(1.) THE order in this writ petition shall also govern the disposal of other two writ petitions, Misc. Petition No. 305 of of 1966 (Raipur Transport co. Pvt. Ltd. v. The Transport Commissioner and others) and Misc. Petition no. 307 of 1966 (Madhya Pradesh Transport Co. Pvt. Ltd. v. The Transport Commissioner and others) as common points for decision are involved.
(2.) THE above referred three writ petitions were filed by petitioners carrying on business of motor transport and plying stage carnages under Articles 226 and 227 of the Constitution. They sought a writ of certiorari for quashing notices of demand issued to them in Form VI under rule 9 of the m. P. Motor Vehicles (Taxation of Passengers) Act, 1959 (hereinafter referred to as "the Rules") for the sum specified therein and recoverable from them as tax under section 7 (a) of the M. P. Motor Vehicles (Taxation of Passengers)Act, 1959) hereinafter referred to as 'the Act') and calling upon the petitioners to pay the amount within the period specified in the notices. It has been further mentioned in the notices that in the event of the failure on the part of the petitioners to pay the amount of tax within the period fixed by the said notices "compulsory proceedings" for the recovery of the amount would be initiated. The petitioners, therefore, also prayed that the proceedings initiated by the Deputy Transport Commissioner by issue of certificates under section 10 (2) of the Act be also quashed. These petitions were allowed by this court in the year 1966 on the basis of the decision given in Raipur Transport co. (P) Ltd. , Raipur v. Shri M. P. Singh, Deputy Transport Commissioner (Misc. Petition No. 304 of 1966, decided on the 8th November 1966= 1967 MPLJ 773) In that case, it has been held that it is only when the amount payable by the operator as tax or penalty is determined that a notice of demand can be issued to him for payment of the amount of tax or penalty, and that a notice of demand presupposes an order of assessment, and an order of assessment is necessary not only for the validity of the notice of demand but also for enabling the appellate authority to see whether the tax has been correctly assessed or not and the demand made against the operator is or is not justified. The respondents went to the Supreme Court challenging the correctness of the decision in each petition in special leave to appeal. These appeals were admitted and registered as under :-
(1) Civil Appeal No, 1450 (NT) of 1967-against the order in Anand transport Co. (P) Ltd. v. The Transport Commissioner and others (M. P. No. 302 of 1966), 2. Civil Appeal No. 1454 (NT) of 1967-against the order in Raipur transport Co. (P) Ltd. v. The Transport Commissioner and 3 others (M. P. No. 305 of 1966). 3. Civil Appeal No. 1452 (NT) of 1967 -. against the order in M. P. Transport Co. (P) Ltd. v. The Transport Commissioner and others (M. P. No. 307 of 1967).
The Supreme Court heard these appeals together with other appeals (with which we are not concerned here) which also relate to challenge to notices of demand for payment of the amount of passenger tax due under the Act and they were also disposed off by the common order dated 8-11-1966 of this court. The appeals have been decided by a common judgment passed by the supreme Court which is referred to in the case of M. P. Singh, Deputy Transport Commissioner and others v. Anand Transport Co. (P) Ltd. etc. (1971 MPLJ 971 (SC) = AIR 1971 SC 2127.) Their lordships of the Supreme Court found two categories of cases. The first category was of those cases in which returns had been duly filed as contemplated by section 5 of the Act but no tax had been deposited as required by section 6. Demand notices were issued in respect of the tax payable pursuant to the returns some years later. Proceedings were also taken as no payment was made for recovery of the tax as arrears of land revenue. The second category was of those cases with which we are concerned here, in which returns were never filed but it appeared the authorities did take certain proceedings under section 7 of the Act and in some cases accounts of the parties were checked and their liability determined. The relevant paras to 7 of the Judgment dealing with the aforesaid categories are as under :
"the scheme of the above provisions apparently is that the operator of a stage carriage has to submit a return in accordance with section 5 and pay tax into the Government treasury every month as provided by section 6. No question can arise of any assessment order being made under section 7 by the Tax Officer where the returns are found to be correct and complete. It is only where either no returns have been submitted or where the returns submitted appear to the Tax Officer to be incorrect or incomplete that the Tax Officer has to follow the procedure laid down in section 7 and determine the tax payable by the operator. The High Court was of the view that even where returns had been filed and accepted as correct the Tax Officer has to pass a proper assessment order holding the operator liable for pay ment of tax in accordance with the return submitted by him. In other words no notice of demand can be issued until the Tax Officer make such an order qualifying the amount of tax. We are unable to accede to the contention which prevailed with the High Court that even where returns had been submitted but the tax has not been paid the Tax Officer is bound to make an order before serving a notice of demand even though the demand is strictly in accordance with the returns which have been submitted. Section 7 rules out any such coarse to be followed by the Tax Officer. It is only when the returns have not been submitted or when returns submitted are found to be incorrect and incomplete that the Tax Officer has to make an inquiry and determine the sum payable by the operator by way of tax. Similarly if there has been escapement of tax, proceedings have to be taken under section 8 and an order has to be made after an inquiry. The position would be same if penalty is sought to be levied under section 8, but where returns have been accepted as correct nothing more need be done except to recover the tax due which has not been paid and no assessment order need be passed in view of the express language of section 7. We are satisfied that in the two appeals, i. e. , Civil Appeals 1449 and 14s3/67 in which returns had been filed the Tax Officer was not bound to make any order quantifying the amount of tax before issuing the notice of demand. The amount sought to be realized was quantified in the returns themselves vide Form IV read with Rule (2) of the M. P. Motor Vehicles (Taxation of Passengers) Rules. It has not been shown that any penalty was sought to be imposed in those two cases. The order of the High Court, therefore, in these appeals cannot be sustained and is hereby set aside and the writ petitions are ordered to be dismissed. As regards Civil Appeals Nos. 1450, 1451, 1452 and 1454/67, it appears, as has been stated earlier, that some proceedings were held of the nature contemplated by section 7 and the notions of demand were issued after orders had been duly made by the Tax Officer. But this is a matter which was not examined in each case by the High Court and we would like to express no opinion with regard to it. These appeals are also allowed and the orders of the High Court are set aside. The High Court will rehear and re-decide the same in accordance with law. Here, we are concerned with the cases of three appeals out of four which have been remanded to this Court for rehearing and deciding the same in accordance with law. The relevant three writ petitions with reference to the three appeals are Misc. Petitions Nos. 302, 305 and 307 of 1966, which have come up for hearing again before us. The fourth writ petition Misc. Petition no. 343 of 1966 (Rajnandgaon Roadways Pvt. Ltd. v. Passenger Tax Appellate authority and another) which relate to the case of Civil Appeal No. 1451 (NT)of 1967 was also heard but since the facts and points for determination, are different, it would be decided by a separate order.
(3.) LEARNED counsel for the petitioners in all the three petitions contended that since the proceedings initiated by the Tax Officer by means of notices under section 7 of the Act were beyond the time prescribed and, therefore, the proceedings taken were not maintainable against the assessee. In support of his submission he placed reliance on the reported decision of the Supreme court in Tax Officer- cum- Regional Transport Officer and others v. Durg Transport company (Pvt.) Ltd. , Durg (Civil Appeal No. 2289 of 1968. decided on the 30th July 1971 = 1974 MPLJ 92-1973 MPWR 345.) On the other hand, learned Deputy Government advocate appearing for the respondents contended that although an operator may not have filed returns as contemplated by section 5 of the Act but in case he submitted statement of account in response to the notice under section 7 of the Act, even though the said notice may be beyond the period of limitation prescribed by the Act, the statement of account would be deemed to be a return submitted by the operator under section 5 of the Act and in such a case the question regarding limitation with regard to the notice under section 7 of the Act would not arise. The Tax Officer can certainly demand tax from the operator on the basis of accounts so submitted, he being the agent for the purposes of collection of the tax from the passengers. Having heard learned counsel of the parties, we are of the opinion that the contentions advanced on behalf of the petitioners have much substance, but before we deal with each petition, it would be better to explain the scheme and relevant provisions of the Act for the decision of them. In the statement of objects and reasons it has been stated that-
"whereas it is very essential that the development of road transport should keep pace with and help the economic development of the State which is in need of recourses for the construction and maintenance of roads in this large State, the State Government propose to raise these by the levy of a tax on passengers who travel by Motor Buses outside the municipal limits. "
The Act imposes a tax on passengers and not on operators. The operators only collect the tax from the passengers in the shape of an extra amount added to the fare and pay it to the Government. Although the passenger pays the extra amount qua fare it does not alter the fact that liability to pay the extra sum is on him and the extra sum is in reality a tax which after collection is paid by the operator to the Government. A duty is cast by the Act on the operator for collecting tax and paying it to the Government. This duty is attached to the privilege of holding a permit for the running of stage carriages. Now, we reproduce the relevant sections of the Act and the rules hereunder-
"section 3, Levy of tax on passengers carried by stage carriages. There shall be levied and paid to the State Government a tax on all passengers carried by stage carriages at a rate equivalent to fifteen per cent of the fare (inclusive of tax) payable to the operator of a stage carriage : provided that no such tax shall be levied on stage carriages plying exclusively within a municipal area or exclusively on such routes serving municipal and adjacent areas as may be approved by the State Government. (1-A) Notwithstanding anything contend in the Motor Vehicles Act, 1939 (of1939), an operator shall be, and shall be deemed always to have been entitled to collect the tax under sub-section (1), in addition to the fares as fixed and in force from time to time for a stage carriage under a notification under section 43 of the Motor Vehicles Act, 1939 (of 1939). (1-B) The tax shall be collected by the operator of a stage carriage and paid to the state Government in accordance with the provisions of this Act. (2) After calculating the total amount of tax payable under sub-section (1) out of the total amount received by an operator during each month on account of fares (inclusive of tax), in respect of the stage carriage or stage carriages held by him under a permit the total amount of tax shall wherever necessary be rounded off to the nearest naya paisa, fractions of half a naya paisa and over being counted as one and less than half being disregarded.
(4.) COMPOSITION of tax.
(1) The Tax Officer may, on application by the operator, permit him to compound the tax assessable on him under this Act by paying in lieu thereof a composition fee to be calculated and paid in the manner specified in the Second schedule.
(2) Application under sub-seetion (1) shall be made by the operator in such form and in such manner and upon payment of such fee not exceeding two rupees as may be prescribed.
(3) The Composition fee fixed under sub-seetion (1) shall be payable by the operator by such date and under such conditions as may be prescribed.
(4) The provisions of sub-seetion (I) of section and section 13 shall not apply to an operator during the year he is permitted to compound the tax under sub-seetion (1).
(5) The provisions of sections 9, 10, Clause (a) of section 11 and section 12 shall apply in respect of composition fee payable under this section as they apply in respect of tax
(6) The State Government may, by notification, amend the Second Schedule but every notification issued under this section shall be laid on the table of the Legislative assembly and the provisions of section 24-A of the Madhya Pradesh General Clauses act, 1957 (3 of 1958) shall apply thereto as they apply to a rule. Section 5. Submission of returns. (1) In respect of the stage carriage or stage carriages held by him, the. operator shall deliver or cause to be delivered to the Tax Officer or to such prescribed officer as the Tax Officer may specify a return in the prescribed form and manner, either daily or at such intervals as may be prescribed. Provided that different rules may be prescribed for the purpose of this sub-seetion in relation to fleet-owner from those in relation to other operators. (2) When any return is received by a prescribed officer he shall forward it to the tax Officer within the prescribed period and in the prescribed manner. Section 6. Tax to be paid every month into Government Treasury. The tax payable during any month in accordance with the returns submitted under section 5 shall be paid into a Government treasury by the operator and the receipt evidencing such payment forwarded to the Tax Officer, on or before such date or dates of the month immediately succeeding as may be prescribed in the case of fleet-owners and other operators.
Section 7. Procedure where no returns are submitted, etc. In the following cases, that is to say,- (a) Where no returns have been submitted by the operator in respect of any stage carriage for any month or portion thereof; or (b) Where the returns submitted by an operator in respect of any stage carriage for any month or portion thereof appear to the Tax Officer to be incorrect or incomplete; the Tax Officer shall, after giving the operator a reasonable opportunity, in case (a) of making his representation if any, and in case (b) of establishing the correctness and completeness of the returns submitted by him, determine the sum payable to the state Government by the operator by way of tax during such month or portion thereof; provided that the sum so determined shall not exceed the maximum tax which would have been payable to (he State Government if the stage carriage had carried its full complement of passengers during such month or portion thereof. Section 8. Fares escaping assessment. If, for any reason, the whole or any portion of the tax leviable under this Act, for any month has escaped assessment, the Tax Officer may, at any time within, but not beyond, one year from the expiry of that month, assess the tax which has escaped assessment, after issuing a notice to the operator and making such inquiry as the officer may consider necessary. Section 9. Penalty for non-payment of tax. Where the whole or any portion of the tax payable to the State Government in respect of any stage carriage for any month or portion thereof in pursuance of sections 6, 7 and 8 has not been paid to it in time, the tax Officer may, in his discretion, levy in addition to the tax so payable, a penalty not exceeding 25 per cent of the maximum tax which would have been payable to the State government if the stage carriage had carried its full complement to passengers during such month or portion thereof. Section 10. Recovery of tax, etc. (1) In the cases falling under sections 7, 8 and 9 the Tax Officer shall serve on the operator a notice of demand for the sums payable to the State Government and the sums specified in such notice may be recovered from the operator as arrears of land revenue. (2) The tax shall be a first charge on the stage carriage in respect of which it is due also on its accessories and such stage carriage and the accessories thereof may be attached and sold for the recovery of the tax under the appropriate law re eating to the recovery of arrears of land revenue. Rule. Submission of returns (1) Every fleet owner shall deliver or cause to be delivered, to the Tax Officer within whose jurisdiction such fleet owner is residing or is having his place of business or to such officer mentioned in rule 3 as such Tax Officer may specify on this behalf, a monthly return in Form I in respect of all stage carriages held by him under a permit. (2) Every other operator shall deliver or cause to be delivered to the Tax Officer within whose jurisdiction such operator is residing or is having his place of business or to such officer as such Tax Officer may specify in this behalf-
(a) a daily return in Form II in respect of every stage carriage authorised to be used exclusively as contract carriage under a permit; (b) a weekly return in Form III in respect of every other stage carriage held under a permit; (c) a monthly return in Form IV in respect of all the stage carriages held under a permit.
Rule 6. Time limit for delivering returns.
(1) Every monthly return in Form I shall be delivered or cause to be delivered before the end of the month immediately succeeding the month to which the return relates. (2) Every daily return in Form II shall be delivered or cause to be delivered on the day immediately following the day to which the return relates. (3) Every weekly return in Form III shall be delivered or cause to be delivered within two days of the expiry of the week to which the return relates. (4) Every monthly return in Form IV shall be delivered or cause to be delivered not later than the seventh day of the month immediately following the month to which the return relates.
Rule 7. Submission of receipt evidencing payment of tax, the receipt evidencing payment of tax payable during any month in accordance with the returns submitted under section 5 shall, in the case of a fleet-owner, be forwarded to the officer authorised to receive returns under sub-rule (l) of rule so as to reach him on or before the last day of the month immediately succeeding such month, and in the case of any other operator, shall be forwarded to the officer authorised to receive returns under sub-rule (2) of that rule on or before the 10th day of the month immediately succeeding such month. Rule 8. Notice in cases referred to in section 7. Before determining the sum payable to the State Government in the cases referred to in section 7, the Tax Officer shall serve a notice in Form V on the operator and shall fix a date (not being earlier than seven days, from the date of receipt of such notice) for the production of such accounts and documents as the Tax Officer may require and for considering the objections, if any, of the operator to the demand. Rule 9. Notice of demand. The notice of demand to be issued under sub-section (1) of section 10 shall be in Form VI. "
(5.) A reading of the above provisions makes it clear that the operator must submit returns in accordance with section 5 read with rule of the rules while rule 6 provides time limit for submission of such returns. The tax amount has to be paid into Government treasury every month as envisaged by section 6 read with rule 7. So, in such cases where returns had been submitted but the tax has not been paid, the notice of demand under section 10 read with rule 9 can certainly be issued without there being an order by the tax Officer quantifying the amount of tax, provided the demand is strictly in accordance with the returns which have been submitted. This law has been laid down by their Lordships of the Supreme Court in the judgment already referred to above. It has been further held in the same decision that the Tax officer has to make an inquiry and determine the sum payable by the operator by way of tax when the returns have not been submitted or when the returns submitted are found to be incorrect and incomplete. This course has to be followed by the Tax Officer in such cases is also clear from the provisions of section 7 read with rule 8. It is only after service of a notice in Form V on the operator and giving him a reasonable opportunity which under rule 8 has been fixed as not earlier than seven days from the receipt of such notice for the production of such accounts and documents as the Tax Officer may require and for considering the objections, if any, of the operator to the demand, he shall determine the sum payable to the State Government by the operator by way of tax. Similarly, an inquiry is necessary in cases of fares escaping assessment wholly or partly and proceedings have to be taken under section 8. The penalty for non-payment of tax is provided under section 9. It is no doubt true that for initiating proceedings under section 8, the period of limitation has been fixed, as at any time within, but not beyond one year from the expiry of the month for which return was delivered in accordance with rule 6. But there is no mention about the period of limitation under section 7 for the initiation of proceedings under that section. Therefore, the question that arises for consideration is whether there is any period of limitation for issue of notice under section 7 or there is none. This point was considered by the Supreme Court in Tax Officer- Cum Regional Transport Officer and others v. Durg Transport Company (Pvt.) Ltd. , Durg, which is reported in 1973 Madhya pradesh Weekly Reporter 345, wherein it has been held that the proceedings under section 7 or 8 will have to be taken within the period of one year mentioned in section 8. The relevant paras 3 and of the judgment read as under:
"it may be noted that the expression 'escaped assessment' has not been defined in the act. Therefore we have to consider whether an assessment that was not made as a result of the assessee Dot submitting his return can be considered as an escaped assessment. According to Mr. Shroff, learned counsel for the State of Madhya Pradesh, 'escaped assessment" means an amount that bad escaped from being included in the tax assessed. According to him, no amount can be considered as 'escaped assessment' unless there has been an assessment anterior to the finding out of the amount that had escaped from being included in the assessment made. He submitted that only such cases come within the scope of section 8. According to his submission when a return is not submitted as a consequence of which there was no assessment, the tax thus evaded does not become escaped assessment. This contention does not appeal to us. In our opinion, when the liability to pay tax is evaded by one method or other, there is an escapement of assessment. The term 'escaped assessment' includes both non-assessment as well as under- assessment. When a person is not assessed to tax though he is liable to be taxed he escapes assessment. We are unable to agree with Mr. Shroff that while the Legislature fixed one year time within which a re-assessment has to be made it fixed no time limit for making the assessment. This is a prima facie unacceptable argument. The provisions of the Act are somewhat similar to the Madhya Bharat Sales Tax Act, 1960. While considering the meaning to be given to the expression 'escaped assessment' this Court in Regional Assistant Commissioner of Sales tax, Indore v. Malwa Vanaspati and Chemicals Company Lid (1969 MPLJ 381 = AIR 1968 SC 894= (1968) 2 SCR p. 431.) held that where a dealer has not filed the prescribed return of his turnover at all, it would be a case of 'escaped assessment' and the proceedings for assessment must be commenced in respect of that turnover within the period of three years prescribed by section 10. We are of the opinion that the ratio of that decision apply to the facts in the present case. Reading sections 6 to 8 together, we come to the conclusion that the proceedings under section 7 or section 8 will have to be taken within the period of one year mentioned in section 8. "
(6.) SO, the controversy regarding the period of limitation applicable to the proceedings under section 7 has been finally resolved by the decision of the Supreme Court referred to above, if a Tax Officer issues a notice in Form V after the expiry of the period of limitation which is one year mentioned in section 8, he would have no jurisdiction to determine the liability of an operator for the sum payable to the Government by way of tax. In such circumstances, even if, after the notice in Form V, assessment order has been passed and in pursuance of that a notice of demand in Form VI for recovery of tax under section 10 read with rule 9 has been issued, all these proceedings would be null and void as the Tax Officer, had no jurisdiction to proceed under section 7 after expiry of the limitation period.
(7.) LEARNED Deputy Government Advocate vehemently contended before us that if in a case a statement showing month wise passenger fare collection is filed by the operation in response to notice in Form V issued by the Tax officer in proceedings under section 7, the said statement be deemed to be a return filed by the operator under section 5 and as such the question of limitation would not arise. The contention, in our opinion, is wholly untenable and devoid of any substance. Having initiated proceedings under section 7 by giving notice in Form V under rule 8 to the operator, if he submitted the statement, such a statement cannot be treated as a return in Form I submitted under section 5. The stage of filing the return under section 5 would be over much earlier. Moreover if the contention is accepted, then in every case under section 7 whenever in the enquiry statements would be filed by an operator, which he has a right to do in support of his defence, the proceedings as contemplated under the said section and the period of limitation prescribed would be given a go-bye which is not permissible. A valuable right of limitation which accrues to the operator on account of late initiation of proceedings under section 7 cannot be permitted to be destroyed in such a manner on account of the slackness of the authority concerned for not taking action within time and which has to be preserved, as intended by the Legislature as well. So we reject the submission of the learned Deputy Government Advocate.
(8.) HAVING explained the provisions of the Act, we shall now deal with each writ petition separately and determine the relief, if any, the respective petitioner is entitled to.
(9.) M. P. No. 302 of 1966: the petitioner was served with a notice (Annexure 2) dated 8-3-1965 under section 7 of the Act since no returns were submitted by it under section 5 for the period 1-9 1961 to 6-5-1962 and it was called upon to produce or cause to be produced the documents specified therein and any other evidence on which it relied for failure to submit the returns. The petitioner vide its reply dated 5 5-1965 (Annexure 4) raised the following material objection besides others :-
"that your notice No 2089 dated 8-3-1965 in Form V has been issued in excess of jurisdiction as it has been issued in contravention of the provisions of section 8 of the M. P. Motor Vehicles (Taxation and Passengers) Act, 1969. "
With its reply, the petitioner also submitted a statement showing month wise passenger fare collection for the period from 1-9-1961 to 6-5-1962. On receipt of the reply, the Tax Officer asked the petitioner to send the returns in Form I (the prescribed form for the purpose) vide memo. dated 5-5-1965 (Annexure 5)but the petitioner did not comply with the request. Thereafter, no assessment orders were passed by the Tax Officer and straightaway notices of demand in form VI (Annexures 6 to 14) were issued calling upon the petitioner to pay the amount of tax specified in each notice within 15 days from the date of receipt of the notices and on failure to pay, compulsory proceedings will be taken according to law for the recovery of the whole of the amount due by it. Since the amount of tax as demanded under notices was not paid, the tax Officer issued a certificate (Annexure 15) under section 10 (2) of the Act, addressed to the Collector, Raipur, for the recovery of the sum of rs. 3,89,852. 37p. (passenger tax) in the same manner as an arrears of land revenue. On these admitted facts, the initiation of proceedings under section 7 of the Act in the year 1965 by the Tax Officer was clearly beyond the period of limitation prescribed under section 8 which is applicable to the proceedings under section 7 as well. Therefore, the entire proceedings relating to raising of demands for payment of passenger tax for the period 1-9-1961 to 6-5-1962 would be wholly illegal and vitiated being without jurisdiction. In consequence, the recovery certificate also becomes useless and not enforceable and as such they are all quashed.
(10.) M. P. No. 305 of 1966: the facts of this petition are much similar to the facts of Misc. Petition No. 302 of 1966 decided above. Here also, the petitioner was served with a similar notice (Annexure 2) dated 8-3-1965 in Form V under section 7 since no returns were submitted under section 5 for the same period, i. e. 1-9-1961 to 6-5-1962. The petitioner also raised identical objections vide its reply dated 5-5-1965. On receipt of the reply, the Tax Officer asked it to submit returns in Form I (the prescribed form for the purpose). Thereafter, without passing any assessment order, notices of demand in Form VI (Annexures 6 to 14)were issued in similar fashion as in the earlier petition calling upon it to pay the amount of tax specified in each notice. Since the tax as demanded was not paid, the Tax Officer issued a certificate (Annexure 15) under section 10 (2)addressed to the Collector for the recovery of the sum of Rs. 3,69,276. 25 P. (passenger tax) as arrears of land revenue. These facts being not disputed, we are of the opinion that in the present case also since the initiation of proceedings under section 7 being clearly much beyond the period of limitation, as it was in Misc. Petition No. 302 of 1966, the Tax Officer acted without jurisdiction in raising the demand and also in consequence the issue of recovery certificate. Accordingly, the entire proceedings are vitiated due to this legal infirmity and as such liable to be quashed. Therefore, for the reasons stated above, this writ petition is also allowed with costs and the notices of demand (Annexures 6 to 14) and recovery certificate (Annexure-15) are quashed.
(11.) M P. No. 307 of 1966: in this case, as well, since the petitioner did not submit returns under section 5, the Tax Officer initiated proceedings under section 7 by issue of notices in Form V for the following three periods :-First period-From 1-10-1961 to 7-10-1961. Second period- From 8-10-1961 to 31-3 1962. Third period- From 1-4-1962 to 6-5-1962. The notice for the first period is dated 20-11-1961, for the second period, two notices were issued which were dated 2-11-1963 and 21-1-1965 respectively and for the third period also two notices dated 2-11-1963 and 21-1-1965 respectively were issued to the petitioner. The petitioner raised an objection regarding limitation besides other objection vide letter (Annexure -D) dated 26-2-1965. But the Tax Officer issued a notice of demand (Annexure-2) dated 25-5-1965 in Form VI under rule 9 for the entire period to pay Rs. 74,169. 21p as tax and since the amount of tax was not paid within the specified period mentioned in the said notice, he issued a recovery certificate (Annexure-3) dated 22-6-1966 under section 10 (2) addressed to the Collector, Raipur, for the recovery of the sum of Rs. 74,169. 21 P referred above as arrears of land revenue. It may be mentioned here that for the first period the demand of tax was made without assessing the liability of the petitioner, while for the remaining two periods assessments were made before issue of demand notice. These aforesaid facts were not disputed by learned counsel of the parties.
(12.) IN the circumstances, we would like to decide the case relating to first period separately as it is different from the other two periods on account of the date of notice being within time and no assessment being made. So, as regards the first period from 1-10-1961 to 7-10-1961, the proceedings under section 7 were initiated by notice dated 20-10-1961 which was clearly within the period of limitation and valid. Therefore, the Tax Officer had jurisdiction to determine the liability of the petitioner about the tax for that period under section 7. But for this period since no assessment order was passed by the Tax Officer before issue of notice of demand, the said demand becomes illegal and without jurisdiction. But, in our opinion, this would not preclude the Tax Officer from passing an assessment order for this period to determine the liability of payment of tax by the petitioner as the proceedings under section 7 in the present case were initiated within time and the period of limitation mentioned under section 8 does not apply for passing of the order relating to assessment. Our attention was invited by the learned Deputy Government advocate appearing for the respondents to an unreported decision of a Division Bench of this Court in Balmukund v. The Assistant Regional Transport officer, Indore and another (Miss. Petition No. 894 of 1971, decided on the 4
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th April 1972.)wherein a similar point was decided supporting our point of view. The relevant paras 5 and 6 of the aforesaid decision read as under:- "next contention of learned counsel for the respondents is that in any case what their lordships hare observed means that the proceedings mast start within the period of one year prescribed by section 8 and since in the case which was for consideration before their lordships the notice for taking proceedings had also been given after the expiry of one year, this ruling cannot be taken to mean that the proceedings even if started within one year would be beyond limitation if the ultimate assessment order is passed after one year. Since their Lordships have said that the proceedings must be taken within the period of one year prescribed by section 8, the question is whether starting proceedings within the year by giving notice is taking proceedings within time. On this point a large number of cases were cited. We think that the matter is covered by the principle decided by their Lordships of the Supreme Court in S. T. Officer, Ernakulam v. S. Iyengar and Sons (AIR 1970 SC 311.) That was a case under a State Sales Tax Act. The question of limitation for assessing escaped sales tax was under consideration. The relevant words of the rule 83 (1) were: '. . . . . . . . . . . . may at any time within three years. . . . . . . . determine to the best of his judgment the turnover which had escaped assessment and assess the tax payable. . . . . . . . . '. In this connection their Lordships interpreted the term 'assess the tax payable' and observed: 'assessment is a comprehensive word and can denote the entirety of proceedings which are taken with regard to it. It cannot and does not mean a final order of assessment alone unless there is something in the context of a particular provision which compels such a meaning being attributed to it. In our judgment despite the phraseology employed in rule 33 the principle which has been laid in other oases relating to analogous provisions in sales Tax statute must be followed as otherwise the purpose of a provision like Rule 33 can be completely defeated by taking certain collateral proceedings and obtaining a stay order as was done in the present case or by unduly delaying assessment proceedings beyond the period of three years'. Since in this case the notice had been served within time, the assessment proceedings have been taken, the order making final assessment is not barred. " (13.) AS regards the other two periods, viz. , second and third, since proceedings under section 7 were initiated by issue of notices which were clearly beyond the period of limitation mentioned under section 8 which is applicable to the proceedings under section 7, the Tax Officer acted without jurisdiction in issuing notices of demand and also recovery certificate under section 10 (2) for the aforesaid two periods. Accordingly this petition is also allowed with costs. The notice of demand (Annexure-2) and the recovery certificate (Annexure-3) are quashed. But the case for the period 1-10-1961 to 7-10-1961 is remanded to the respondent No. 1 (Tax Officer) for making the final assessment first before issue of notice of demand afresh for that period alone. (14.) IN the result, the petitions succeed and are allowed with costs. The notices of demand and the recovery certificates are hereby quashed. But misc. Petition No. 307 of 1966 so far as it relates to the period 1-10-1961 to 7-10-1961 is remanded to the respondent No. 1 (Tax Officer) for making the final assessment first before issue of notice of demand afresh for that period alone. Counsel's fee in each case Rs. 200, if certified. The outstanding amount of security shall be refunded to the petitioner in each case. Petitions allowed.