- (1.) THE Excise and Taxation Officer (Assessing Authority), Ludhiana, who is appellant in this Letters Patent appeal, issued notice to the respondent M/s. Hardit Singh Bhagat Singh, a partnership concern, under Section 11 (2) of the Punjab General Sales Tax Act, 1948 (hereinafter called "the Act"), intimating that he was not satisfied that the returns filed by them (pertaining to the periods mentioned therein) were correct and complete and it appeared to him to be necessary to make assessment under Sub-section (3) of Section 11 of the Act in respect of the periods mentioned therein. He called upon the respondent to produce the accounts and documents and to raise any objections, which it may wish to bring, and to show cause why in addition to the tax to be assessed a penalty, not exceeding one-and-a-half times of the amount, should not be imposed. The respondent impugned this notice through a writ petition under Articles 226 and 227 of the Constitution of India. The writ was allowed by the learned single Judge and the notice was quashed. It has been held that the power to make the best judgment assessment under Sub-section (3) of Section 11 could be exercised within a period of five years as mentioned in Sub-section (4) of Section 11, and that the period had to be counted from the end of each quarter in respect of which return had been filed by the assessee. The Assessing Authority cannot proceed to make the best judgment assessment in respect of the quarter ending 31st March, 1967, or the period preceding that on or after 16th June, 1972, i. e. , the date on which the impugned notice was issued. Sustenance for this view had been sought from a decision of the Constitution Bench of the Supreme Court in Madan Lal Arora v. Excise and Taxation Officer, Amritsar [1961] 12 STC 387 (SC ). Shri G. S. Grewal, the learned Advocate-General, appearing for the appellant has stated that for cases falling under Section 11 (2) of the Act no period of limitation was prescribed to issue notice to the assessee and in support of this view he referred to us to the decision of the Final Court in Indian Aluminium Cables Ltd. v. Excise and Taxation Officer [1977] 39 STC 19 (SC ).
(2.) IT will be apposite to extract the relevant provisions of Section 11 of the Act at the threshold: (2) If the Assessing Authority is not satisfied without requiring the presence of dealer who furnished the returns or production of evidence that the returns furnished in respect of any period are correct and complete, he shall serve on such dealer a notice in the prescribed manner requiring him, on a date and at a place specified therein, either to attend in person or to produce or to cause to be produced any evidence on which such dealer may rely in support of such returns. (3) On the day specified in the notice or as soon afterwards, as may be, the Assessing Authority shall, after hearing such evidence as the dealer may produce, and such other evidence as the Assessing Authority may require on specified points, assess the amount of the tax due from the dealer. (4) If a dealer having furnished returns in respect of a period, fails to comply with the terms of notice issued under Sub-section (2), the Assessing Authority shall within five years after the expiry of such period, proceed to assess to the best of his judgment the amount of the tax due from the dealer.
(3.) PRIOR to its amendment by Act No. 28 of 1965, the word "dealer" in subsection (4) ibid. was preceded by word "registered"; by the Amendment Act among other things the word "registered" was deleted and the period of limitation was extended from three years to five years. The unamended Sub-section (4) of Section 11 came for construction before the Final Court in Madan Lal Arora's case [1961] 12 STC 387 (SC ). It was held: Held, (1) that the power to make the best judgment assessment could be exercised only within the period of three years mentioned in the sub-section and the three years had to be counted from the end of each quarter in respect of which the returns had been filed; (2) that where the last of the quarters in respect of which the petitioner filed his returns ended on 31st March, 1956, the Assessing Authority could not proceed to make a best judgment assessment in respect of this quarter after 31st March, 1959.;