THE STATE OF ANDHRA PRADESHversusNAY SWADESHI OIL MILLS

                    THE STATE OF ANDHRA PRADESH
A                                                                                  '1
                                       v.
                '     NAY SWADESHI OIL MILLS.

                            NOVEMBER 3, 1987.
B
      [E.S. VENKATARAMIAH AND S. RANGANATHAN, JJ.]                              ~
          Andhra Pradesh General Sales Tax Act, 1957: ss. 13 & 14(1) &
    14(3)/Central Sales Tax Act, 1956: s. 9(2)-Applicability of-Returns
    not filed within the prescribed period-Assessments made after expiry
    of four years from assessment year-Held, cases fall under s. 14(3) and
c   assessment can be made within six years from expiry of the assessment
    year.
                                                                               )
        Sub-section (2) of s. 9 of the Central Sales Tax Act, 1956 makes
  the assessment procedure prescribed under the general sales tax law of
D
  the appropriate State applicable to the assessment to be made under the
  Central Act. Section 13 of the Andhra Pradesh General Sales Tax Act,
  1957 requires the dealer to submit returns in such manner, within such
  period and to such authority as may be prescribed. Sub-section (1) ofs.
  14 permits the assessing authority to assess the amount of tax due on the    \,
  returns submitted under s. 13 only within a-period of four years from            )
E the expiry of the year to which the assessment relates. Sub-section (3)
  permits the assessing authority to make best judgment assessment
  where a dealer (i) fails to submit return before the date prescribed; (ii)
  produces the accounts registers and other documents after inspection
  and (iii) submits a return subsequent to the date of inspection, within a
  period of six years from the exp.iry of the year to which the assessment
F relates.
                                                                               )
        In the main appeal before this Court the assessee-respondent filed
  its return relating to the quarter ending 31st March, 1969 on 7th
  August, 1969 under the Central Sales Tax Act. The last date prescribed
G by Jaw was 24th May, 1969. The Commercial Tax Officer passed the
  assessment order on 3rd August, 1973, beyond four years from 31st
  March, 1969, the last day of the assessment year 1968-69. The asses-
  see's appeals against that order were dismissed by the Assistant Com-        ,)
  missioner and the Sales Tax Appellate Tribunal. 'the High Court in
  revision, however, held that the assessment made after four years from
H the last day of the assessment year was not a valid assessment.
                                     736
                     STATE OF A.P. v. SWADESHI OIL MILLS                   737

,.         In the connected appeal the respondent who was the assessee tiled
     the annual return in respect of the assessment year 1968·69 under the A
     provisions of the Central Act on 19th August, 1969 after the expiry of
     the prescribed date. The order of assessment was passed on 2nd August,
     1973 beyond four years from the last day of the assessment year 1968·



~
     69. An appeal against that order was dismissed by the Assistant Com·
     missioner. The Sales Tax Appellate Tribunal, however, allowed the B
     appeal holding that the assessment had been passed beyond four years
     from the last day of the assessment year. The revision petition preferred
     by the State was dismissed in limine by the High Court.

           In the appeals by special leave filed by the State, it was contended
     for the respondent that since the returns in the cases had been accepted,
{_   even though they had filed been beyond the prescribed date, the assess·
     ments made thereon could not be considered as best judgment assess·
                                                                                   c

     ments and, therefore, sub-section (3) of s. 14 of the Act under which it is
     permissible to make best judgment assessments would be inapplicable.

           Allowing the appeals,                                                   D

           HELD: 1.1 On a true construction of sub-s. (1) and sub·s. (3) of
     s. 14 of the Andhra Pradesh General Sales Tax Act, 1957 it is apparent
     that where a return is not tiled by a dealer before the date prescribed in
     that behalf under the Act the assessing authority has jurisdiction to
~
     complete the assessment within a period of six years from the expiry of E
     the year to which the assessment relates. [744CI

            1.2 The two types of cases which fall under sub-s. (1) and sub-s.
     (3) of s. 14 of the Act respectively are mutually exclusive. The return on
     the basis of which an assessment is to be made under s. 14(1) is a return


~
     filed ·within the prescribed period and in such a case the assessment has F
     to be completed within a period of four years from the expiry of the
     period to which the assessment relates. The Act confers a distinct
     advantage on such a dealer who is prompt in tiling his return inasmuch
     as he acquires immunity against assessment on the expiry of the said
     period of four years. All cases where the return is submitted beyond the
     prescribed date fall under sub·s. (3) of s. 14 of the Act. Assessment in G
     such cases may be completed within six years from the expiry of the
      year to which the assessment relates. When once it is established in a
      case that a return has not been tiled within the prescribed period such
""    case falls outside s. 14(1) of the Act and therefore the period of four
      years prescribed therein becomes automatically inapplicable. It clearly
      falls under cl. (i) of sub-s. (3) of s. 14 of the Act and assessment can be H
    738                    SUPREME COURT REPORTS              [1988) 1 S.C.R.

A made in such a case within the expiry of the period of six years. In the
  instant cases the returns were not filed within the prescribed dates. The
  assessments have, therefore, been rightly made within six years from the
  expiry of the year to which the assessments relate. [742G·H; 743A-B; 744Cl
                                 /

         2. Whether the-assessment made is the best judgment or not has
B no bearing at all on the period within which an assessment can be made
  under the Act. It depends upon the other conditions mentioned in sub-
  ss. (1) and (3) of s. 14. Best judgment assessment can be made even in a
  case falling under sub-s. (1), as is evident from the latter part of
  that sub-section which reads: "but if the return appears to him to
                                                                                  4
  be incorrect or incomplete he shall after giving the dealer a reason-
  able opportunity of proving the correctness and completeness of the
C return submitted by him and making such inquiry as he deems neces-
  sary, to assess to the best of his judgment, the amount of tax due from
  the dealer." Yet such best judgment assessment has to be completed
  within a period of four years from the expiry of the year to which the
  assessment relates. Therefore, in the instant case merely because the
D assessments are not best judgment assessments, it cannot be said that
  sub-s. (3) of s. 14 is inapplicable. Neither the High Court nor the
  Tribunal gave adequate attention to the words 'before the date pre-
  scribed in that behalf' in cl. (i) of sub-s. (3) of s. 14. They laid emphasis
  only on the words 'fails to submit return' in the said sub-clause to arrive
  at a wrong conclusion. [743C, H; 744A-B)
E
          State of Andhra Pradesh v. Pyarelal Malhotra, (13 S.T.C. 946),
    and State of Madras v. S.G. Jayaraj Nadar & Sons, 28 S.T.C. 700,
    distinguished.

        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4448
F of 1985.

         From the Judgment and Order dated 26. 10.1982 of the Andhra
    Pradesh High Court in Tax Revision Case No. 23 of 1978.

                                     WITH
G
          Civil Appeal No. 694 of 1986.

         From the Judgment and Order dated 3 1.7 .1985 of the Andhra              A
    Pradesh High Court in Tax Revision Case No. 205 of 1985.

H         T.V.S.N. Chari for the Appellant.
                    STATE OF A.P. v. SWADESHI OIL MILLS {VENKATARAM!AH, J.I         739

                     R. Ramachandran for the Respondents.
                                                                                           A
                    The Judgment of the Court was delivered by

                     VENKATARAMIAH, J, The question of law which arises in
               these two appeals by special leave being a common, they are disposed
               of by this common judgment. The said question-relates to the time           B
               within which an assessment can be made under the provisions of the
"""(           Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to
               as 'the Act') where the return is not filed by the dealer.within the time
               prescribed in that behalf.

           , The assessee in Civil Appeal No. 4448 of 1985 is M/s. Nav
      Swadeshi Oil Mills, Jadcharla, Mahboobnagar district. For assessment c
       I
  A__ year 1968-69 the assessee filed its return relating to the quarter ending
      3 1.3. 1969 on 7.8. 1969 before the Commercial Tax Officer of
      Mahboobnagar under the Central Sales Tax Act, 1956 even though the
      last date for submission of return prescribed by law was 24.5. 1969. The
      return filed by the assessee showing a taxable turnover of D
      Rs. 18,25,410. 72 was accepted and it was called upon to pay salex tax of
      Rs.45,424.48 under the Act. The assessment order was passed on
      3.8. 1973 beyond four years from 3 1.3. 1969 which was the last day of
      the assessment year 1968-69. Aggrieved by the assessment order which
      had been passed beyond the period of four years 'from the last day of
  .., the assessment year the assessee filed an appeal before the Assistant E
      Commissioner (CT) Appeals, Warangal in Appeal No. 5 75-76 and
      that appeal was dismissed on 14.9. 1976. Against the order of the
      Assistant Commissioner (CT) Appeals, Warangal the assessee filed an
      appeal before the Sales Tax Appellate Tribunal, Andhra Pradesh at
      Hyderabad in Tribunal Appeal No. 183 of 1977. That appeal also was
      dismissed. The assessee thereafter filed a revision petition in Tax F
      Revision Case No. 23 of 1978 before the High Court of Andhra
      Pradesh. The High Court by its order dated October 26, 1982 set aside
      the order of the Tribunal and also the assessment on the ground that
      the assessment which had been passed after four years from the last
      day of the assessment year was not a valid assessment. Aggrieved by
      the decision of the High Court the State of Andhra Pradesh has filed G
      this appeal by special leave.

                     The assessee in Civil Appeal No. 694 of 1986 is M s. Nav
               Swadeshi Oil Mills and Refinery at J adcharla. In respect of the assess-
               ment year 1968-69 the assessee filed an annual return under the provi-
               sions of the Central Sales Tax Act, 1956 on 19.8. 1969 after the expiry     H
    740                   SUPREME COURT REPORTS            [ 1988] I S.C.R.

  of the prescribed period. The order of assessment was passed on
A 2.8. 1973 beyond four years from the last day of the assessment year
   1968-69. Aggrieved by the assessment order which had been passed by
  the assessing authority the assessee filed an appeal before the
  Assistant Commissioner (CT) Appeals, Warangal on the ground that
  the asssessment order passed beyond four years from the last day of
B the assessment year was barred by time. That appeal was dismissed.
  Against the order passed in that appeal the assessee filed an appeal
  before the Sales Tax Appellate Tribunal, Andhra Pradesh in Tribunal
  Appeal No. 206 of 1977. The Tribunal allowed the appeal and set aside
  the assessment holding that the assessment had been passed beyond
  time. Aggrieved by the decision of the Tribunal the State of Andhra
  Pradesh filed a Revision Petition in Tax Revision Case No. 205 of 1985
C on the file of tlie High Court of Andhra Pradesh. That Revision Peti-
  tion was dismissed in limine by the High Court. Aggrieved by the
  decision of the High Court the State of Andhra Pradesh has filed this
  appeal by special leave.

D        The only question which arises for consideration in these appeals
  is whether the orders of assessment in the above two cases which had
  admittedly been passed beyond four years from the last day of the
  assessment year but within the period of six years from that. date had
  been validly passed. By virtue of section 9 of the Central Sales Tax
  Act, 1956 the procedure prescribed for making an assessment under
E the Act is applicable to the assessments to be made under the Central
  Sales Tax Act, 1956. Section 13 of the Act prescribes that every dealer
  who is liable to get himself registered under section 12 or section 12-A
  as the case may be under the Act shall submit such return or returns
  relating to his turnover in such manner within such period and to such
  authority as may be prescribed. The material part of section 14 which
F is relevant for purposes of these cases reads thus:

                      "14. Assessment of tax: ( 1) If the assessing authority
               is satisfied that any return submitted under section 13 is
               correct and complete, he shall assess the amount of tax
               payable by the dealer on the basis thereof, but if the return
G              appears to him to be incorrect or incomplete he shall, after
               giving the dealer a reasonable opportunity of proving the
               correctness and completeness of the return submitted by
               him and making such inquiry as he deems necessary, assess        .).
               to the best of his judgment, the amount of tax due from the
               dealer. An assessment under this section shall be made
H              only within a period of four years from the expiry of the
              STATE OF A.P. v. SWADESHI OIL MILLS [VENKATARAMIAH.J.]         741

                    year to which the assessment relates.
                                                                                    A



                    (3) Where any dealer liable to tax under this Act-

                    (i) fails to submit return before the date prescribed in that   B
                    behalf, or

                    (ii) produces the accounts, registered and other documents
<                   after inspection, or

                    (iii) submits a return subsequent to the date of inspection,
                    the assessing authority may, at any time within a period of C
                    six years from the expiry of the year to which assessment
                    relates, after issuing a notice to the dealer and after such
                    enquiry as he considers necessary, assess to the best of his
                    judgment, the amount of tax due from the dealer on his
                    turnover for that year, and may direct the cfealer to pay in D
                    addition to the tax so assessed penalty as specified in sub-
                    section (8)."

                 It is necessary to analyse sub-section ( 1) and sub-section (3) of
         section 14 of the Act for purposes of determining the issue involved in
         these cases. Sub-section ( 1) of section 14 of the Act provides that if the E
         assessing authority is satisfied that any return submitted under section
          13 is correct and complete, he shall assess the amount of tax payable by
         the dealer on the basis thereof but if the return appears to the assessing
         authority to be incorrect or incomplete he shall after giving the dealer
         reasonable opportunity of proving the correctness and completeness of
      , the return submitted and making such inquiry as he deems necessary, F
    \    assess to the best of his judgment, the amount of tax due from the
       - dealer. In both these cases the return contemplated is one which has
         been filed in accordance with section 13 of the Act within the time
         prescribed for that purpose. Such an assessment under sub-section (1)
         of section 14 of the Act can be made within a period of four years from
         the expiry of the period to which the assessment relates. Sub-section G
         (3) of section 14 of the Act authorises the assessing authority to make
         an assessment to the best of his judgment in three cases: (i) where a
. ..A. dealer under the Act fails to subit return before the date prescribed in
         that behalf, (ii) where a dealer produces the accounts. registers and
         other documents after inspection and (iii) where a dealer submits a
         return subsequent to the date of inspection. In these three cases the H
    742                    SUPREME COURT REPORTS'           [ 1988] 1 S.C.K

A   assessing authority is empowered to make an assessment to the best of
    his judgment at any time within a period of six years from the expiry of     Y
    the year to which the assessment relates after issuing a notice to the
    dealer and after such inquiry which he considers necessary to make the
    assessment.

B         The crucial question which arises for consideration in these cases
    is whether in a case where the assessee submits a true and complete
    return after the prescribed date the assessment should be completed
    within a period of four years prescribed by sub-section ( 1) of section 14
    of the Act or within a period of six years permitted under sub-section
    {3) of section 14 of the Act. Sub-section ( 1) of section 14 of the Act
    relates to an assessment which may be made on the basis of a return
c   submitted under section 13 of the Act. Section 13 of the Act as stated
                                                                                 \

    above provides that every dealer shall submit such return or returns
    relating to his turnover in such manner within such period and to such
    'luthority as may be prescribed. The return on the basis of which an
    assessment is to be made under section 14{ 1) of the Act is, therefore, a
D   return filed within the prescribed period and in such a case the assess-
    ment has to be completed within a period of four years from the expiry
    of the year to which the assessment relates. The return referred to in
    sub-section ( 1) of section 14 of the Act cannot be a return filed beyond
    the prescribed date is emphasised by clause (i) of sub-section (3) of
    section 14 of the Act which refers to a case where a dealer liable to pay
E   tax fails to submit return before the date prescribed in that behalf. All
    cases where the return is submitted beyond the prescribed date fall
    under sub-section (3) of section 14 of the Act.
                                                                                     ,
           The scheme of the Act regarding the period within which assess-
    ments can be made is very simple. Assessments in cases falling under
F   sub-section ( 1) of section 14 of the Act have to be completed within
    four years from the expiry of the year to which the assessment relates ).
    and assessments in cases falling under sub-section (3) of section 14 of _
    the Act may be completed within six years from the expiry of the year
    to which the assessment relates. The two types of cases which fall
    under sub-section ( 1) and sub-section (3) of section 14 of the Act
G   respectively are mutually exclusive. }\'hen once it is established in case
    that a return has not been filed within the prescribed period such case
    falls outside section 14 (I) of the Act and therefore the period of four
    years prescribed therein becomes automatically inapplicable. It clearly    .A
    falls under clause (i) of sub-section (3) of section 14 of the Act and
    assessment can be made in such a case within the expiry of the period
H   of six years. While a dealer who files a return within the prescribed
              STATE OF A.P. v. SWADESHI OIL MILLS (VENKATARAMIAH, J.]         743

y       period acquires immunity against assessment on the expiry of four
                                                                                     A
        years from the last day of the assessment year, a dealer who fails to file
        a return within the prescribed period has to wait for six years to be
        over to acquire such immunity. Thus the Act confers a distinct
        advantage on a dealer who is prompt in filing his return.

              We are not impressed by the argument that since the returns in         B
        the cases before us had been accepted even though they had been filed
        beyond the prescribed date the assessments made thereon cannot be
        considered as best judgment assessment and therefore sub-section (3)
        of section 14 of the Act under which it is permissible to make best
        judgment assessments would be inapplicable. The period within which
        assessments can be made under the Act does not depend upon the
 ,(     answer to the question whether the assessment in question is a best          c
        judgment assessment or it is an assessment made treating the return as
        correct and complete but it depends upon the other conditions
        mentioned in sub-section ( 1) and in sub-section (3) of section 14 of the
        Act. We may here point out that even in a case falling under sub-
        section (1) of section 14 of the Act it is possible for the assessing        D
        authority to make a best judgment assessment as can be seen from the
        latter part of the said sub-section which reads: "but if the return ap-
        pears to him to be incorrect or incomplete he shall after giving the
        dealer a reasonable opportunity of proving the correctness and comp-
___,,   leteness of the return S\Jbmitted by him and making such inquiry as he
        deems necessary, assess to the best of his judgment, the amount of tax       E
        due from the dealer." Yet such best judgment assessment has to be
        completed within a period of four years from the expiry of the year to
        which the assessment relates. Hence it cannot be held that merely
        because the assessments in question are not best judgment assessments
        sub-section (3) of section 14 of the Act is inapplicable for best judg-
        ment assessments can be made both under sub-section (1) and sub-             F
  \__   section (3) of section 14 of the Act. That the assessment is a best
        judgment assessment is not, therefore, decisive of the question
        involved in these appeals.

              The decision of the Andhra Pradesh High Court in the State of
        Andhra Pradesh v. Pyarelal Malhotra 13 S.T.C. 946 and the decision of G
        this Court in the State of Madras v. S.G. Jayaraj Nadar & Sons 28
        S. T.C. 700 which dealt with the question as to when a best judgment
,.X     assessment could be made are not relevant for purposes of deciding the
        question which has arisen before us. As we have already pointed out
        the question whether the assessment made is the best judgment assess-
        ment or not has no bearing at all on the period within which an assess- H
        744                   SUPREME COURT REPORTS             [ 1988) I S.C.~.

    A ment can be made under the Act. Neither in the judgment of the High            y
,     Court against which Civil Ap,peal No. 4448 of 1985 is filed nor in the
      judgment of the Tribunal out of which Civil Appeal No. 694 of 1986
      arises adequate attention is given to the words 'before the date pre-
      scribed in that behalf in clause (i) of sub-section (3) of section 14 of the
      Act. The High Court and the Tribunal laid emphasis only on the words
    B
      "fails to submit return" in the said sub-clause and it is on this account
      they arrived at a wrong conclusion.                                                )<--




    c
             On a true construction of sub-section (I) and sub-section (3) of
      section 14 of the Act we are of opinion that where a return is not filed
      by a dealer before the date prescribed in that behalf under the Act, the
      assessing authority has got jurisdiction to complete the assessment
      within a period of six years fr_om the expiry of the year to which the __)._
                                                                                            -
      assessment relates. Admittedly, in these cases the returns were not
      filed ·within the prescribed date and the assessments have been made
      within six years from the expiry of the year to which the assessments
      relate. The orders of the High Court against which these appeals have
    D
      been filed are therefore liable t9 be set aside. In Civil Appeal No. 4448
      or 1985 the judgment of the High Court is set aside and the judgment
      of the Tribunal is restored. In Civil Appeal No. 694 of 1986 the order
      of the High Court and the judgment of the tribunal are set aside and
      judgment of the Assistant Commissioner (CT) Appeals, Warangal is
      restored. The respondent shall pay the costs of the Appellant in both     ...,.....
    E the appeals.

        P.S.S.                                                 Appeals allowed.

                                                                                            -