The State of Madras vs S. Balu Chettiar

Rajagopalan, J.—The assessee was a dealer as defined by the Madras General Sales Tax Act. He did not get himself registered as a dealer

in the assessment year 1951-1952, under the provisions-of the Act. When the Deputy Commercial Tax Officer, the assessing authority, took steps

to assess the assessee, on a provisional basis under the rules, for 1952-1953, the accounts of the assessee for 1951-1952 were also examined on

14th September, 1953. On 4th January, 1954, a notice was issued to the assessee to show cause why he should not be assessed on his turnover

for the assessment year 1951-1952. The assessee did not submit any return even after the receipt of the notice. On 16th January, 1954, the

Deputy Commercial Tax Officer estimated the turnover of the assessee for 1951-1952 at Rs. 33,016-1-5, on the basis, of the entries in the

assessee''s books themselves and assessed him to pay a tax of Rs. 515-14-0. On appeal the Commercial Tax Officer confirmed the assessment.

On further appeal by the assessee to the Tribunal, the assessment was set aside. The Tribunal was of the view, that the case of the assessee had to

be dealt with under Rule 17(1) of the General Sales Tax Rules, and it pointed out that the period of limitation prescribed by the rule, as it stood at

the relevant period, expired on 31st March, 1953. The Government applied u/s 12-B of the Act to revise the order of the Tribunal.

The contention of the learned Government Pleader was that Rule 17(1) did not apply to the case of the assessee, as it was a case of an

assessment for the first time, for completing which no period of limitation was prescribed by any of the rules. That if Rule 17(1) applied the view

taken by the Tribunal would be right was not challenged. So the question is, did the assessment in question come within the scope of Rule 17(1).

The relevant portion of Rule 17(1), before it was amended ran thus:

If for any reason the whole or any part of the turnover of business of a dealer has escaped assessment to the tax in any year...the assessing

authority may at any time within the year or the 2 years next succeeding that to which the tax...relates, determine to the best of his judgment the

turnover which has escaped assessment and assess the tax payable on such turnover...after issuing notice to the dealer...and after making such

enquiry as he considers necessary.

The contention of the learned Government Pleader was that what was never assessed at all could not come within the purview of Rule 17(1). It

was on cases decided u/s 34 of the Income Tax Act, that the learned Government Pleader mainly relied to sustain his contention of the scope of

Rule 17(1). In State of Madras v. Louis Dreyfus & Co. Ltd. (1955) 6 S.T.C. 318 a Full Bench of this Court pointed out:

The language employed in Section 34 of the Income Tax Act, which has undergone serious changes from time to time is not identical with that in

Rule 17 of the Madras General Sales Tax Rules, and the mere fact that both these provisions are designed to achieve a somewhat similar purpose

is too slender a foundation for the application of the cases construing one provision for determining the scope of the other. We, therefore, propose

to confine our attention to the language used in.... Rule 17(1) and gather the intention of the rule-making authority as expressed by the words

employed.

We, therefore, do not consider it necessary to consider over again the cases cited by the learned Government Pleader based on the scope of

Section 34 of the Income Tax Act.

In State of Madras v. Louis Dreyfus & Co., Ltd. (1955) 6 S.T.C. 318 , the Full Bench pointed out:

The turnover escapes when it is not noticed by the officer either because it is not before him by reason of an inadvertence, omission or deliberate

concealment on the part of the assessee or because of want of care on the part of the officer,""...and that ""this would be the natural and normal

meaning of the expression turnover which has escaped in Rule 17(1).

The assessee, as we pointed out, did not file a return of his turnover at any time. But though he violated the obligation cast on him by Section 9

of the Act, that does not alter the answer to the question at issue. Whether it was a case of omission or of deliberate concealment on the part of the

assessee, he did not submit any return. It was his default that led to the escape of the turnover for 1951-1952 from assessment to the tax lawfully

due. It was the whole of the turnover for that year that escaped assessment. But Rule 17(1) specifically provides for a case of the whole of the

turnover escaping assessment. The opening words of Rule 17(1) ''if for any reason'' are of wide amplitude and it was on that basis, the Full Bench

considered the rule, giving illustrative examples in the passage we have quoted above. The case of the assessee came within the purview of Rule

17(1). The view taken by the Tribunal was right. The assessment made on 16th January, 1954, was barred by the rule of limitation as it stood in

the relevant period.

The petition fails and is dismissed with costs. Counsel''s fee Rs. 100.

T.R.C. No. 88 of 1955:

The chequered history of the case up to the stage at which the Deputy Commercial Tax Officer assessed the respondent assessee on 20th March,

1954, on a turnover of Rs. 44,617-15-0, which according to the departmental authority has escaped assessment in 1950-51, has been set out in

the order of the Tribunal. The Tribunal held that that assessment was beyond the period of limitation prescribed by Rule 17(1) as it stood during

the relevant period, and set aside the assessment. The Government seeks to have that order revised u/s 12-B of the Sales Tax Act.

For the reasons given in T.R.C. No.54 of 1955, in which we have just pronounced judgment, we negative the contention of the Government,

that as there has been no valid assessment at all at any time before 20th Match, 1954, the case would not come within the scope of Rule 17(1).

Rule 17(1) applied, and the assessment was beyond the time prescribed by that rule.

The petition is dismissed with costs. Counsel''s fee Rs. 100.