PATHAK, J. - (1.) I have carefully considered the matter. The submissions made by the learned counsel before us disclose no reasonable basis for changing the view I took earlier in Commissioner of Sales Tax v. Sugan Chand ([1971] 27 S.T.C. 161; 1970 A.L.J. 895). I agree with the answer proposed by my brother Hari Swarup to the questions formulated in the different references, and also agree that the writ petition should be dismissed. The parties should bear their own costs in each case. In this case an important and difficult question arises under the U.P. Sales Tax Act. The question is whether 21 or section 7(3) or both apply for making an assessment where a dealer fails to file a return of his turnover within the prescribed time. It is necessary to notice a few relevant provisions of the Act. Section 3 is the charging section under which every dealer has to pay, for each assessment year, tax at the rate specified therein on his turnover of such year. Machinery for assessment of the turnover and of the tax is contained in section 7. Sub-section (1) thereof provides that every dealer, who is liable to pay tax, shall submit such return or returns of his turnover at such intervals within such period and in such form as may be prescribed. Under sub-section (2) if the assessing authority is satisfied that any returns submitted under sub-section (1) are correct and complete, he shall assess the tax on the basis thereof. Sub-section (3) then deals with a case where no return is filed or, if the return filed is incomplete or incorrect. This provision is important and may be quoted in full : "(3) 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 inquiry 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 him."
(2.) THEN we come to the rules. Rule 41 prescribes the time and the manner in which returns have to be submitted. Under sub-rule (1) of rule 41, every dealer who is liable to pay tax under the Act 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. Under sub-rule (2), before submitting the return under sub-rule (1), the dealer shall deposit in the treasury the amount of tax calculated by him on the turnover shown in such return and shall submit a treasury chalan with the return or a cheque for the amount so calculated. Under sub-rule (3), if no return is submitted in respect of any quarter within the period or if the return submitted is without payment of the tax, the Sales Tax Officer shall after making such enquiries as he considers necessary, determine the turnover to the best of his judgment and provisionally assess the tax payable for the quarter. Then we have sub-rule (5) which provides that 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. And finally under sub-rule (6), if the tax assessed differs from the total amount deposited or paid by cheque, the difference shall be realized or refunded by the Sales Tax Officer, as the case may be. Then we come to section 21. That section contains a provision for the assessment of the turnover which has escaped assessment and reads as under : "Assessment of tax on the turnover not assessed during the year. - (1) If the assessing authority has reason to believe that the whole or any part of the turnover of the 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 any assessment to the best of his 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 from 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 assessment 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 question then arises as to when does turnover escape assessment ? Now, the obvious case where turnover escapes assessment is when an assessment has once been made and thereafter it is discovered that a part of the turnover has not been taxed. That would be a case of a part of the turnover escaping assessment. Turnover also escapes assessment when an assessment order is made but the turnover of the dealer is held to be not liable to tax and thereafter it is discovered that the turnover was in fact taxable. That would be a case where whole of the turnover escapes assessment. Then arises the important question as to whether the turnover escapes assessment even if no assessment is made and the dealer files no return.;