E. Masoothu Rawther vs Deputy Commissioner of Agricultural Income Tax And Sales Tax and Others

M.S. Menon, J.—The petitioner was assessed to sales tax under the Travancore-Cochin General Sales Tax Act, 1125, for the period from

1-1-1125 (17th August, 1949) to 15-10-1125 (29th May, 1950) on 24th March, 1953. The only contention urged before me on his behalf is that

the assessment is bad on the ground that it was made on a date subsequent to the two year period prescribed by Rule 33(1) of the Travan-core-

Cochin General Sales Tax Rules, 1950.

It is admitted that the petitioner submitted a return on 18th October, 1951, giving the details of his turnover and denying liability to tax on the

ground that he was an exporter. According to the State there was a provisional assessment on 8th December, 1949, and the petitioner has made

remittances in liquidation of his liability under that provisional assessment. Paragraph 2 of the affidavit filed by the Officer who made the final

assessment reads as follows : -

The impugned assessment was made by me on 24th March, 1953, under the Travancore General Sales Tax Act, 1124, in pursuance of a return

made by the petitioner on 18th October, 1951. Before that, the petitioner was provisionally assessed under the said Act on 8th December, 1949,

by my predecessor-in-office. The petitioner was paying the tax on the basis of the said assessment. Accordingly he paid a sum of Rs. 16,292-8-0

for the assessment year. But under the final assessment, his tax was fixed at Rs. 14,285-11-6 and the excess amount collected was adjusted

against the tax payable by him for the subsequent year"" and in paragraph 2 of the affidavit accompanying the petition the petitioner said:

The 3rd counter petitioner by his order dated 24th March, 1953, an attested copy of which is herewith produced marked Exhibit A, has

determined the total taxable turnover for the assessment period 1-1-1125 to 15-10-1125/3oth May, 1950, at Rs. 9,14,286 and has determined

the total sales tax payable by me for that period at Rs. 14,285-11-6. As per the provisional assessment I had remitted Rs. 16,292-8-0. The 3rd

counter petitioner directed the excess tax paid, viz., Rs. 2006-12-6, to be adjusted in the final assessment for the next period, viz., 1950-51.

The statement ""As per the provisional assessment I had remitted Rs. 16,292-8-0"" should normally amount to an admission that there was a

provisional assessment (as contended by the State) and that towards that provisional assessment he had remitted Rs. 16,292-8-0 (as stated by

them). The provisional assessment order is not, available in the file and the learned counsel for the petitioner submitted before me that according to

his client there was no provisional assessment at all and the payments were made not in pursuance of any provisional assessment but of a final

assessment for the year 1124 and the first two months of 1125 which was cancelled by the Deputy Commissioner of Agricultural Income Tax and

Sales Tax, Trivandrum, on 1st February, 1952, as per the following order :

Two appeals are filed against the assessments made by the Assistant Sales Tax Commissioner for the last quarter of 1124 and the first two months

of 1125. Sri P. J, George who appears before me submits that the Assistant Excise Commissioner who made these assessments has drawn no

assessment order except that he has served notices of demand on the appellant. The procedure adopted in this case is not in order. Hence the

assessments are cancelled and the cases remanded for fresh disposal according to law.

The order shows that the petitioner knows how to take advantage of the absence of orders when demands are made and in the light of the wording

of his affidavit I feel little doubt that the only basis for his present contention is his desire to exploit the absence of the provisional assessment order

in the files of the Department.

Rule 33(1) of the Travancore-Cochin General Sales Tax Rules, 1950, provides :

If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to the tax in any year or if the

licence fee has escaped levy in any year the assessing authority or licensing authority, as the case may be, may at any time within the year or the

two years next succeeding that to which the tax or licence fee relates, assess the tax payable on the turnover which has escaped assessment or levy

the licence fee after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary

and it is evident from the sub-rule that it applies not to a case like this but to cases where the turnover of a dealer had ""escaped"" assessment to the

tax.

According to the petitioner the words ""has escaped assessment to the tax in any year"" is synonymous with the words ""has not been assessed to

the tax in any year"" and this being a case where the assessment was made not within the year concerned but only subsequently the period of

limitation provided in Rule 33(1) should apply. A similar contention was urged as regards the words ""has escaped assessment in any year

occurring in Section 34 of the Indian Income Tax Act, 1922, before the Privy Council, in Sir Rajendra Nath Mukerjee v. Commr. of Income Tax,

(1934) 61 Ind App 10, AIR 1934 PC 30 Their Lordships extracted Section 34 (as it stood on the relevant date) :

If for any reason income, profits or gains chargeable to Income Tax has escaped assessment in any year, or has been assessed at too low a rate,

the Income Tax Officer may, at any time within one year of the end of that year, serve on the person liable to pay tax on such income, profits or

gains, or in the case of a company on the principal officer thereof, a notice containing all or any of the requirements which may be included in a

notice under Sub-section (2) of Section 22 and may proceed to assess or re-assess such income, profits or gains, and the provisions of this Act

shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section : Provided that the tax shall be charged at the

rates at which it would have been charged had the income, profits or gains not escaped assessment or full assessment, as the case may be

and dealt with the contention of the appellants as follows :

Assessment, they argue, is a definite act, indeed the most critical act in the process of taxation. If an assessment is not made on income within the

tax year then that income, they submit, has escaped assessment within that year, and can be subsequently assessed only u/s 34 with its time

limitation. This involves reading the expression ''has escaped assessment'' as equivalent to ''has not been assessed''. Their Lordships cannot assent

to this reading. It gives too narrow a meaning to the word ''assessment'' and too wide a meaning to the word ''escaped''.

Their Lordships also quoted with approval the view expressed by Rankin, C.J., in In Re: Lachhiram Basantlal, :

Income has not escaped assessment if there are pending at the time proceedings for the assessment of the assessees'' income which have not yet

terminated in a final assessment thereof.

The learned counsel for the petitioner invited my attention to Jaipuria Brothers Ltd. v. Sales Tax Officer and Anr. [1956] 7 S.T.C. 64. That was

a case in which the Department was taking proceedings under sectional of the United Provinces Sales Tax Act, 1948 :

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 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 relates assess the tax payable on the turnover which has escaped assessment or levy the correct amount of the

licence fee, after issuing a notice to the dealer and after making such inquiry as he considers necessary"" and as the period of three years provided in

that section had expired it was held by the court that the Sales Tax Officer had no jurisdiction to make any assessment u/s 21 of the Act. Section 7

of the United Provinces Sales Tax Act deals with the determination of the turnover and assessment of tax in normal circumstances and the court

took care to point out that ""the question whether he has a right to proceed with that assessment now u/s 7 of the Act does not arise for

determination in the instant case.

What I am concerned with in this case is a normal assessment following a provisional assessment on 8th December, 1949, and a return filed on

18th December, 1951, and no question of limitation Under rule 33(1) can possibly arise for consideration.

It follows that the petition has to be dismissed and it is hereby dismissed with costs, advocate''s fee Rs.150.