PATHAK, J. - (1.) THIS is a reference under section 11(1) of the U.P. Sales Tax Act on the following question : "Whether under the facts and circumstance of the case the proceedings for assessment in this case should not have been taken to be the proceedings for 'escaped assessment' under section 21 of the U.P. Sales Tax Act and should have been held to be only the first assessment under rule 41(5) of the U.P. Sales Tax Rules as mentioned in the notice for assessment issued to the assessee ?"
(2.) THE assessee is a partnership firm which appears to have enjoyed a brief period of existence only. Business was commenced on 13th February, 1957, and was closed on 8th July, 1957. The dissolution of the firm followed on 5th October, 1957. Admittedly, notice of the dissolution was not conveyed to the sales tax authorities. The assessee did not file any return of its turnover under the U.P. Sales Tax Act for the period during which it had carried on business during the assessment year 1957-58. On 11th March, 1959, and again on 20th May, 1959, two notices were issued by the Sales Tax Officer purporting to be under rule 41(5) of the U.P. Sales Tax Rules. They were followed by a third notice dated 2nd November, 1960. The firm having been dissolved, all the notices were served, it is said, by affixation to the last known place of business. On 1st December, 1960, the Sales Tax Officer made an ex parte assessment order, purporting to be under rule 41(5). The assessment order was set aside in appeal and the case was remanded for fresh assessment. The assessee applied in revision and contended that the entire assessment proceeding should have been annulled and the remand order was contrary to law. The revision application was allowed by the Additional Judge (Revisions) Sales Tax. The Additional Judge (Revisions) held, relying upon Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax ([1963] 14 S.T.C. 976 (S.C.)), that as no return had been filed by the assessee it was a case where the turnover had escaped assessment and, therefore, the proceeding lay under section 21 of the Act. In adopting this view, the Additional Judge (Revisions declined to follow the decision of this court in Kishan Lal Gopi Krishna v. Commissioner of Sales Tax (Sales Tax Reference No. 397 of 1961 dated 30th July, 1963). Accordingly, he allowed the revision application and quashed the entire proceeding for the assessment year 1957-58. At the instance of the Commissioner of Sales Tax the present reference has been made. It come on for hearing before a Division Bench of this court, which being of opinion that the decision of this court in Kishan Lal Gopi Krishna (Sales Tax Reference No. 397 of 1961 dated 30th July, 1963) required reconsideration, in view of the decision of the Supreme Court in Ghanshyamdas ([1963] 14 S.T.C. 976 (S.C.)), referred the case to a larger Bench. Section 7(1) of the U.P. Sales Tax Act requires every dealer, who is liable to pay tax under the Act, to submit a return or returns of his turnover at such intervals and within such period as is prescribed. Section 7(2) provides that if the assessing authority is satisfied that the returns submitted are correct and complete he shall assess the tax on the basis thereof. Section 7(3) reads : "If no return is submitted by the dealer under sub-section (1) within the period prescribed in that behalf or, if the return submitted by him appears to the assessing authority 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 : Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of proving the correctness and completeness of any return submitted by him." Section 21 provides : "21. Assessment of tax on the turnover not assessed during the year. - (1) If the assessing authority has reason to believed that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for any year, the assessing authority may, after issuing notice to the dealer, and making such enquiry as may be necessary, assess or reassess him to tax : Provided that the tax shall be charged at the rate at which it would have been charged had the turnover not escaped assessment, or full assessment, as the case may be. Explanation. - Nothing in this sub-section shall be deemed to prevent the assessing authority from making an assessment to the best of its judgment. (2) No order of assessment under sub-section (1) or under any other provision of this Act shall be made for any assessment year after the expiry of four years the end of such year : Provided that where the notice under sub-section (1) has been served within such four years the assessment or reassessment to be made in pursuance of such notice may be made within one year of the date of the service of the notice even if the period of four years is thereby exceeded : Provided further that nothing contained in this section limiting the time within which any assessment or reassessment may be made shall apply to an assessment or reassessment made in consequence of, or to give effect to, any finding or direction contained in an order under section 9, 10 or 11. Explanation. - Where the assessments proceedings relating to any dealer remained stayed under the orders of any civil or other competent court, the period during which the proceedings remained so stayed shall be excluded in computing the period of limitation for assessment provided under this sub-section."
(3.) THE contention on behalf of the Commissioner of Sales Tax is that as the assessee had failed to submit its return of turnover for the assessment year 1957-58, the turnover had escaped assessment and could be taxed under section 7(3). The case for the assessee is that section 7(3) can be invoked only where a return has been field but not within time, and where a return has not been filed at all, as in the present case, recourse can be had to section 21 only. Learned counsel for the Commissioner has relied on two decisions of the Supreme Court. One is Ghanshyamdas ([1963] 14 S.T.C. 976 (S.C.)) and the other Anandji Haridas and Co. (P.) Ltd. v. S. P. Kushare ([1968] 21 S.T.C. 326 (S.C.)). In both the cases the Supreme Court was concerned with section 11(4)(a) and section 11-A of the C.P. and Berar Sales Tax Act, 1947. The material portion of those provisions is set out hereunder : "11. If a registered dealer (a) does not furnish returns in respect of any period by the prescribed date ......, the Commissioner shall in the prescribed manner assess the dealer to the best of his judgment : Provided that he shall not so assess him in respect of the default specified in clause (a) unless the dealer has been first given a reasonable opportunity of being heard." "11-A. (1) If in consequence of any information which has come into his possession, the Commissioner is satisfied that any turnover of a dealer during any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within three calendar years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed in such manner as may be prescribed to reassess or assess, as the case may be, the tax payable on any such turnover; and the Commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount. (2) The assessment or reassessment made under sub-section (1) shall be at the rate at which it would have been made, had there been no under-assessment or escapement. (3)(a) Nothing in sub-sections (1) and (2) - (i) shall apply to any proceeding (including any notice issued) under section 11 ....." ;