- (1.) The Malwa Vanaspati and Chemical Company Ltd.-hereinafter called 'the respondent' - is a public limited company which carries on the business of manufacturing and selling hydrogenerated oil and is registered as a dealer under the Madhya Bharat Sales Tax Act, 1950, and also under the Central Sales Tax Act, 1956. For the four quarters of 1958-59 the respondent submitted returns of turnover from its inter State sale transactions. The Madhya Bharat Sales Tax Act, 1950, was repealed with effect from April 1, 1959 by the Madhya Pradesh General Sales Tax Act 2 of 1959, but it is common ground that assessment in this case is governed by the provisions of the Madhya Bharat Sales Tax Act, 1950.
(2.) After certain infructuous attempts made to tax the turnover of the respondent under Act 2 of 1959, the Additional Assistant Commissioner of Sales Tax, Indore Region, by notice dated September 17, 1962, called upon the respondent to show cause why the transactions included in the taxable turnover of the respondent be not taxed at the full rate. The respondent then presented a petition under Art. 226 of the Constitution to the High Court of Madhya Pradesh for an order quashing the proceeding for assessment, contending, later alia that since the assessment not completed within three years was the last day of the year of assessment provided by S. 10 of the Madhya Bharat Sales Tax Act, 1950, the Sales Tax Officer bad no power to continue the proceeding. Following their judgment in Malwa Vanaspati and Chemical Co. Ltd. v. Regional Assistant Commissioner of Sales Tax, Indore, Misc. Petn. No. 356 of 1963 (MP) the High Court quashed the proceeding for assessment and directed the appellant to forbear from proceeding with the assessment. With special leave, the appellant has appealed to this Court.
(3.) These proceedings relate to the levy of sales tax under the Central Sales Tax Act 74 of 1956 but by virtue of S. 9 of that Act. Central sales tax is liable to be assessed and recovered in the manner provided by the law of the State from which the movement of the goods commences. The relevant provisions of the Madhya Bharat Sales Tax Act, 1950, may first be read : S. 7 "(1) Every dealer liable to pay tax shall furnish returns of his turnover for the prescribed periods in the prescribed form, in the prescribed manner and within the prescribed time, to such an authority as may be prescribed. (2) * * * * * (3) * * * * *" S. 8 "(1) (a) Assessment of taxable turnover and determination of tax due for any year, shall be made after the returns for all the periods of that year have become due: Provided * * * * (b) Notwithstanding anything contained in clause (a) if any dealer fails to submit a return under Section 7 (1) for the prescribed period within the prescribed tune, the assessing authority shall, after making such enquiry as he considers necessary and after giving the dealer a reasonable opportunity of being heard determine the turnover of the deafer for the said period to the best of his judgment and assess the tax on the basis thereof. This assessment subject to the provisions of section 10 and to such orders as may be passed in appeal or revision, shall be final for the period. Provided * * * * (c) If the assessing authority, after such enquiry, as be considers necessary, is satisfied that the returns furnished by a dealer are correct and complete he shall assess the tax on the basis thereof. (2) If the assessing authority is not satisfied without requiring the presence of the person who made the returns or the production of evidence that the returns are correct sod complete he shall serve on such person a notice requiring him on a date and place to be therein specified- "(i) to appear in person or by an agent duly authorised in writing; or (ii) to produce or cause to be produced, any evidence on which such person may rely, in support of the returns; or (iii) to produce or cause to be produced such accounts or documents pertaining to the assessment year and to three years preceding as the assessing authority may require. 3. On the day specified in the notice under sub-section (2) or as soon afterwards as may be, the assessing authority after hearing such evidence as such person may produce and such other evidence as the assessing authority may require on specified points, shall, by an order in writing, assess the taxable turnover and determine the tax payable on basis of such assessment. (4) If a dealer (a) having furnished returns fails to comply with all the terms of a notice issued under sub-section (2); or (b) has not regularly employed any method of accounting, or if the method employed is such that, in the opinion of the assessing authority, assessment cannot property be made on the basis thereof, the assessing authority shall assess the dealer to the best of his judgment and determine the tax payable on the basis of such assessment. (5) x x x x x" S. l0 "If for any reason the whole or any part of the turnover of business of a dealer has escaped assessment to the tax, or if the licence fee, registration fee or exemption fee has escaped levy or has been assessed at too low a rate in any year, the assessing authority at any time within a period of three years next succeeding that to which the tax or the licence fee, registration he or the exemption fee relates, assess the tax payable on the turnover which has escaped, assessment or levy the correct amount of licence fee, registration fee or exemption fee, after issuing a notice to the dealer and after making such enquiry as he considers necessary.";