Holding

In the absence of a statutory limitation, assessment under s.11(3) Punjab Act or s.28(3) Haryana Act may be completed after delay, provided it is done within a reasonable period.

Summary

Bharat Steel Tubes Ltd., a registered dealer under the Punjab and Haryana sales‑tax Acts, filed returns for the years 1968‑69 to 1974‑75. The assessing authority issued notices under the respective statutes and the company complied, but later issued further notices seeking additional documents. The company challenged these notices and the validity of section 28A of the Haryana Act, contending that the assessment could not be completed after a long delay. The Supreme Court held that, in the absence of a statutory limitation period, an assessment under section 11(3) of the Punjab Act or section 28(3) of the Haryana Act may be completed even after a considerable delay, provided it is done within a reasonable time. The Court directed the authority to complete the pending assessments within four months and dismissed the writ petitions, leaving the questions of the necessity of a prior notice and the vires of section 28A unresolved. Costs were awarded against the petitioners.

Issues considered

Whether an assessment under s.11(3) Punjab Act or s.28(3) Haryana Act can be completed after a long delay or is barred by limitation.
Whether section 28A of the Haryana General Sales Tax Act, 1973 is constitutionally valid.
Whether a prior notice is a condition precedent to the completion of a best‑judgment assessment.

Legislation cited

Haryana General Sales Tax Act, 1973s. 25, s. 28, s. 28A
Punjab General Sales Tax Act, 1948s. 11(2), s. 11(3), s. 11(4)

Subjects

Sales taxAssessmentLimitation periodBest judgment assessmentHaryana ActPunjab ActWrit petitionArticle 32Section 28ANotice requirement

Judgment

BHARAT STEEL TUBES LTD. & ANR. A
v.
STATE OF HARYANA & ANR.

MAY 4, 1988
B
[R.S. PATHAK, CJ, RANGANATH MISRA AND
M.M. DUTT, JJ.]

Haryana General Sales Tax Act, 1973: Sections 25, 28 and 28A:
Punjab General Sales Tax Act, 1948: Section 11(3): Sales Tax-
Assessment-When complete-When no statutory period fixed-
Necessityfor assessment to be completed expeditiously-Within reason- C
able period_.:._What is reasonable period-Depeniient on facts of case-
Best judgment assessment-Prior notice to dealer by assessing
authority-Whether necessary-Question left open.

The petitioners are a public limited company and its General D
Manager (Legal). The Company was a manufacturer of electric resis-
tence, welded steel tubes and pipes, and registered as a dealer under the
Haryana General Sales Tax Act, 1973 as also the Central Sales Tax Act .
.It filed returns for all the quarters covered within the period 1968-69 to
1974-75 as prescribed by the Punjab General Sales Tax Act, 1948 till
March 31, 1973 and under the Haryana Act for the quarters of the E
remaining years as the Haryana Act came into force with effect from
May 5, 1973. On the receipt of notice relating to the assessment years
1968-69 to 1973-74 in the prescribed form ST-XIV under s. 14(2) of the
Punjab Act, and in the prescribed form ST-25 under S. 28(2) of the
Haryana Act relating to the year 1974-75 the petitioner-Company
appeared before respondent No. 2-Assessing Authority, and complied F
with the requirements of the said notice by production of documents,
books and other papers. While the matter was thus proceeding, respon·
dent No. 2 again issued a notice on September 24, 1982 requiring the
petitioner-Company to produce certain further records and documents.

The petitioners in their writ petition challenged the notices and G
.also the vires of Section 28A of the Haryana General Sales Tax Act,
1973.

On the question: Whether an order of assessment under sub-
section (3) of section 11 of the Punjab Act or section 28(3) of the
Haryana Act can now be completed or would be barred by limitation. H

895
896 SUPREME COURT REPORTS [1988] 3 S.CR.

Dismissing the writ petition,
A
HELD: I. Assessment of tax should be completed with-. expedi-
tion. It involves the revenue to the State. [90SB-C]

2. In the case of a registered dealer who collects sales-tax on
B behalf of the State, there is no justification for him to withhold the
payment of the tax so collected. If a timely assessment is completed, the
dues of the State can be conveniently ascertained and collected. Delay in
completion of assessment often creates problems. Long delay is not in •
the interest of either the assessee or the State. [90SC-D I

3. In the absence of any prescribed period of limitation, the
c assessment has to be completed within a reasonable period. What
such reasonable period would be, would depend upon the facts of each
case. [904E-F]

4. Until by statute, a limitation is provided, it is proper for the
D State Government to require, by statutory rules or appropriate instruc-
tions, to ensure completion of assessments with expedition and reason-
able haste but subject to rules of natural justice. [90SE-F]

In the instant case, though notices were issued under sections
11(2) of the Punjab Act or Section 28(2) of the Haryana Act within a -~
E reasonable period from the filing of returns for the respective quarters
in the assessment years under consideration, further action had not
been taken by the assessing officer to complete the assessments. Now
that the assessing authority intends to complete assessments under
section 11(3) of the Act, no prejudice is seen to be caused to the assessee
if the assessing authority is permitted to complete the assessment now.
F In the situation which has thus arisen, it would be appropriate to call ~
upon the assessing authority to complete all these pending assessments
within a total period of four months on the basis of available material
in the record before him, and such other material as the authority
may obtain. Such assessment has to be only under section 11(3) of the
Act. [9040-E; G-H; 90SA-B] .
G
S. It may be !hat in a given case the original notice under section
II (2) or a subsequent order requiring production of some more
material on specific points is not complied with. Non-compliance with
the notice under section 11(2) of the Act leads to a situation where a best
judgment assessment can be complied. This Court in Indian Aluminium
H Cables Ltd. & Anr. v. Excise and Taxation Officer & Anr., [1977] l
BHARAT STEEL TUBES v. STATE OF HARYANA [MISRA, J.[ 897

SCR 716 has indicated that a further notice has to be given. The ques- A
tion that fell for determination before the Court did not require exami-
nation as to whether such a notice was necessary. Though such a notice
is not a statutory prescription, judicial propriety would require a larger
bench of the Court to examine the correctness of the view in the Indian
Aluminium case. On an appropriate occasion, the question as to
whether such a notice is a condition precedent to completion of assess- B
ment would be examined. [903E-H]

• Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax,
Nagpur & Ors. 14 STC 976; Madan Lal Arora v. Excise and Taxation
Officer, Amritsar, 12 STC 387; Jagat Ram Om Prakash v. Excise and
Taxation Officer, Amritsar, 16 STC 107 and Indian Aluminium Cables
Ltd. & Anr. v. Excise and Taxation Officer & Anr., [1977] 1 SCR 716,
c
referred to.

CIVIL APPELLATE Writ Petition Nos.
3589-3594 & 12587 of 1983.
, 1 D
(Under Article 32 of the Co( · .,,.',f India).
......... , ~~

Raja Ram Aggarwal and Vineet Kumar for the Petitioners in
WP. Nos. 3589-94 of 1983.

Harish N. Salve and Vineet Kumar for the Petitioners in WP. E
No. 12587 of 1983 .
•
Harbans Lal, Ms. LS. Goel and C.V. Sobba Rao for the
Respondents.

The Judgment of the Court was delivered by F

RANGANATH MISRA, J. These are applications under Article
32 of. the Constitution. and challenge in these proceedings is to the
validity of notice issued by the Excise arid T"!'ation Officer-cum-
Assessing Authority, Respondent no. 2, under the Haryana General
Sales Tax Act, 1973 (hereinafter referred to .as 'the Haryana Act'). G
~ Such notice is said to have been issued on 18th of December, 1980 .
.· The relevant periods are 1968-69 to '1974-75 and each of the writ peti-
tions relates to one of these years. As common questions of fact and •
law arise in these petitions and. a· common set of arguments has been
advanced at the Bar, we proceed to dispose of all these writ petitions
by a common judgl\lent. · ' H
898 SUPREME COURT REPORTS [1988] 3 S.C.R. -"'

A The petitioner No. l, a Public Limited Company, has its factory
at Ganaur within the District of Sonepat in Haryana State and
petitioner No. 2 is its General Manager (Legal) and duly constituted
Attorney. Petitioner No. 1 .a manufacturer of electric resistence,
welded steel tubes and pipes, is a dealer registered under the Haryana
Act as also under the Central Sales Tax Act. It filed returns for all the
B quarters covered within the period indicated above as prescribed by
the Punjab General Sales Tax Act, 1948 (hereinafter referred to as
'the Punjab Act') till 31.3.1973 and under the Haryana Act for the
quarters of the remained years in question. as the Haryana Act came
into force with effect from 5th May, 1973. On the receipt of notice
relating to assessment years 1968-69, 1969-70, 1970-71, 1971-72, 1972-
73 and 1973-74 in the prescribed form ST-XIV under section 14(2) of
c the Punjab General Sales Tax Act and in the prescribed form ST-25
under section 28(2) of the Act relating to year 1974-75, the petitioner-
company appeared before the respondent No. 2 and complied with the
requirements of such notice by production of documents, books and
other papers. While the matter was thus proceeding, the second •~·
D respondent again issued a notice on 24.9.1982 requiring the petitioner-
company to produce certain further records and documents. The
petitioner has ch~llenged that notice as also the vires of section 28A of
the H aryana A ct.

Section 11 of the Punjab Act lays down the procedure of assess-
E ment which broadly corresponds to section 28 of the Haryana Act.
Though a major part of the period involved in these proceedings would
be covered by the Punjab Act, it would be sufficient to refer for con-
venience to the corresponding provisions of the Haryana Act. Sec-
tion 25 of the Haryana Act obliges every registered dealer to furnish its
return in the manner prescribed and the relevant rules require returns
F to be submitted on quarterly basis. Sub-section (1) of section 28 enti-
tles the assessing authority to accept the returns and assess the amount
of tax due from the dealer on the basis of such returns when he is
satisfied without requiring the presence of the dealer or the production
by him of any evidence that the returns furnished are correct and
complete. Sub-section (2) requires the assessing authority, where·he is
G not satisfied without requiring the presence of the dealer or production
of evidence in support of the return to serve on such dealer a notice in
the prescribed manner requiring him to attend in person or to produce
or cause to be produced such evidence.as he may rely upon in support
of the return. Under sub-section (3), where the dealer responds to the
notice under sub-section (2), the assessing authority after hearing such
H evidence as the dealer may produce and such other evidence as the
)... BHARAT STEEL TUBES v. STATE OF HARYANA [MISRA, J,j 899

assessing authority may require on specified points, has to assess the
A
tax. Sub-section (4) authorises the assessing authority in the event of
default of compliance with the terms of notice issued under sub-section
(2) to proceed to assess, to the best of his judgment, the amount of tax
due from the dealer. Sub-section (5) deals with the situation where
returns are not furnished and provides a period of five years after the
expiry of such period to which the returns, if filed, would be related as B
the outer limit for completing the assessment to the best of the asses-
sing authority's judgment. The five sub-sections of section 28 thus deal
with four different situations:
Sub-section( 1) authorises the making of assessment on the basis
of returning without anything more:
Sub-sections (2) and (3) deal with one particular situation, c
namely, when the assessing authority looks for evidence and support-
ing material, he calls upon the dealer to appear and produce his
accounts and on the basis of such material' he is to complete the
assessment;
Sub-section (4) deals with the situation where there is failure of D
compliance with the notice under sub-section (2) -and this provision
enjoins upon the assessing authority to complete the· assessment,
according to the best of his judgment, within a period of five years;
Sub-section (5) deals with the situation where no return is filed.
For each of these years Under consideration, that i~, either under E
section 11(2) of the Punjab Act or under section 28(2) of the Haryana
Act, notice has been issued by the assessing officer. The assessing
officer in his affidavit has made it clear that assessments for these years
_....._ were intended to be completed following the procedure in sub-sections
· r (2) and (3) of either of the sections in the two Acts. It has, therefore, F
been contended, relying on judgments of this Court that there is no
prescribed limitation for completing such assessments. In course of
argument, learned counsel for the State has further indicated \hat
action under section 28A of the Haryana Act was not intended to be
taken. In that view of the matter, it is indeed unnecessary to ·refer to
tl\e provisions of section 28A of the Haryana Act and deal With several
~· contentions advanced at the Bar with reference to that provision. Equally G
unnecessary would be to find oui tl)e exact meaning of "proceed to
assess to ,the best of his judgment" appearing.in sub-section (4) of
section 28 of the Haryana Act.
In Ghanshyamdas v. Regional Assistant Commissioner of Sales
Tax, Nagpur & Ors., 14 STC 976 a five'Judge bench of ihis Court was· H
900 SUPREME COURT REPORTS [1988] 3 S.C.R.

A actually dealing with a case of assessment of escaped tum-over and for
that purpose had to· find out whether there was any escapement of tax
if proceedings in respect of the first assessment itself was still pending
and no final order of assessment had been made. Dealing with this
aspect, this Court held:

B "it is manifest that in the case of a registered dealer, the
proceedings before the Commissioner start factually when
a return is made or when a notice is issued to him either
under section 10(3) or under section 11(2) of the Act. The
acceptance of the contention that statutory obligation to
file a return initiates the proceeding is to invoke a fiction
not sanctioned by the Act. The obligation can be enforced
c by taking a suitable action under the Act. Taking of such an
action may have the effect of initiating proceedings against
the defaulter. The default may be the occasion for initiating
the proceedings but the default itself proprio vigore cannot
initiate proceedings. Proceedings in respect of the assess-
D ment of the tum-over for the relevant period cannot, there-
fore, be said to be pending before the Commissioner ....
. . . . . . For the foregoing reasons, we hold that a statutory
obligation to make a return within a prescribed time does
not proprio vigore initiate the assessment proceedings
before the Commissioner; but the proceedings would com-
E mence after the return was submitted and would continue
tin a final order of assessment is made in regard to the said
return." •
On the basis of this authority, it would follow that notices under
sub-section (2) of either section 11 or section 28 of the relevant Acts,
F having already issued and final orders of assessment having not been
made, assessment proceedings are still pending.

In Madan Lal Arora v. Excise and Taxation Officer, Amritsar, 12
STC 387 a five-Judge Bench was examining the question of limitation
in respect of a best judgment assessment. At that time, section 11 of
G the Punjab Act had a time limit of three years within which the best
judgment assessment had to be completed. Now that period of limita-
tion in section 28(4) is of five years. In view of what we have already
noted, consideration of the procedure for best judgment assessment is
not relevant.

H Nor are we concerned with the examination of the view taken by
BHARAT STEEL TUBES v. STATE OF HARYANA !MISRA, J.J 901

the Full Bench of the Punjab and Haryana High Court in Jagat Ram
A
Om Prakash v. Excise and Taxation Officer, Amritsar, 16 STC 107.
Therein, the examination was with reference to the provisions in
section 11(4) of the East Punjab General Sales Tax Act, 1948 and the
question of the time limit for completion of a best judgment asssss-
ment was in issue. The Court pointed out that as to at what point of
time the assessing officer did actually proceed to so assess would have B
to be determined on the facts and circumstances of each case and it is
not possible to lay down any definite and clear-cut test applicable to all
cases. It was, however, pointed out that there must be some definite
act or step taken from which it can be clearly perceptible that from that
point of time the assessing officer has proceeded to access to the best
of its judgment and the commencement of this process must be within
the period of three years, as provided in section 11(4) of that Act.
c

In Indian Aluminium Cables Ltd. & Anr. v. Excise and Taxation
Officer & Anr., 11977) 1 SCR 716 a three-Judge Bench of this Court
was considering the procedure of assessment laid down under section
11 of the Punjab Act. This Court observed: · D

"On a correct interpretation of the provision aforesaid,
what emerges is as follows:

(i) That the assessing authority shall hear the evi-
dence produced by the dealer on the day specified in E
the notice issued under sub-section (2).

(ii) It can adjourn the hearing to some other day and
hear the evidence produced by the dealer on the
adjourned day or days.
' F
(iii) The assessing authority may require the dealer
to produce further evidence on specified points on
the adjourned day or days.

(iv) The assessing authority should assess the amount
of tax due from the dealer, that is to say, pass the G
order of assessment, on the day on which the hearing
of the evidence is completed as soon afterwards as
may be."

There can be no opposition to the position as summarised with
reference to section 11(2) and (3) of the Punjab Act corresponding to H
section 28(2) and (3) of the Haryana Act.
902 SUPREME COURT REPORTS [19881 3 S.C.R. -'

The Court proceeded to state:
A
"Sub-section (4) of section 11 is attracted in a case
where a dealer having furnished a return in respect of a
period fails to comply with the terms of a notice issued
under sub-section (2). In such a case, the assessing autho-
B rity has to take some effective step, such as issuance of a -(
notice to the assessee ntimating to him that he is proceeding
to access to the best of his judgment the amount of tax due
from the dealer. On failure of a dealer to furnish a return in
respect any period by the prescribed date the assessing
authority after giving the dealer a reasonable opportunity
of being heard can proceed to access to the best of his
c judgment the amount of tax, if any, due from the dealer. In
such a case, also an effective step such as issuance of a
notice to the dealer concerned showing that the assessing
authority is proceeding to access has got to be taken within
five years of the expiry of the period concerned. Sub-
D section (6) is attracted in the case of a dealer who being
liable to pay tax under the act has failed to apply for regis-
tration. Similar steps as the ones to be taken under sub-
section (5) are to be taken under sub-section (6) within a
period of five years after the expiry of the concerned
period. But the Legislature advisedly did not fix any period
E of limitation for taking up of the steps or the passing of the
assessment order under any of the sub-sections (1), (2) or
(3). The reason is obvious. Best judgment assessments in
the circumstances mentioned in any of the sub-sections (4), '
(5) or (6) could not be allowed to be made after the expiry
of a certain reasonable time which the Legislature thought ;}-·
F was three years previously but.made it five years by Punjab I
Act 28 of 1965. But where a registered dealer has filed the
return, the assessing authority can pass the assessment
order under sub-section (1) and accept the return filed by
the dealer as correct and complete. In such a case the for-
mality of passing an order of assessment is to be completed
G without any further demand of tax from the dealer. For the
issuance of a notice under sub-section (2) no time limit has
been fixed, but the assessing authority must remain on its
guard of taking the steps and completing the assessment as
soon as it may be possible to do so. Otherwise, the risk
involved may just be pointed out. Take a case where a
H notice under sub-section (2) is issued after the expiry or
BHARAT STEEL TUBES v. STATE OF HARYANA [MISRA, J.[ 903

just on the verge of expiry of the period of five years and A
the dealer fails to comply with the terms of the notice. In
such a case, the assessing authority may have to proceed to
make the best judgment assessment under sub-section (4)
attracting the bar of limitation of five years. But, of course,
there may be a case where in spite of the failure of the B
dealer to comply with the terms of the notice a suit under
sub-section (2) the assessing authority may be in a position
to complete the assessment under sub-section (3) treating
the alleged failure of the dealer as not a real failure on his
part."

Section 11(4) of the Punjab Act which has been considered in c
this case no where requires a notice to be given to the. dealer by the
assessing authority of the fact that he was going to assess to the best of
his judgment. Where it is not possible fonhe assessing authority to
complete the assessment on the basis of the return and a notice under
sub-section (2) has l!een issued, the assessee appears before the asses- D
sing authority and respond to the notice ..Once the assessee is
before the authority and the documents and evidence produced by the
assessee are examined, the assessee would certainly know which way
the assessment proceeding is heading. It is quite possible that in course /
of examination of the papers produced by the assessee in answer to the/
notice, the assessing authority would indicate his dissatisfaction with E
the compliance. It may be that in a given case the original notice under
section 11(2) or a subsequent order requiring production of some more
material on specific points is not complied with. Non-compliance with
the notice under section 11(2)' of the Act leads to a situation where a
best judgment assessment can be complied. It is true that this Court in
Indian Aluminiuim case (supra) has indicated that a further notice has F
to be given. The question that fell for determination before the Court
did not require examination as to whether such a notice was necessary.
In view of the position as has emerged in the matter before us, we alsu
do not think it necessary to finally indicate as to whether such a notice
has to be issued and failure to issue such a notice would prevent the
assessing officer from making a best judgment assessment. Though we G
are of the opinion that such a notice is not a statutory prescription, we
do not intend to say anything more about it as judicial propriety would
require a larger bench of the Court to examine the correctness of the
view in the Indian Aluminium case. On an appropriate occasion, we
hope the question as to whether such a notice is a condition precedent
to .completion of assessment would be examined. H
904 SUPREME COURT REPORTS [1988] 3 S.C.R.

In Indian Aluminium case (supra) this Court has approved the
A
earlier-decision in Gurbax Singh v. Union of India, [1976] 3 SCR 247.
The ratio in Gurbax Singh's case is that in the absence of a period
provided by statute for completion of assessment, an order of assess-
ment made with some delay would not be without jurisdiction. Even in
Indian Aluminium case (supra), where the statute requires assessment
B to be completed within a reasonable time, the Court indicated that the
argument of the learned counsel that the assessment had to be comp-
leted within a reasonable time in order to be sustainable was not
acceptable as a sound one.

The short question that really falls for examination in this case is
whether an order of assessment under sub-section (3) of section 11 of
'C
the Punjab Act or section 28(3) of the Haryana Act can now be comp-
leted or would that be barred by limitation. Undoubtedly, the assess-
ment proceedings have been very delayed. As the material placed
before us shows, the assessee had gone before different courts from
time to time to ask for injunction against the completion of assessment
D but that trial appears be 'have started in December, 1980 when a suit
was filed and injunction was obtained. Though notices were issued
under sections 11{2) of the Punjab Act or 28(2) of the Haryana Act
within a reasonable period from the filing of returns for the respective
quarters in the assessment years under consideration, further action
has not been taken by the assessing officer to complete the assess-
E ments. But as we have said above, in the absence of any prescribed
period of limitation, the assessment has to be completed within a
reasonable period. What such reasonable period would be, would
depend upon facts of each case. One view can be that it should be a •
period not exceeding five years as the Legislature has fixed the limita-
tion of five years for completing assessments in case of escaped tum--
F over. Unless then be an assessment made soon after the period to
which such assessment relates, the question of consideration of escape-
ment would indeed become difficult to consider and examine. We, are,
however, not inclined to extend into a situation like the one before us,
a period of limitation for completion of assessments under sections
11{3) or 28(3) of the respective Acts. The assessee has made returns
G for all the quarters and must have paid its admitted tax. Now that the
assessing authority intends to complete assessments under section
11(3) of the Act, we see no prejudice to the assessee if the assessing
authority is permitted to complete the assessment now. On the other
hand, if no assessment is made an anomalous situation might arise and
even though the assessee has collected the sales tax on its sale turn-
H over, it might raise a claim for refund of it in the absence of an assess-
BHARAT STEEL TUBES v. STATE OF HARYANA [MISRA, J.J 905

ment. We do not propose to create such a situation. It would suffice to
A
say that in the situation which has arisen it the matter before us, it
would be appropriate to call upon the assessing authority to complete
all these pending assessments within a total period of four months
from today on the basis of available material in the record before him
and such other material as the authority may obtain. We, however,
make it clear that such assessment has to be only under section 11(3) of B
the Act.
Before we part with the case, we would like to indicate that
assessment of tax should be completed with expedition. It involves the
revenue to the state. In the case of a registered dealer who collects

l sales-tax on behalf of the State, there is no justification for him to
withhold the payment of the tax so collected. If a timely assessment is
completed, the dues of the State can be conveniently ascertained and
collected. Delay in completion of assessment often creates problems.
c

The assessee would be required to keep up all the evidence in support
of his transactions. Where evidence is necessary, with the lapse of
time, there is scope for its being lost. Oral evidence as and when
required to be produced by the assessing authority may not be avail- D
able if a long period intervenes between the transactions and the con-
sideration of the matter by the assessing authority. Long delay thus is
not in the interest of either the assessee or the State. In view of the fact
that a period of limitation has been prescribed for bringing the escaped
tum-over into the net of taxation, such an eventuality cannot be grap-
pled with appropriately unless timely assessment is completed. In E
several taxing statutes, even in a situation like this, where assessment
under sections 11(3) or 28(3) of the respective Acts is contemplated, a
period of limitation is provided. Until by statute, such a limitation is
provided, it is proper for the State Governments to require, bystatutory
· rules or appropriate instructions, to ensure completion of assessments
with expedition and reasonable haste but subject to rules of natural F
justice.

We would like to clarify the position that we have not dealt with
the vires of section 28A of the Haryana Act nor have we found any
necessity to deal with the requirement of notice before the assessing
authority proceeds to complete the assessment according to the best of G
his judgment. These questions ate left open.

Each of the writ petitions is, therefore, dismissed. Parties are
directed to bear the respective costs.

N.V.K. Petitions dismissed. H