- (1.) The following question referred for opinion under section 11 of the U. P. Sales Tax Act, 1948, was answered by the High court of Allahabad, in both its branches, in the affirmative: "whether section 18 (4) takes away the right of election of the assessment year conferred on every dealer by the first proviso to section 7 read With rule 39 (1) and whether tax is to be imposed on a new dealer on his turnover computed in accordance with section 18 (4) in spite of his election of the assessment year by filing quarterly returns - The Commissioner of Sales Tax has appealed to this court with special lave.
(2.) The respondents commenced business in cotton textiles at Bulandshahr in U. P. during the assessment year 1949-50 and they were assessed to sales tax under section 18 (3) of the U. P. Sales Tax Act, 15 of 1948, on their turnover of that year. During the assessment year 1950-51 the respondents filed quarterly returns. The Sales Tax Officer, Bulandshahr, rejected the contention of the respondents that they were liable to be assessed on the turnover computed in accordance with section 18 (4) of the U. P. Sales Tax Act, 1948, and computed the taxable turnover of the respondents at Rs. 1,15,711-11-3, and assessed them to pay tax on that turnover. In appeal to the Judge (Appeals) , Sales Tax, the order was confirmed. But the Judge Revisions) in exercise of power under section 10 of the Act set aside the order of the assessing authority and directed that taxable turnover of the respondents be calculated in accordance with the provisions of section 18 (4) of the Act. The High court of Allahabad agreed with the view of the Judge (Revisions).
(3.) The Commissioner of Sales Tax contended in this appeal that the taxable turnover of the respondents in respect of the year 1949-50 was liable to be computed under section 7 (2) of the Act read with rule 41 (5) of the Rules framed under the Act, and not under section 18 (4). To appreciate the contention, the relevant statutory provisions may first be noticed. Section 7 of the U. P. Sales Tax Act, 15 of 1948, as amended by Act 25 of 1948, read as follows : " (1) Subject to the provisions of section 18, every dealer whose turnover in the previous year is Rs. 12,000. 00 or more in a year shall submit such return or returns of his turnover of the previous year within sixty days of the commencement of the assessment year in such form and verified in such manner as may be prescribed: Provided that the State government may prescribe that any dealer or class of dealers may submit, in lieu of the return or returns specified in this section, a return or returns of his turnover of the assessment year at such intervals, in such form and verified in such manner as may be prescribed, and thereupon, all the provisions of this Act shall apply as if such return or returns had been duly submitted under this section. " Ss. (2) and (3) of section 7 provided that the assessing authority may, after such enquiry as he considers necessary, complete the assessment and assess the tax on that basis; if no return is submitted by the dealer or if the return submitted by him appears to be incorrect or incomplete, the assessing authority shall, after making such enquiry as he considers necessary, determine the turnover of the dealer to the best of his judgment and assess the tax on the basis thereof. Ss. (3) and (4) of section 18 as they stood at the relevant time read as follows: " (3) (a) Every dealer or a reconstituted firm commencing business during the course of an assessment year whose monthly turnover is estimated to be not less than Rs. 1,000. 00 shall give notice of the fact to the assessing authority within fifteen days of such commencement and shall submit monthly statements of his turnover within seven days of the expiry of each month in such form and verified in such manner as may be prescribed in respect of the portion of such year during which the business is continued. (b) If the assessing authority, after making such enquiry as he considers necessary, is satisfied that such returns submitted under clause (a) are correct and complete and that the average monthly turnover is not less than Rs. 1,000. 00 he shall assess the dealer on the total turnover shown in the returns. (c) If no returns are submitted by the dealer under clause (a) before the period specified, or if the returns submitted by him appear to the assessing authority to be incorrect or incomplete, the assessing authority shall, after such enquiry as he deems necessary, determine to the best of his judgment, the average monthly turnover and the total turnover for the period of the assessment year during which the business is carried on and, if the average monthly turnover is not less than Rs. 1,000. 00 he shall assess the tax on the basis of the total turnover so determined by him. (4) The assessing authority shall fix the turnover of the dealer for the next succeeding assessment year at the amount of average monthly turnover determined by him in accordance with clause (b) or (c) of Ss. (3) , as the case may be, multiplied by 12 and shall assesse the tax thereon. " In exercise of the powers conferred by section 24 of the Act, the State government framed rules to carry out the purposes of the Act. Rules 39, 40 and 41 are relevant : "39. (1) Any dealer may elect to submit returns of his turnover of the assessment year in lieu of the returns of the turnover of the previous year, and shall signify such election in the return filed by him in Form IV: Provided that a dealer who did not carry on business during the whole of the previous year shall elect to submit his returns of the assessment year. (2). . . -. . "40. Every dealer who elects to submit return of his previous year shall, within sixty days of the commencement of the assessment year, submit to the Sales Tax Officer a return in Form IV showing his turnover for the previous year: Provided. . . . . . " "41. (1) Every dealer whose estimated turnover during the assessment year is not less than Rs. 15,000. 00 and who elects to submit returns of such year shall before the last day of July, October, January and April submit to the Sales Tax Officer, a return of his gross turnover for the quarters ending June 30, September 30, December 31 and March 31, respectively, in Form IV: Provided (2). . . . . . (3). . . . . . (4). . . . . . (5) Upon the expiry of the assessment year the Sales Tax Officer shall, after such enquiry as he may deem necessary, determine the turnover of the assessment year and shall assess the tax thereon.;