STATE OF PUNJAB & ORS. versus M/S. TARA CHAND LAJPAT RAI

Citation: [1967] 3 S.C.R. 10 · Decided: 28-02-1967 · Supreme Court of India · Bench: J.M. SHELAT · Disposal: Appeal(s) allowed

Judgment (excerpt)

STATE OF PUNJAB & ORS. 
v. 
M/S. TARA CHAND LAJPAT RAI 
February 28, 1967 
[J.M. SHELAT AND G. K. MITTER, 1J.J 
Punjab General Sales Tax Act (46 of 1948), s. 11(2) and (4)-Re· 
turn by assessee-Noti•e under s. 11(2) within the prescribed perlod-
Complianc• wirh notice by assessee-Order by Assessing 
Authority on 
the basis of bl!si' judgment-Order pasStll after prescribed period-Order 
If falls under s. 11 ( 4 )-Order, if barred by limitation. 
The respondent firm, was a registered dealer and furnished quarterly 
returns of its turnover as required by the Rules under the Punjab Gene· 
ral Sales Tax Act, 1948. The Assessing Authority was not satisfied with 
the returns and issued a notice, und~r s. 11 ( 2) of the Act asking the 
firm to praduce evidence to establish that the returns were full and com· 
plete. The notice was served on the firm before the 
expiry of three 
y01trs from the respective dat.. for furnishing the returns. 
A 11artner 
of the firm complied with the notice by appearing and 
producing its 
account books. The officer held an enquiry, and passed an order stat· 
illg that he was assessing the firm to the best of his judgment. The order 
was passed after the expiry of three years 
from the dates when 
the 
quarterly returns had to be filed. 
The firm chaUenged its validity by a 
writ petition, and the High Court held that the order· feU under s. 11 ( 4) 
of the Act and that it was barred by limitation. 
In appeal to this Court, 
HELD : The impugned order could not be said to be under s. 11 ( 4) 
even though it was stated that the assessment 
was made to the best of 
the officer's judgment, because, the condition precedent under that sub-
sectioa is that a registered dealer who has furnished returns should fail 
to comply with the terms of the.notice 
issued under s. 11(2). But 
assuming it was made under s. 11 ( 4), the order could not be attacked 
on the grouRd of its being beyond limitation. Under s. 11 ( 4), if a re· 
gistered dealer having furnished returns in respect of a period, fails to 
comply with the terms of a notice under 1. 11 (2), the Asse.sing Autho· 
rity shall, within three years after the expiry of such period, proceed to 
assess, to the best of his judgment, the amount of tax due 
from the 
dealer. 
"Such period",, refers to the period mentioned earlier in 
the 
sub-section, that is, in the present case, to the quarters in respect of 
whith the firm had to submit returns. The assessment proceedin~ com-
mence, in the case ·of a registered dealer, 
either when he furnishes 
a 
return or when a ~otice is issued to him undor s. 11(2), and would be 
pending ftom the time they are initiated until they are terminated by a 
final order of as,,.ssment. Therefore, 
if such proceedin!l' were taken 
""ithin the pr"'°ribed time, thougll the assessment was made final subee-
~uently, even after the expiry of the prescribed time, no question of 
limlla!ion would ari..e. [14 H; 15 A, F, G; 17 G; 18 B-F) · 
Madan Lal Arora v. Excise and Taxation O{fiur, Amritsar, 
[1962) 
I S.C.R., 823 and Ghanshyam Das·v. Regional Assistant Commissl•n•r 
o-f Sales Tax, Nagpur, 0964] 4 S.C.R. 436, followed. 
B 
c 
D 
E 
F 
G 
H 
PUNJAB v. M/S, TARACHA1'0 (Shelat, J,) 
11 
A 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1080 of 
B 
c 
D 
E 
' 
G 
H 
1965. 
Appeal from the judgment and order dated September 25, 
1963 of the Punjab High Court in Civil Writ No. 1088 of 1961. 
Dipak Dutta Chaudhuri and R. N. Sachthey, for the appellants. 
C. D. Garg, for the respondent. 
The Judgment of the Court was delivered by 
Shelat, J. This appeal by certificate granted by the Punjab 
High Court raises the following question :-
"Where the sales tax authority is not satisfied with 
the returns filed by a registered dealer and issues a 
notice under s. 11 ( 2) of the Punjab General Sales Tax 
Act, 1948 before the expiry of three years from the 
termination of the period for 
furnishing returns but 
finalises the assessment order after three years from the 
aforesaid date, whether such an assessment order can be 
said to be time barred and, therefore, without jurisdic-
tion". 
A few facts for understanding this question may first bt 
stated. 
The respondent is a partnership firm registered under the 
Act and was at the material time carrying on business in vegetable 
ghee, sugar and other commodities. 
The assessment year in ques-
tion commenced from Aoril 1, 1955 and ended on March 31, 
1956. The dealer furnished four quarterly r

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