Messrs Rattan Di Hatti vs The Excise And Taxation Officer, Ludhiana and Another

Shamsher Bahadur, J.—The petitioner Rattan Chand, as proprietor of "Rattan Di Hatti" in Chaura Bazu Ludhiana, has moved this Court in certiorari proceedings to have the order passed by the Assessing Authority, Ludhiana, on 29th of March, 1963, making an assessment of Rs. 1,793.21 nP quashed.

The petitioner started the business of selling yarn and cloth on 9th of April, 1959, and carried it on till the 19th of May, 1962. The assessment proceedings in respect of the year beginning on 1st of April, 1959, and ending with 31st of March, 1960, were initiated by the Assessing Authority on 25th of August, 1960. The petitioner had to submit his quarterly returns for the periods 9th April, 1959 to 30th of June, 1959, 1st of July, 1959 to 30th of September, 1959, 1st of October, 1959 to 31st of December, 1959 and 1st of January, 1960 to 31st of March, 1961. The petitioner filed only one return on 2nd of May 1960, in respect of the fourth quarter ending with 31st of March, 1960, wherein gross turnover was disclosed at Rs. 1,86,517.06 nP. In the opinion of the Assessing Authority, the petitioner on one pretext or another avoided the production of account books. The petitioner had been appearing before the Assessing Authority before whom he made statements on 12th of September, 1961, and 17th of May, 1962, to the effect that he had only bills of his sales and purchases and had not kept any regular accounts in the form of rokar khata, etc. On 19th May, 1962, the petitioner stated before the Assessing Authority that his sales bills and purchase invoices had been taken away and he was unable to produce them. The Assessing Authority after having investigated further into this matter suo moto proceeded to pass the impugned assessment order on 29th of March, 1963 "on the principles of best Judgment." It is not disputed that the order of 29th of March, 1963, was passed in pursuance of sub-section (4) of section 11 of the Punjab General Sales Tax Act, 1948, which says that:

If a registered dealer, having furnished returns in respect of a period, fails to comply with the terms of a notice issued under sub-section (2), the Assessing Authority shall within three years after the expiry of such period, proceed to assess to the best of his judgment the amount of the tax due from the dealer.

The notice under sub-section (2) is given by an Assessing Authority to require the presence of a dealer to produce or cause to be produced any evidence on which he relies for support of such returns.

It is submitted by Mr. Jain, the learned counsel for the petitioner, that the latest decision of this Court has construed the period of limitation of three years to mean that the entire assessment proceedings should be completed before the expiry of three years from the assessment year. In other words, the assessment order should have been passed on or before 31st of March, 1962. The only quarter in respect of which the assessment could have been made within this period was the fourth one between 1st of January and 31st of March, 1930. It has been held by the majority Judgment of the Full Bench in Mrs. Rameshwar Lal Sarup Chand v. Shri U.S. Naurath, Excise and Taxation Officer, Assessing Authority (1963) 65 P.L.R. 768 (F.B.) that the best judgment assessment must be completed within three years from the last date on which the return could be filed under the Punjab General Sales Tax Act. The order of assessment in that case having been passed three years after such period was quashed on the ground that it was without jurisdiction. It is not disputed that the assessment proceedings relating to the year 1959-60 must be quashed on the authority of this Full Bench except for the last quarter between 1st of January and 31st of March, 1960. The learned Additional Advocate-General, appealing for the respondents, however,, points out that the Punjab General Sales Tax Act has been amended by Punjab Act 2 of 1963, which came into force on 23rd March, 1963. Section 5 of the Amending Act says that:

In sub-sections (4), (5) and (6) of section 11 for the words ''three years'' the words ''four years'' shall be substituted.

It is contended by him that the amendment relating as it does to a matter of procedure should be applicable to pending proceedings.

In our opinion, the amended provision of the Punjab General Sales Tax Act, 1948, has no effect on the present proceedings. According to the Full Bench decision the period of three years under the unamended sub-section (4) of section 11 expired on 31st of March, 1962. The amendment is in form prospective and no retroactivity can be inferred. No proceedings were pending en 23rd of March, 1963, when the amended section came into force. The order of assessment no doubt was made on 29th of March, 1963, but according to the ratio decidendi of the Full Bench Judgment the assessment proceedings could not have been prolonged after 31st of March, 1952, on which date the petitioner came to have a vested right under the law expounded by the Full Bench. As pointed out by Craies on Statute Law (6th edition) at page 398:

So careful are the courts in endeavouring to protect vested rights that we find that in several cases judges have refused to allow statutes to have a retrospective operation, although their language seemed to imply that such was the intention of the legislature, because, if the statutes had been so construed, vested rights would have been defeated. Lord Blackburn stated this rule of law in the following way with regard to the effect of a statute upon a transaction past and closed. ''Where,'' said he, ''the effect would be to alter a transaction already entered into, where it would be to make that valid which was previously invalid, to make an instrument which had no effect at all, and from which the party was at liberty to depart as long as he pleased, binding-I think the prima facie construction of the Act is that it is not to be retrospective, and it would require strong reasons to show that it is not the case.

Another argument adduced by Mr. Doabia is that the validity of the Full Bench decision has been thrown in doubt by a later decision of the Supreme Court in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur 1968 S.T.C. 976. The head note is somewhat misleading but a perusal of the Judgment shows that their Lordships upheld the view that the assessment has to be made within three calendar years from the expiry of the period in respect whereof a dealer has been made liable to pay tax under the Act. The Act in question was the Central Provinces and Berar Sales Tax Act, 1947, section 11-A of which authorised the Commissioner to proceed within a period of three calendar years from the expiry of such period with the assessment in respect of any turnover which has escaped assessment. So far as we can see, there is nothing said in this Judgment against the reasoning and conclusion which has been reached by the Full Bench of this Court.

We would accordingly allow this petition and set aside the entire assessment. The respondents are, however, given the liberty to make the assessment separately for the period which is not barred under sub-section (4) of section 11. This is precisely what was done by their Lordships of the Supreme Court in Ghanshyamdas s case 1968 S.T.C. 976. As we have indicated before, the assessment with regard to the fourth quarter appears to be within time and the Assessing Authority would be free to make a fresh assessment in respect to that period. The parties are left to bear their own costs.

Bedi, J.

I agree.