IMPORTANT POINT
Power to stay assessment proceedings can be exercised only in extraordinary circumstances and for supervening reasons which cannot be attributed to the default or failure of the assessing authorities.

Headnote:SALES TAX-Central Sales Tax Act, 1956-Gujarat Sales Tax Act, 1969-Section 42(1)-Rule 37-A-Power to stay assessment proceedings-Can be exercised only in extraordinary circumstances and for supervening reasons which cannot be attributed to default or failure of assessing authorities-Commissioner is required to put in writing reasons and circumstances that necessitate stay of proceedings-Power under Rule 37-A may not be exercised without first giving to assessee notice to show cause why his assessment proceedings should not be stayed for a stated period.
Held : The stay of assessment proceedings has consequences of a civil nature upon an assessee, which the High Court has, as aforesaid, noted. The more the time that elapses the more difficult it is for the assessee to prove his accounts and claim set off, exemptions and the like. We take the view that, in the circumstances, the power under Rule 37-A may not be exercised by the Commissioner without first giving to the assessee notice to show cause why his assessment proceedings should not be stayed for a stated period. The notice should set out what the reasons and circumstances are which, according to the Commissioner, necessitate such stay so that the assessee has the opportunity of meeting the same. This is a requirement of natural justice that, having regard to the scope of Rule 37-A, requires to be read into it. (Para 10)

JUDGMENT

Bharucha, J.-The respondents have been served but have not appeared.

2. The judgment and order under appeal was passed by a Division Bench of the High Court of Gujarat. It dismissed a writ petition filed by the appellant.

3. The appellant carries on the business of manufacture and sale of ball and roller bearings at Vadodara in Gujarat. It is registered as a dealer under the Central Sales Tax Act, 1956, and the Gujarat Sales Tax Act, 1969. The writ petition was filed to quash the order of the Deputy Commissioner of Sales Tax dated 31st August, 1987, passed under Section 42(1) of the Gujarat Sales Tax Act and Rule 37-A of the rules thereunder staying until 31st August, 1988, the appellant s assessment for the period at September, 1976, to 31st August, 1984, and to restrain the Sales Tax Officer from making any assessment and penalty orders for the said period and for consequential reliefs.

4. The order of the Deputy Commissioner dated 31st August, 1987, so far as is relevant stated :

"Since some more time will be taken and the assessment proceedings are not likely to be completed within the prescribed time, and the assessment for the period 1.9.1976 to 31.3.1984 for the paid assessee cannot be completed within time limit prescribed under Section 42(1) of the Gujarat Sales Tax Act, 1969. Hence it is considered proper to stay the assessment in the case of the said assessee upto 31.8.1988, and in this respect show cause notice was given vide letter No. Jagrut/SK/ Anve/Ch/S. 42/87-88/JA Nil dated Nil as to the period of assessment should not be extended. In response to the said notice, the assessee has not remained present nor did he make any representation either by post or in person. The assessee has made representation vide letter dated Nil. Accepting the representations of the assessee, I under the authority conferred on me under Section 9(2) of the Central Sales Tax Act, 1956 read with Rule 37-A of the Gujarat Sales Tax Rules, 1969 hereby order that the assessment in respect of M/s. Precision Bearings India Limited, Baroda who is registered vide Registration No. 40602801/ Guj. 9B 81 under Local-Central Sales Tax Acts and who is under the jurisdiction of Sales Tax Officer (1) Div. (6) Enforcement, Baroda for the period 1.9.1976 to 31.8.1984 be stayed upto 31.8.1988."

5. On behalf of the appellant it was contended before the High Court that no order for stay of the assessment proceedings had in fact been passed on 31st August, 1987 and, thus, the assessment proceedings had become time barred; that the order dated 31st August, 1987, ("the said order") was null and void inasmuch as no show cause notice in that bahalf had been given to the appellant nor had it been heard before the said order was passed; and that the reasons given in the said order did not justify its passing.

6. The High Court held against the appellant on the first contention and, that being a finding of fact, we do not concern ourselves therewith. Insofar as the second contention was concerned, the High Court considered whether the power of staying assessment proceedings was quasi-judicial in nature. The High Court noted that prior to 6th May, 1970, there was no provision in the State Act prescribing a time limit within which assessment proceedings were required to be completed. A Sales Act Enquiry Committee had been appointed by the State Government and it gave its report in 1967. This showed that the position of cases of assessment lingering for years was unsatisfactory as dealers had to preserve account books for long periods of time and it became difficult for them to produce evidence at late stages to support their claims to set off, exemptions and the like; also, because recoveries became difficult and Government revenues were jeopardised. It was then that the period of three years for the completion of assessment proceedings had been prescribed in the State Act. In 1979 this period was reduced to two years and, simultaneously, the provision in respect o

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1996 Supreme(SC) 2100

IMPORTANT POINTPower to stay assessment proceedings can be exercised only in extraordinary circumstances and for supervening reasons which cannot be attributed to the default or failure of the assessing authorities.

IMPORTANT POINT
Power to stay assessment proceedings can be exercised only in extraordinary circumstances and for supervening reasons which cannot be attributed to the default or failure of the assessing authorities.