1968 PLP 735 (PTD)

In this case relevant assessment year is 1957‑1938, and it is stated that a notice was issued on the Assessee on 1‑5‑61, and the assessment order made on 26‑6‑61 is alleged to have been made under section. 10 of the Act. The Appellate Assistant Commissio ner, however, found that in the facts and circumstances of the case, it was necessary to take action under section 28 of the Act for the Assessment in question. He cancelled the assessment as he considered it to be illegal as no notice was issued under sec tion

28. He accordingly directed the Income‑tax Officer to refund the tax collected from the assessee. This officer also noticed that only on 1‑5‑61 the assessee was asked to produce books of account for assessment year 1957‑58, that is, after about two years. In his view, therefore, it was a case of escaping the tax payable by the assessee. The Tribunal, however, differed with the view taken by the Appellate Assistant Commissioner and expressed the opinion that the Sales Tax Officer rightly made the assessment under section 10(4) of the Act. Mr. A. H. Mirza, learned counsel for the assessee, submits that an assessment under section 10(4) of the Act can only be made in the case of a known assessee and there is nothing in the record in this case to show that it is a case of a known assessee. Further contention of learned counsel is that the very fact that the notice was issued in 1961 for the assessment year 1957‑58, clearly indicates that it was a case in which it could at best be claimed that the assessee escaped the payment of the sales tax for that year and as such relevant section for the purpose would be section 28 and not section

10. Mr. Afzalul Hoque, on the other hand, strenuously argues that section 10 applies to the facts of the case and that there is no provision that assessment is to be made in the same, year. Reliance has been placed by learned counsel for the assessee on the case of Commissioner of Sales Tax v. Shaikh Inayatullah (P L D 1966 Lah. 509). In that case it was observed : "The provisions of section 10(4), thus, apply to cases, where a known assessee has omitted to submit a return whereas the case of an assessee who has suppressed from the knowledge of the assessing authority the factum of the sales made by him will fall under section 28". In this case there is nothing in the printed paper book to show that it was a case of the known assessee; but the important feature of the case is that assessment has been made after two years. Subsection (1) of section 10 of the Act provides that every manufacturer or producer and every licensed wholesaler shall send to the Sale Tax Officer a return for each quarter. Subsec tion (2) leaves the matter to the satisfaction of the Sales Tax Officer as to whether or not he would accept the return and it further makes provision for the determination of the amount of the tax payable after giving credit for the tax paid in pursuance of the provisions of subsection (1) of section

12. Subsection (3) authorises the Sales Tax Officer to call for further particulars and books of account when he, is not satisfied with the return, already submitted to him. Subsection (4) empowers him to make assessment to the best of his judgment after giving the assessee an opportunity of being heard, if no return is submitted. Subsection (5) thereafter makes the provision that he can make assessment of two or more quarters of the same year. It is not necessary for our purpose to refer to subsection (6). Mr. Afzalul Hoque claims that since no return has been filed in this case, subsection (4) applies to the facts of this case. The contention of Mr. A. H. Mirza, however, is that a bare reading of the provisions of section 10, as a whole, indicates that it applies to a case of assessing quarter to quarter in a continuous process. It seems to us that the contention of the learned counsel for the assessee is of substance. We have already seen, in general terms that section 10, speaks of a return at the end of each quarter as already noticed under subsection (10). Subsec tion (2) required the officer to determine the tax and subsection (3) authorises him to call for the books of accounts and subsec tion (5) further enables him to make assessment of two or more quarters Although he is not required to make the assessment within the same year, it does not contemplate that he will take recourse to section 10, after sleeping over the assessment for over two years. We are, therefore, clearly of opinion that on the facts found, section 10 is inapplicable. We are fortified in this view by subsection (4) for it gives reasons for it. The Sales Tax Officer is free to take action even when there is default in submitting a return for one single quarter. Therefore, it is clear that the Legislature did not intend that he should be authorised to take action even after a lapse of two years. I now read subsection (1) of section 28: "If for any reason any tax payable under this Act has escaped assessment or has not been paid in any yeah, the Sales Tax Officer may at any time within five years of the end of that year assess the tax payable, after issuing a notice to the assessee and making such inquiry as he considers necessary." It may be stated here‑ that the words `five years' were substituted for the words `four years' in the aforesaid subsection (1) of section 28 in the year 1963 and the assessment was made in 1961. Subsection (1) of section 28 therefore deals with a case where the tax payable under the Act has escaped assessment or in other words has not been paid in any year. In this particular case it has been seen that the tax payable under the Act for the relevant year remained unpaid for over two years. This would be a case in which an assessment has escaped within the meaning of subsection (1) of section

28. The question as framed, however, is whether the issue of a notice was necessary for initiation of proceedings for assessment for the year 1957‑58, after the expiry of that year. We have seen that the assessment has been admittedly made under section 10(4) and that assessment can be made in this case only under section 28 e of the Sales Tax Act and we are of opinion that a notice should have been issued, proceedings conducted, and an enquiry held, as contemplated in section 28 as distinguished from section 10 of Act. Absence of enquiry is indeed prejudicial to the interest of an assessee specially when such an enquiry is required to be held under the law. For the reasons stated above, the question referred to us is answered in the affirmative. In the facts and circumstances of the case, the parties are left to bear their own costs. A. H. KHAN, J.‑I agree. S. Q. Reference answered in the affirmative.