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SUPREME COURT OF INDIA
K.N. WANCHOO, C.J.I., R.S. BACHAWAT, V. RAMASWAMI, G.K. MITTER AND K.S. HEGDE, JJ.
Anandji Haridas and Co. (P) Ltd., (in all the Appeals). Appellant
Versus
S. P. Kasture and others (in all the Appeals), Respondents.
Civil Appeals Nos. 511 to 514 of 1966,
D/- 28-9-1967.
Advocates Appeared
Mr. H. R. Gokhale, Senior Advocate (M/s. M. R. Bhandare and P. C. Bhartari, Advocates and Mr. O. C. Mathur, Advocate of M/s. J. B. Dadachanji and Co. with him), for Appellant (In all Appeals), Mr. N. S. Bindra, Senior Advocate (Mr. P. K. Chatterjee, Advocate and Mr. S. P. Nayar Advocate for Mr. R. H. Dhebar, Advocate with him), for Respondents (In all the Appeals).
The expression 'dealer' in section 11-A (1) of the Act includes both registered and unregistered dealers.
The expression 'escaped assessment' in section 11-A includes that of a turnover which has not been assessed at all, because for one reason or other no assessment proceedings were initiated and no assessment was made in respect thereof. Where it was the duty of the assessee not only to submit their quarterly returns but also along with those returns the treasury challans in proof of the payment of the tax admittedly due from them and such assessee fails to do so within the prescribed period, his turnover in question had escaped assessment. 1964 JLJ 161 = 1964 RN 190 followed. Para 7
It is not correct to say that the 'information' contemplated by section 11-A should be from some outside source and not something that can be gathered by the assessing authority from his own record. The knowledge of the fact that the assessee had not submitted their quarterly returns as well as the treasury challans, constituted an information to the assessing authority from which it could be satisfied that the turnover had escaped assessment 1959 Supp. (1) SCR 10 followed. (1961) 42 ITR 547, (1967) 64 ITR 218 referred to. [Para 8
(2) Sales Tax-Sales Tax Act, 1947 (C.P. & Berar) - Ss. 11 (4) (a), 11-A (1) & 11-A (3) (as amended in Bombay) - section 11 (4) (a) has become discriminatory in view of section 11-A (3) (as amended in Bombay) - held violative of Art. 14 constitution and struck down - unconstitutionality of the provision is the result of adding of sub-section (3) to section 11-A - Constitution of India - Art. 14.
Per Majority (Bachawat & Ramaswami Contra - The case of an assesse who is a registered dealer and fails to file the treasury challan as well as the return falls both under section 11 (4) (a) and section 11-A (1). Therefore it was open to the assessing authority to proceed against them under any one of these two sections. But as they were proceeded against under section 11 (4) (a) they cannot have the benefit of the period of limitation prescribed under section 11-A (1). It follows that section 11 (4) (a) has become a discriminatory provision in view of section 11-A (3), as added for the Bombay State by the Bombay Act (No. 22 of 1959). Hence the same is liable to be struck down under Art. 14 of the Constitution. But for the inclusion of sub-section (3) in section 11-A, there would have been no discrimination between those dealt with under section 11 (4) (a) and those under section 11-A (1). The period of limitation prescribed in section 11-A (1) would have attracted it self to proceedings under section 11 (4) (a). 1964 JLJ 167 = 1964 RN 190 & (1955) 1 SCR 448 relied on. [Para 9
(3) Constitution of India - Art. 14 - classification - when valid - must be based on real and substantial distinction - should not be arbitrary.
To be a valid classification, the same must not only be founded on an intelligible differentia which distinguishes persons and things that are grouped together from others left out of the group but that differentia must have a reasonable relation to the object sought to be achieved.
It is true that the State can by classification determine who should be regarded as a class for the purpose of legislation and in relation to a law enacted on particular subject, but the classification must be based on some real and substantial distinction, bearing a just and reasonable relation to the object sought to be attained and cannot be made arbitrarily and with out any substantial basis. [Para 10
(4) Sales Tax - Sales Tax Act, 1947 (C.P. & Berar) - 11 (4) (a) - notice under - need not before a particular quarter - may be for more than one quarter - failure to strike out inapplicable matter printed in the form of notice - no prejudice caused - notice not invalid.
Section 11 (4) (a) of the Act makes a reference to a period which might consist of more than one quarter. The issue of one notice for several quarters is not contrary to law. (1961) 1 SCR 719 relied on. [Para 13
Where in the printed form of the notice the alternatives not applicable to the assessee are not scored out but no prejudice thereby is caused to the assessee, such mistake does not vitiate the notice. (1961) 1 SCR 719 relied on. [Para 14
(5) Sales Tax - Sales Tax Act, 1947 (C.P. & Berar) - Ss. 11 (4) & 11-A (1) - Sales Tax Rules - R. 32 - notice is not a condition precedent - reasonable opportunity to be heard -less than 30 days time given in notice - provision not mandatory - irregularity in notice - proceedings not vitiated unless there is prejudice.
This is not the correct position of law that a notice under S. 11 (4) (a) or 11-A (1) is a condition precedent for initiating proceedings under those provisions or that it is the very foundation for the proceedings to be taken under those provisions. All that sections 11 (4) and 11-A (1) prescribe is that before taking proceedings against an assessee under those provisions, he should be given a reasonable opportunity of being heard. In fact the section does not speak of a notice. But Rule 32 prescribes the manner in which reasonable opportunity contemplated in there provisions should be afforded to the assessee.
The period prescribed by Rule 32 is not mandatory. The rule itself says that 'ordinarily' 'not less than 30 days notice should be given. Therefore, what is to be seen is whether any prejudice is caused to the assessee. The irregularity in the notice alone does not vitiate the proceedings (1947) 15 ITR 302 applied. [Para 16
Judgement
HEGDE, J. :- (with him Wanchoo C. J. and G. K. Mitter J.) The principal question canvassed in this group of appeals by special leave is whether S. 11 (4) (a) of the Central Provinces and Berar Sales Tax Act 1947, to be referred to as the Act hereinafter, is ultra vires Article 14 of the Constitution and consequently the notices impugned in the writ petitions from which these appeals arise are liable to be struck down and the respondents restrained from levying sales-tax on the appellants for the period May 1, 1952 to October 31, 1955.
2. The appellants are a private limited company carrying on business inter alia as dealers in iron and steel materials in Vidharba region of the Maharashtra State. In that region they have more than one place of business. They registered themselves as dealers under S. 8-A of the Act and obtained a certificate of registration on August 17, 1947. Their assessment year as shown in their registration certificate is from November 1 to October 31. They were required to submit quarterly returns of their turnovers. They did so till April 31, 1952 Thereafter no returns were submitted. On September 13, 1955, the Assistant Commissioner of Sales-tax, the assessing authority at that time, issued a notice calling upon the appellants to show cause why action should not be taken against them under Ss. 10 (3) and 11 (4) (a), on account of their failure to furnish the return for the period 1-1-1953 to 31-12-53. Similar notices were issued to them on October 27, 1955 for the period 1-1-54 to 31-12-54 and on July 7, 1956 for the period 1-1-1955 to 31-12-55. It appears that the appellants repeatedly took time for submitting their explanation. The first respondent to whom the appellant s case stood transferred issued in 1958 fresh notices to the appellants similar to those issued in 1955. At that stage the appellants object ed to the validity of those notices both orally as well as in writing on the ground that their assessment year was not the calendar year as mentioned in those notices but the year ending October 31. Evidently in view of that objection, the first respondent issued another set of notices on July 8, 1959. The appellants contended that those notices were barred by time. Thereafter the appellants challenged the validity of the notices issued in 1959 in the petitions under Art. 226 from which these appeals arise.
3. In these appeals the questions arising for decision are whether S. 11 (4) (a) or 11-A (3) or any parts thereof contravene the guarantee of equal protection of the laws or equality before the law or whether those provisions are based on a valid classification which is reasonable in view of the object with which they were enacted. Mr H. R. Gokhale, learned counsel for the appellant, urged that both these provisions deal with the same class of persons having common characteristics and properties and hence there is no just basis for the classification made. According to him the classification complained of has brought about a discrimination. Further he asserted that the Act had conferred arbitrary power on the assessing authority to pick and choose from the persons belonging to the same class to be dealt with either under S. 11 (4) (a) or under 11-A (1). He urged that as a case coming under S. 11 (4) (a) also falls under S. 11-A, as the law now stands, the persons proceeded against under S. 11-A (1) will have the benefit of the period of 1imitation prescribed therein while the said benefit is not available for those proceeded under S. 11 (4) (a).
4. According to the learned counsel for the revenue, Ss. 11 (4) (a) and 11-A deal with different classes of persons; the classification made under those provisions is a reasonable classification having nexus with the object sought to be achieved.
5. Before adverting to the points at issue it would be convenient to set out the circumstances under which S. 11-A (3) which is said to have brought about the discrimination complained of came to be enacte
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