Sub-section (4) deals with the circumstances under which a deregistered dealer would again become liable to pay tax under the Act. It is significant to note that in all these provisions of the charging section the unit of time which has been prescribed for the purposes of determining the dealer's liability to sales tax is a year. Under Sub-section (1) the liability to pay tax of every dealer starts when his "gross turnover during the year immediately preceding the date of such commencement" exceeded Rs. 10,000 of sales both within the State and outside. Sub-section (2) also lays down that the dealer's liability to pay tax commenced when during "the quarter immediately following a period not exceeding twelve months" his gross turnover first exceeded Rs. 10,000. Sub-sections (3) and (4) also describe the unit of time as a year for the purposes of determining as to when a dealer was to be deregistered or if having been deregistered when he should commence paying tax.
The next provision relevant for the purposes of these references is Section 10 of the Act. Sub-section (1) thereof reads as under:
Any dealer, whose gross turnover on sales which have taken place both in and outside Bihar during a year has exceeded Rs. 10,000, may, notwithstanding that he is not liable to pay tax under Section 4, apply in the prescribed manner to the prescribed authority for registration under this Act.
This provision deals with cases of voluntary registration by a dealer and the unit of time during which his turnover should exceed the non-taxable limit in order to enable him to get himself registered under the Act, is a year.
Then Sub-section (1) of Section 12 of the Act reads as under:
Such dealer 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.
Sub-rule (1) of Rule 22 of the Bihar Sales Tax Rules, 1949, (hereinafter referred to as the Rules), which is relevant for the purposes of filing of returns reads as under:
Every dealer liable to do so shall, unless otherwise directed by the Commissioner, furnish to the Commissioner quarterly returns within a calendar month from the expiry of the quarter to which the return relates. He shall also furnish an annual consolidated return in respect of the whole year within a calendar month from the expiry of the year:
Provided that the Commissioner may, by order in writing, direct any such dealer to submit returns for period less than a quarter at such intervals as may be specified in the order and may likewise, at any time, modify or annul such order.
In terms of Section 12(1) read with Rule 22, a dealer is required to file quarterly returns and also an annual consolidated return in respect of the whole year. The expression "dealer" occurring in Section 12(1) does not limit itself to a registered dealer. It covers the cases of all dealers, registered or unregistered. The position is obvious when one reads Sub-section (1) of Section 12 in contradistinction with Sub-sections (2) and (3) thereof. Whereas Sub-section (1) refers to a "dealer", Sub-sections (2) and (3) refer to a "registered dealer". Now, therefore, the position which emerges on reading sections, 4 and 12 read with Rule 22 of the Rules is that if proceedings under Section 13(5) are started against an unregistered dealer, namely, against a dealer who, although liable to pay tax, had nevertheless wilfully failed to apply for registration, he has to file quarterly returns for the period during which he was liable to pay tax and also a consolidated annual return in respect of the periods during which though liable to pay sales tax, he had wilfully failed to apply for registration.
It is significant to note that Sub-section (1) of Section 12 does not talk of "return" but of "returns" so that the argument on behalf of the department that the entire period of default of a dealer in terms of Section 13(5) of the Act should be taken as one unit of period for the purposes of assessment under that section does not fit in with the scheme relating to the filing of the returns under the Act as laid under Section 12 of the Act. These are the provisions relating to the filing of returns.
9. Then there is Section 13 of the Act which relates to assessment, both on registered dealers as also on unregistered dealers. Sub-sections (1) to (4) of Section 13 govern the case of a registered dealer and Sub-section (5) governs the case of a dealer who, though liable to pay tax, has wilfully failed to get itself registered. Sub-sections (1) to (3) deal with cases where return has been filed by a registered dealer. Sub-section (4), which I will presently quote, deals with a no-return case of a registered dealer. It reads as under:
If a registered dealer does not furnish returns in respect of any period by the prescribed date, the Commissioner shall, after giving the dealer a reasonable opportunity of being heard, assess, to the best of his judgment, the amount of tax, if any, due from the dealer.
It will be significant to note that notwithstanding the default in the filing of the return, the assessment is limited to the period of default. It does not authorise the department to make a consolidated assessment in respect of all the periods, if the default was one which extended over a period of more than one year.
10. Now referring to Section 13(5) of the Act it will be obvious that the Act has prescribed the same procedure as is the procedure in Section 13(4) for assessing dealers liable to pay tax who have wilfully failed to apply for registration. The assessment under Section 13(5) has to be a best judgment assessment as in the case of an assessment under Section 13(4) of the Act with this difference that whereas in Section 13(4), the Act contemplates a best judgment assessment for the year of default in Section 13(5) the Act prescribes that the assessment shall be in respect of "such period and of subsequent periods". This no doubt authorises the sales tax authority to pass one single assessment (order) covering the entire period of default, but it does not authorise them to treat the whole period of default under Section 13(5) as one single unit of period. Otherwise there was no point in saying "assess to the best of his judgment the amount of tax, if any, due from the dealer in respect of 'such period' and of 'subsequent periods'." If the intention of the Legislature behind Section 13(5) was to treat the whole period of default as one single unit of period it was not necessary to qualify the period of default as "period" and also "subsequent periods"; rather, the Legislature should have qualified the term "period" as the "total period" or "such total period".
11. Mr. Shreenath Singh at this stage urged that the expression "such period" occurring in Section 13(5) of the Act meant the total period of default and the expression "subsequent periods" meant the period after notice under Section 13(5) had been issued against a dealer.
I do not think that such an interpretation is warranted by the language of Section 13(5) of the Act. A defaulter continues to be a defaulter. Detection does not exonerate it from the default, so that notwithstanding the use of the term "subsequent periods" it can only be understood as meaning that assessment for all the periods will have to be made but without amalgamating the periods of default into one consolidated whole. If the argument raised by Mr. Singh was to prevail, it will lead to anomalous result because in terms of Sub-section (5) of Section 9, where a dealer has been assessed to tax under Section 13(5) of the Act, "the Commissioner shall register such dealer and grant him a certificate of registration, and such registration shall take effect as if it had been made under Sub-section (3) of this section on the dealer's application", so that after a dealer has been assessed for "such period" under Section 13(5) no further assessment under the said section would be permissible for the "subsequent periods". The dealer after the first assessment would no more remain a dealer who had wilfully failed to apply for registration. In my opinion, therefore, the interpretation given by Mr. Singh, with regard to the expression "such period" and "subsequent periods" in Section 13(5) of the Act, is incorrect.
It is an accepted principle of interpretation of statutes that taxing statutes which impose pecuniary burden upon the subject are to be strictly construed. Nothing is to be read in and nothing is to be implied. One has to look fairly at the language used. It is also an accepted principle of interpretation of statutes that in case of reasonable doubts, the construction most beneficial to the subject has to be adopted. Now as stated above, Section 13(5) of the Act prescribes the mode of assessment in the case of a dealer who has wilfully failed to apply for registration or having applied for registration has failed to furnish particulars or information required by the prescribed authorities, for granting a certificate of registration. While authorising the sales tax authorities to make an assessment under Section 13(5), by use of the expressions "such period" and "all subsequent periods", the Legislature in its wisdom has not empowered the taxing authorities to amalgamate several periods into one for the purposes of best judgment assessment under that provision of the Act. There is no provision in the Act authorising the sales tax authorities to make an assessment amalgamating all the periods into one unit of period. In fact as the facts of the case show the Superintendent of Commercial Taxes has not amalgamated the different periods of default into one block as one unit for the purposes of assessment. He has kept each period separate from the other. The first period has been assessed from 1st April, 1955, to 31st March, 1956, the next is from 1st April, 1956, to 31st March, 1957, the next is from 1st April, 1957, to 31st March, 1958, the next is from 1st April, 1958, to 31st March, 1959, and the last is from 1st April, 1959, to 30th June, 1959.
Mr. Ghose, appearing for the dealer, submitted that the bifurcation of the periods into a year each was wrong. According to him the period should be a quarter of a year and not a year. He referred to the provisions of Sub-section (2) of Section 4 which is the charging section and Rule 22 of the Rules under which every dealer was required to file quarterly returns.
I think the argument is based on a faulty reading of the said provisions of the Act. Sub-section (2) of Section 4 only fixes the time from which a dealer became liable to pay tax under the Act. It is in that context that it is laid therein that the dealer shall become liable to pay tax from the commencement of the quarter immediately following a period not exceeding twelve months, during which his gross turnover has exceeded Rs. 10,000. Simply because the expression "quarter" has been used in the said section of the Act it cannot be understood as meaning that a quarter of a year was the unit for the purposes of assessment. This position is made further clear by reference to Rule 22 of the Rules which lays down that the dealer shall file quarterly returns but shall also file an annual consolidated return and in terms of the charging Section 4 read with the provisions relating to the filing of returns and assessment the liability for the purposes of assessment to tax is always counted in terms of a year.
I, therefore, think that the expression "period", wherever it occurs in Section 13 of the Act, means "a year" commencing from the time since when the dealer became liable to pay tax.
12. To substantiate my conclusion that the expression "period" in Section 13(5) of the Act has to be understood as meaning "a year", I may refer to one of the decisions of the Supreme Court of India in the case of Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur, and Ors. A.I.R. 1964 S.C. 766, in which one of the questions which arose related to limitation. Question relating to escaped assessment for two assessment years were involved, one for the year 1949-50 and the other for the year 1950-51. In respect of the year 1949-50 (Civil Appeal No. 101 of 1961) the dealer had submitted a return for one quarter only and had made a default in respect of the other quarters and in respect of the assessment for the year 1950-51 (Civil Appeal No. 102 of 1961) the dealer had not filed any return for the whole year. (I may state here that according to the Sales Tax Act, namely, the Central Provinces and Berar Sales Tax Act, 1947, now Madhya Pradesh Sales Tax Act, the period for which a return was required to be filed and for which assessment was to be made was a quarter). Now, on the above facts, one of the questions which arose was whether any part of the turnover for the two aforesaid years, for which the assessment had to be made, had escaped assessment and what would be the period of limitation for bringing to tax the escaped turnover. In that context it became necessary for their Lordships to decide as to the point of time up to which the three years' period of limitation, as laid under Section 11-A of that Act, would reach. Subba Rao, J., who delivered the majority judgment observed, in paragraph 21 at page 774 of the report that in Civil Appeal No. 101 of 1961 which referred to the case where the dealer had filed return for one quarter :
...The appellant has to submit quarterly returns and assessments are made on the basis of the said returns ; that is to say, he has to be assessed for his turnover separately in respect of each quarter....
In respect of Civil Appeal No. 102 of 1961 in which case the dealer had not submitted any return for the year 1950-51, his Lordship observed :
...As the unit of assessment is a quarter, the period in Section 11-A can only mean a quarter and it cannot be further split up into months, weeks and days....
Referring to the case of a dealer, who did not register itself under the Act, his Lordship observed :
...His is really a case of evasion from his obligation to get himself registered under the Act. Section 10(1) enables the Commissioner to issue a notice to him requiring him to furnish a return in the prescribed manner. In his case also the same procedure as prescribed in Sections 10(3), 11(1) and 11(2) has to be followed in the matter of assessment....
Referring thereafter to Sub-section (5) of Section 11 of the Act which is materially the same as Section 13(5) of the Act with which these references are concerned, his Lordship observed :
...So in the case of a dealer liable to pay tax, but who has failed to register himself under the Act, the Commissioner may issue a notice to him under Rule 22 and assess him under Section 11 ; and in the case of evasion, on subsequent information, the Commissioner can assess him within three calendar years from the expiry of the period in respect of which he was liable to pay tax and for subsequent years and also impose a penalty on him. It is clear from this provision that in the case of such a dealer the assessment can be made only within three calendar years from the expiry of the period in respect whereof he has been liable to pay tax under the Act....
As quoted earlier, his Lordship observed that the procedure to be followed for assessing a dealer which did not register itself under the Act was the same as in the case of a registered dealer and in the case of a registered dealer the expression "period" has been held to mean a quarter under that Act. By necessary implication, therefore, the expression "period" in the Bihar Sales Tax Act will mean a year.
13. On behalf of the department reference was made to a Bench decision of the High Court of Madhya Pradesh in the case of Battulal v. Commissioner of Sales Tax, Madhya Pradesh, Indore [1962] 13 S.T.C. 893. In that case there was a dealer who did not get himself registered under the said Act though he was liable to pay tax thereunder. Notice under Section 11(5) of that Act was issued to the dealer for assessing him in respect of the period 1st June, 1947, to 26th June, 1950. Subsequently on further enquiry a fresh notice under Section 11(5) was issued to the dealer for assessing him for the period. 8th October, 1948, to 6th November, 1953, and the notice under Section 11(5) having been issued to the dealer and received by him on the 2nd June, 1955, the dealer was assessed under Section 11(5) for the entire period and a question arose as to whether the expression "period" in Section 11(5) of the Act meant the entire period during which the dealer was liable to pay tax as one unit or that it should be split up into a quarter as was the unit for assessing a registered dealer. It was held that the expression "such period" occurring in Section 11 (5) of the Act refer to "any period in respect of which the dealer has been liable to pay tax under the Act". In other words the word "period" occurring in Section 11(5) of that Act was held to govern the whole period during which a dealer being liable to pay tax under the Act, had wilfully failed to apply for registration as one unit and then it was held that "the limitation of three calendar years has to be computed from the end of this period. That being so, no part of the assessment made on 2nd June, 1955, was barred by time."
14. Most respectfully, I think that the answer given by their Lordships does not decide the meaning of the expression "period". It cannot be disputed that when a dealer, though liable to pay tax, has not got itself registered and has thereby evaded assessment, he is certainly liable to be assessed for all that period which had escaped assessment but subject to limitation. The fact that the dealer is liable to be assessed for all that period, however, does not define the meaning of the word "period". Their Lordships have of course held that the assessment for the entire period 8th October, 1948, to 6th November, 1953, as valid and not barred by limitation and by implication one would think that their Lordships understood the expression "period" as meaning the whole block of time during which the dealer, though liable to pay tax, did not get himself registered and escaped assessment, as one unit. Yet since the expression "period" has remained uninterpreted in the said judgment, because of absence of any discussion about its meaning, it is not of any assistance in these references and more so when the said decision is not in line with the decision of the Supreme Court referred to above. Similar is the position with regard to another decision cited, that of the Nagpur High Court in Firm Sheonarayan Matadin v. Sales Tax Officer, Raipur, and Anr. [1956] 7 S.T.C. 623. Here also the meaning which could be attributed to the expression "period" has not been discussed in the context of Section 11 (5) of the C.P. and Berar Sales Tax Act, 1947, and their Lordships have applied their mind only to the question as to whether the initiation of the proceeding to make the assessment was within the period of limitation.
15. In view of the discussion made above, in my opinion, the expression "period" occurring in Section 13(5) cannot have a meaning separate from the one attributed to it in respect of the other sub-sections of Section 13 of the Act. In other words, the expression "period" has to be understood even for the purposes of Section 13(5) of the Act as an unit of time of one year not more, not less.
16. Next is the question relating to the true import of the expression "initiate" as occurring in the proviso to Sub-section (6) of Section 13 of the Act. The relevant portion of the said proviso is "...that no proceeding for assessment of the tax due from a dealer in respect of any period shall be initiated later than four years from the expiry of such period___" To be more precise, the question therefore, is what is meant by "initiation of proceeding for assessment" in the said provision of the Act.
The rival contentions already stated earlier are, that according to the department the proceeding for assessment was initiated on the 28th of September, 1959, when the Superintendent of Salex Tax directed his office by recording an order dated 28th September, 1959, for issue of notice under Section 13(5) of the Act, calling upon the dealer to produce his books of accounts for the relevant period. According to the dealer, however, the proceeding for assessment was initiated only on 10th January, 1962, when a notice under Section 13(5) of the Act was issued to him. The question of initiation of the proceeding for assessment has assumed importance because on it depends the answer of the question as to whether any part of the assessment under Section 13(5) of the Act for the period 1st April, 1955, to 30th June, 1959, was barred by limitation.
17. It cannot be gainsaid that initiation of a proceeding has to be understood in the context of the object and the purpose for which the initiation was made. I think, the test is, what was it that was sought to be achieved by taking a particular step. By directing the office to issue notice, does it achieve the purpose of informing the dealer to submit itself for assessment to sales tax ? In my opinion, a direction to issue the notice to the dealer achieves no object except that a step be taken for a notice to issue to the dealer. It does not go any further than that. Whereas if a notice has been issued to the dealer for assessment the object sought to be achieved by such a notice would be to make an assessment. In my opinion, therefore, an order directing the office to issue notice for assessment could not be understood as a step towards making an assessment. If on the passing of the order dated 28th September, 1959, an assessment could be made against the assessee it would have been an initiation of proceeding for assessment. It cannot, however, be gainsaid that such was not possible. In terms of Section 13(5) of the Act under which the impugned assessment has been made, it is mandatory on the assessing authority to give the dealer a reasonable opportunity of being heard. The procedure to be followed by the assessing authority, as laid under the Act, is that in terms of Sub-section (1) of Section 12 read with Rule 22 the Commissioner has the power to require the dealer to furnish a return of its turnover within such time as he may prescribe. Whether or not the dealer has complied with that requisition is not material, but in terms of Section 13(5) of the Act, the assessing authority has to give the dealer a reasonable opportunity of being heard before making the best judgment assessment under that section on the dealer. Such a notice in terms of Rule 28 has to be in form VIII of the Sales Tax Rules. By mentioning these provisions of the Act my only intention is to understand as to whether the order dated 28th September, 1959, directing issue of notice under Section 13(5) of the Act was the initiation of proceedings for assessment or whether the notice dated 10th January, 1962, which was issued in form VIII of the Rules was the initiation of the proceedings for assessment. From what I have observed above relating to the test to determine as to when the proceeding for assessment would be deemed to have been initiated, in my opinion, the step taken prior to the notice dated 10th January, 1962, was a step for a purpose anterior to the purpose of initiating proceedings for making an assessment. The order dated 28th September, 1959, was an order by the assessing authority to the office to issue notice under Section 13(5) of the Act. That was the only object which was achieved by such an order. It was only when a notice dated 10th January, 1962, was issued to the assessee that the object became to make an assessment on the dealer. In the decision of the Supreme Court referred to above (Ghan-shyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur, and Ors. A.I.R. 1964 S,C. 766) an identical question cropped up as to when the proceedings for assessment would be deemed to have been initiated in the case of a registered dealer and so also in the case of an unregistered dealer. His Lordship Subba Rao, J., observed with regard to the registered dealer:
It is manifest that in the case of a registered dealer the proceedings before the Commissioner start factually when a return is made or when a notice is issued to him either under Section 10(3) or under Section 11(2) of the Act....
The provisions equivalent to Sections 10(3) and 11(2) of the C.P. and Berar Sales Tax Act, 1947 (since known as Madhya Pradesh Sales Tax Act) are Sections 12(3) and 13(2) of the Bihar Sales Tax Act. Dealing with the case of an unregistered dealer his Lordship observed :
Now coming to the case of a dealer who did not register himself under the Act, the position is different. There is no statutory obligation cast on him by any section to submit a return. His is really a case of evasion from his obligation to get himself registered under the Act. Section 10(1) enables the Commissioner to issue a notice to him requiring him to furnish a return in the prescribed manner. In his case also the same procedure as prescribed in Sections 10(3), 11(1) and 11(2) has to be followed in the matter of assessment....So in, the case of a dealer liable to pay tax, but who has failed to register himself under the Act, the Commissioner may issue a notice to him under Rule 22 and assess him under Section 11 ....
[Sections 10(1), 10(3) and 11 and Rule 22 of the C.P. and Berar Sales Tax Act are equivalent to Sections 12(1), 12(3) and 13 and Rule 22 of the Bihar Act.] The decision of the Supreme Court on the question of limitation turned on the fact of notice having been issued within the period of three years from the expiry of the period in regard whereto the turnover was sought to be assessed where no return had been filed by the dealer at all. This decision, therefore, is clearly an authority on the basis of which lean safely say that a proceeding for assessment under Section 13(5) would be deemed to have been initiated only when a notice under Section 13(5) in form VIII was issued to the assessee. The question as to when assessment proceedings can be said to be initiated was considered by the Bombay High Court in the case of D. P. Wadia and Sons v. Commissioner of Income-tax, Poona [1963] 50 I.T.R. 761. It was a case under the Income-tax Act, but the principle applies equally to the Sales Tax Act also. It became necessary to discuss the question of time when assessment proceedings could be held to have been initiated, because the levy of court-fees, whether under the old or under the new Bombay Court Fees Act, depended on it. The argument on behalf of the assessee was that the assessment proceedings were initiated when the public notice under Section 22(1) of the Income-tax Act, 1922, was given by the Income-tax Officer or when the time given in the said notice for filing of return expired, The argument on behalf of the department was at the other extreme, that the proceedings for assessment get initiated when the Income-tax Officer not being satisfied with the return filed by the assessee calls upon him to support the income returned by production of evidence or at the most when notice under Section 23(2) of the Income-tax Act, 1922, was given by the Income-tax Officer to the assessee. Their Lordships observed :
...The contention of the assessee that the initiation of the proceedings should be taken to have commenced when the public notice under Section 22(1) is given or at any rate when the time given in that notice to furnish a return of the total income expires cannot be accepted. No doubt the said public notice is the first step which sets in motion the machinery provided in the Act for inquiring into, determining, levying and recovering the tax, which is charged under the charging sections of the Act, but it does not start the assessment proceedings against any individual assessee as such. If after the publication of the notice nothing further happens, that is, neither the assessee files a return nor the Income-tax Officer calls upon him to submit a return by an individual notice, no proceeding can be said to have commenced against him. The public notice opens the arena as it were for the proceedings to commence or take place, They commence when the individual assessee steps in with his return or the Income-tax Officer calls upon the individual assessee to step in by submitting a return. The date of the public notice under Section 22(1) is, therefore, anterior to the commencement of the assessment proceedings against any individual assessee. Similarly, the point of time suggested by the learned Advocate-General is after the commencement of the proceedings. The stage of the notice under Section 23(2) is reached when, after the return has been submitted by the assessee, the Income-tax Officer, not being satisfied with the correctness of the return, requires the presence of the assessee before him or requires him to produce evidence. That, obviously, is in the course of the proceedings, which have already commenced....
Their Lordships held that proceedings for assessment are initiated when either the assessee submits a voluntary return to the Income-tax Officer or when the Income-tax Officer, having jurisdiction over the assessee, calls upon him by a notice under Section 22(2) of the Income-tax Act, 1922, to submit a return of income.
I am in respectful agreement with this view and moreover this decision is in line with the above decision of the Supreme Court.
18. Learned counsel for the department referred to a decision of the Madras High Court in the case of Artisan Press Ltd. v. Income-tax Appellate Tribunal and Anr. [1958] 33 I.T.R. 670. In this case what had happened was that during the course of proceedings in appeal before the Appellate Tribunal it was discovered that the dealer had concealed its income in the return. Consequent upon such finding the Tribunal recorded a note in the order disposing of the appeal giving direction for the issue of a notice under Section 28 of the income-tax Act, 1922. It so happened, however, that the order disposing of the appeal was dated the 7th of October, 1955, whereas the notice under Section 28 in pursuance of the direction of the Tribunal was served on the assessee on the 10th October, 1955. It was, therefore, contended on behalf of the assessee that the notice under Section 28 of the Income-tax Act, 1922, being later titan the date on which the Tribunal had passed its order in appeal, the notice issued under Section 28 by the Tribunal was without, jurisdiction. In the context of these facts the question arose as to whether the proceedings for the levy of penalty under Section 28 of the Income-tax Act, 1922, 'were initiated at a time when the Tribunal was seized of the assessment. His Lordship held that even in the order under Section 33(4), that is the appeal order, the Tribunal had made it clear that notice under Section 28 was being issued to the assessee and that thus the direction to issue such notice was when the Tribunal was seized of the assessment proceeding. Defining the meaning of the word "initiate" his Lordship held that it meant " to originate or to take the first step".
Referring to the facts of the case in reference and applying the above observations of his Lordship, learned counsel for the department submitted that the direction to the office made on the 28th September, 1959, was a direction which was the first step towards making the assessment and therefore it was on that date that the proceedings for assessment should be deemed to have been initiated.
I am unable to find any support for the department's point of view in this decision, firstly, because as the facts show in that case the Tribunal was already seized of the assessment proceedings and it was during the course of that proceeding, that the notice was issued. Such a position is wanting in the case before me. Here the jurisdiction is yet to be seized. (1) [1958] 33 I.T.R. 670.
The object behind the direction to the office on the 28th September, 1959, was merely to issue a notice under Section 13(5) of the Act and not a direction to the assessor, as in that. case. The object was not to call the dealer to submit to an assessment under Section 13(5} of the Act. As observed by me earlier, initiation of a proceeding must be understood in the context of the object which is sought to he achieved by taking a particular step.
19. The next decision is that of the Gujarat High Court in the case of D. M. Manasvi v. Commissioner of Income-tax, Gujarat II [1969] 72 I T.R. 17. In this case also the position was that the Income-tax Officer was seized of the assessment proceedings and it was during that period that he made an entry in the order sheet of the assessment file, directing issue of notice for levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961. In that context the question arose as to whether the proceedings had been commenced within the period prescribed under Section 275 of the said Act. Their Lordships decided the issue on the fact that the proceeding for levy of penalty had been commenced during the pendency of the main assessment proceedings.
This decision was given on its own fact and is not an authority for understanding the meaning behind the expression "initiation of proceeding for assessment". The case before me is one where the department is not at all seized of any proceeding against the assessee and merely a direction was given by it to its office to issue notice under Section 13(5) on the dealer. Such a direction, to reiterate my observation once again, is merely a direction for the issue of notice for assessment and not for issue of notice initiating proceeding for assessment.
20. It is one of the accepted principles of law that if an action is intended to be taken against a person, it must, be followed by some overt act. The person concerned must have a notice of the impending action against him. Taxation, since it creates a burden on the subject, cannot be made without warning the subject about it. Such a warning cannot come when an action has been taken unilaterally by the taxing authority keeping the intention to burden the subject with tax a top secret within itself. Now for the matter of that, the taxing authority might give a direction to his office to issue a notice to the dealer under Section 13(5) of the Act; the direction may not be followed, as is the case here, where the direction given on the 28th September, 1959, was not followed until the 10th of January, 1962, and in that case the subject will never know as to whether any proceeding had been initiated against him for making an assessment on him. It may even be that the notice in pursuance of the direction having been written out might still remain in the table-drawer of the clerk concerned. Even in such a case the dealer will not know about his impending assessment. It is only when the assessing authority does some act, which in my opinion, can only be by the issue of the notice under Section 13(5) that the dealer is sought to be reached for the purpose of an assessment on him, and then only the. department could say that it had done all that lay in its power to apprise the dealer of the proposed assessment on him and that the proceedings for assessment had been initiated.
21. I am, therefore, of the view on the discussions made above, that the proceeding for assessment under Section 13(5) of the Act is initiated either when a dealer files a return voluntarily or when a notice is issued to the dealer and that on the facts of the case under reference such initiation was made on the 10th January, 1962, when a notice under Section 13(5) of the Act was issued to the dealer.
22. Now as held by me above that the expression "period" even for the purposes of Section 13(5) of the Act meant an unit of time of one year only, not more, not less and further that "initiation of proceedings for assessment" means only when the dealer files a return voluntarily or when a notice calling upon the dealer to get assessed is issued, the answer to the question as to whether on the facts and in the circumstances of the case any part of the assessment under Section 13(5) of the Act for the period 1st April, 1955, to 30th June, 1959, is barred by limitation under the provisions of Section 13(6) of the Act, becomes easy. Proceedings for assessment, on the above basis, were initiated only on the 10th of January, 1962, and not. on the 29th of September, 1959. The period of limitation laid under Section 13(6) of the Act will have, therefore, to be counted from the 10th of January, 1962, and the period of four years as laid under the said section will have to be calculated with reference to the expiry of each "period" of one year. Calculating that way the assessment for the periods 1st April, 1955, to 31st March, 1956, and 1st April, 1956, to 31st March, 1957, will be barred by limitation. My answer to the questions as to whether the Tribunal's decision on the question of initiation of proceedings under Section 13(5) of the Act was correct or not and whether any part of the assessment under Section 13(5) of the Act for the period 1st April, 1955, to 30th June, 1959, was barred by limitation under the provisions of Section 13(6) of the Act are, that the decision of the Tribunal on the question of initiation of the proceedings under Section 13(5) of the Act was correct and the assessment for the periods 1st April, 1955, to 31st March, 1956, and 1st April, 1956, to 31st March, 1957, were barred by limitation under the proviso to Section 13(6) of the Act.
23. I now turn to question No. (2) in Tax Case No. 61 of 1966 which reads as under :
Whether on the facts and in the circumstances of the case Section 29(1) of the Bihar Sugar Factories Control Act, 1937, bars imposition of tax on the sale of the sugarcane under the Act.
The reference to Section 29 of the Control Act is as it stood prior to its amendment in 1963.
24. I have already related the arguments on behalf of the dealer, which, in substance, was that levy of sales tax under the Sales Tax Act as also levy of cess on it under the Control Act amounted to double taxation. The case of the dealer in this respect was that the Control Act would prevail as against; the Sales Tax Act in so far as it concerned the levy on the sale of sugarcane. The, Commercial Taxes Tribunal, however, held that both the impositions would be valid being authorised under two different, entries, namely, entries Nos. 52 and 54 of Schedule VII, State List II, of the Constitution of India.
25. I do not consider it necessary to detain myself in an elaborate discussion on this issue. The law is now settled by the Supreme Court of India in the case of Mathra Parshad and Sons v. State of Punjab and Ors. A.I.R. 1962 S.C. 745 that such double impositions would be valid. That was a case in which a firm of general merchants sold, besides other goods, manufactured tobacco as defined under the Punjab Tobacco Vend Fees Act (12 of 1954) which came into force in the State of East Punjab from 1st of April, 1954. The firm was also a registered dealer under the East Punjab General Sales Tax Act, 1948, and was paying sales tax on manufactured tobacco. There was some confusion in the mind of the dealer which was created by virtue of an amendment to the schedule of the exemption under Section 6 of the said Sales Tax Act as to whether it was liable to pay sales tax as also the vend fees under the Tobacco Vend Fees Act. One of the contentions resisting the levy of sales tax as also of the vend fees was that the Punjab Tobacco Vend Fees Act pro tanto repealed the East Punjab General Sales Tax Act and that therefore sales tax on manufactured tobacco could not be levied after April, 1954. Their Lordships held that, ...there can be two taxes on the same commodity or goods without the one law repealing the other. No repeal can be implied, unless there is an express repeal of an earlier Act by the later Act, or unless the two Acts cannot stand together....
In the case before me there are two further factors, on the basis of which, I think, this question must be answered in the negative. The first is that the said question indirectly raises a question of vires of the imposition of sales tax on the sale of sugarcane. It is now an accepted principle of law as laid by the Supreme Court of India in the case of K. S. Venkata-raman and Co, v. State of Madras A.I.R. 1966 S.C. 1089 that the question of vires of an Act or any portion thereof cannot be raised before an authority which is a creation of the same Act. Since that question cannot be raised before that authority the question cannot arise out of an order passed by that authority and consequently no reference under Section 25 of the Act can lie. The second factor is one that of a fact, namely, that no notification imposing cess on sale of sugarcane to a sugar mill during the period under consideration had been issued by the State Government in exercise of the powers conferred on it under Section 29(1) of the Control Act. This means that actually there is no double taxation and the question thus resolves itself into a mere academic one, which, therefore, need not be answered.
26. In any event my answer to the question as to whether Section 29(1) of the Control Act bars imposition of taxes on the sale of sugarcane under the Act is, that it does not; the answer is in the negative.
27. Summing up, therefore, my answer to the question, referred by the Tribunal in Tax Case No. 62 of 1966 is that the decision of the Tribunal on the question of the initiation of the proceedings under Section 13(5) of the Act was valid and correct. The answer to question No. (1) in Tax Case No. 61 of 1966 is that the assessment under Section 13(5) of the Act for the periods 1st April, 1955, to 31st March, 1956, and 1st April, 1956, to 31st March, 1957, was barred by limitation under the proviso to Section 13(6) of the Act. The answer to question No. (2) in Tax Case No. 61 of 1966 is in the negative.
Tax Case No. 57 of 1966.
28. This is a reference under Section 25(1) of the Act. The petitioner in this case is M/s. Rajpur Farms Limited, which is a public limited company. It grows sugarcane on its farm and the produce is sold to a local sugar mill. The Superintendent of Commercial Taxes found that though the petitioner's annual turnover exceeded Rs. 15,000 (Rupees fifteen thousand) it had failed to get itself registered. He accordingly recorded an order dated 28th September, 1959, directing issue of notice under Section 13(5) of the Act asking the petitioner to produce its books of accounts for the period 1st April, 1955, to 30th June, 1959, on the 30th November, 1959. The notice required to be issued under the said order dated 28th September, 1.959, was, however, not issued then. The Superintendent of Commercial Taxes discovered the omission only when the records of the case were put up before him on the 30th of October, 1961. He then directed the office to send notice under Section 13(5) of the Act to the dealer, namely, the petitioner, fixing 22nd January, 1962, as the date for production of the books of accounts. In pursuance of this order a notice was issued to the petitioner on the 10th of January, 1962, and it is not in dispute that the said notice was duly served on the petitioner. The dealer denied its liability to be assessed in respect of its sales of sugarcane. Besides other objections raised for denying its liability to be assessed, the two objections relevant for the purposes of this reference were :
(i) that the levy of sales tax under the Sales Tax Act on sale of sugarcane crushed in a sugar factory was barred in view of the provisions of Section 29 of the Control Act as it amounted to double imposition of taxes on the sale of one and the same commodity; and
(ii) the proposed assessment for the period sought to be assessed by the proceedings under Section 13(5) of the Act was time-barred in view of the proviso to Section 13(6) of the Act.
29. The objections were overruled, and a consolidated assessment under Section 13(5) of the Act for the period 1st April, 1955, to 30th June, 1959, was made. The Superintendent of Commercial Taxes, however, allocated the turnover on the sale of sugarcane into five parts: (a) from 1st April, 1955, to 31st March, 1956, (b) from 1st April, 1956, to 31st March, 1957, (c) from 1st April, 1957, to 31st March, 1958, (d) from 1st April, 1958, to 31st March, 1959, and (e) from 1st April, 1959, to 30th June, 1959, and assessed tax at the rates applicable to each such part.
After an unsuccessful appeal to the Deputy Commissioner of Commercial Taxes the dealer appealed to the Commercial Taxes Tribunal. The aforesaid two objections were pointedly reiterated by the assessee before it. The Tribunal held-(1) that the proceedings for assessment under Section 13(5) of the Act were initiated on the 10th of January, 1962, when notice under Section 13(5) of the Act was issued to the petitioner, (2) no part of the assessment for the period 1st April, 1955, to 30th June, 1959, was barred by limitation inasmuch as the period of four years as provided under the proviso to Section 13(6) of the Act had to be computed from the end of June, 1959, and (3) that there was no illegality in the imposition of sales tax on the supply of sugarcane to the sugar mill even though cess under the Control Act be levied.
30. Now, therefore, the Commercial Taxes Tribunal has referred the following two questions under Section 25(1) of the Act for the opinion of this court. They are :
(1) Whether on the facts and in the circumstances of the case any part of the assessment under Section 13(5) of the Act for the period from 1st April, 1955, to 30th June, 1959, is barred by limitation under the provisions of Section 13(5) of the Bihar Sales Tax Act, 1947, read with Section 47 of the Bihar Sales Tax Act, 1959 ?
(2) Whether on the facts and in the circumstances of the case, Section 29(1) of the Bihar Sugar Factories Control Act, 1937, bars the imposition of tax on the sale of sugarcane under the Bihar Sales Tax Act ?
31. I have discussed the aforesaid two questions in my judgment passed in Tax Cases Nos. 61 and 62 of 1966. The facts and the circumstances in the case under reference are the same as were the facts and circumstances in Tax Cases Nos. 61 and 62 of 1966. The rival arguments on behalf of the parties were also the same as were raised in the said two tax cases. My answer, therefore, to the two questions will, therefore, be the same which I have given in Tax Cases Nos. 61 and 62 of 1966. My answers are, therefore, as follows :
(i) The assessment under Section 13(5) of the Act for the periods 1st April, 1955, to 31st March, 1956, and 1st April, 1956, to 31st March, 1957, was barred by limitation under the provisions of Section 13(6) of the Act, and
(ii) Section 29(1) of the Control Act does not bar imposition of sales tax on the sale of sugarcane under the Act.
The references are answered accordingly. There will be no order for costs in either of these three references.
Shambhu Prasad Singh, J.
1. I agree with my learned brother S.P. Sinha, J., as to the meaning of the expression "period" in Sub-section (5) of Section 13 of the Bihar Sales Tax Act, 1947, and when a proceeding initiates within the meaning of the proviso to that section. Answers given to the questions referred to the court for its opinion by the Tribunal by my learned brother, if I may say so with respect, are entirely correct. However, I have some doubts as to one of his reasonings in support of the answer given to the question concerning interpretation of the expression "period" in Section 13(5) of the said Act based on Sub-section (5) of Section 9 of the Act. Registration of a dealer under Section 9(5) of the Act, after he has been assessed with tax under Sub-section (5) of Section 13, has got no direct bearing on the interpretation of the expression "period" in Section 13(5) of the Act. Registration can take place only after assessment is completed and "subsequent periods" in Section 13(5) cannot relate to a period after such assessment. It must relate to a period before the assessment, referred to in that section. However, the contention of Mr. Shreenath Singh that the expression "subsequent periods" in Section 1.3(5) only meant the period after notice under that section cannot be accepted. If "period" could be used in singular for the entire period of default prior to the issue of notice, there is no reason why it could not have been used in singular again for the entire period between issue of notice and assessment. The very fact that "period" has been used in singular and thereafter in plural with the adjective "subsequent" shows that "period" means a period of one year only.
2. I may refer to an argument which was advanced before the Tribunal and was also advanced before us by Mr. H. L. Agarwal in Tax Case No. 57 of 1966. This was with regard to the effect of Section 47 of the Bihar Sales Tax Act, 1959, which repealed the previous Act of 1947. There is a proviso to that section which saves any right, title, obligation or liability already acquired, accrued or for anything done or suffered in respect of the period immediately preceding the repeal from being affected by the repeal. According to Mr. Agarwal, his client in no case could be liable to pay tax except for a period of one year immediately preceding the repeal. As this question was not referred to the court by the Tribunal, we declined to deal with this question. Further, the aforesaid argument was rejected by the Tribunal on account of the interpretation put by it on the expression "period", and we have already answered what is the meaning of the expression "period" in Section 13(5) of the Act.
B.D. Singh, J.
I agree.