Judgement

SHAH, J.: In respect of assessment to sales-tax for two accounting periods April 1, 1961 to June 30, 1961 and July 1, 1961 to September 30, 1961, the Board of Revenue, Madhya Pradesh, referred the following questions to the High Court of Madhya Pradesh for opinion:

"(1) Whether in the facts and circumstances of the case the notice in Form XVI that was served on the applicant was invalid and therefore the assessment of the applicant on the basis of that notice was bad in law?

(2) Whether in the facts and circumstances of the case the applicant was a dealer during the assessment period under the Act and the imposition of purchase tax on him under Section 7 of the Act was in order?"

The High Court answered the first question in the negative, and the second in the affirmative. These appeals are preferred with special leave granted by this Court.

2. The appellants are a firm of building contractors and are registered as dealers under the Madhya Pradesh General Sales Tax Act 2 of 1959. The appellants purchased building materials in the two account periods and used the materials in the course of their business. The Sales Tax Officer, Jabalpur Circle, served notices under Section 18 (5) of the Act calling upon the appellants to show cause why "best judgment" assessments should not be made, and by order dated November 30, 1961, he assessed the appellants to tax in respect of goods purchased by the appellants for use in their construction business and imposed a penalty of Rs. 200 in each case. Appeals against the orders imposing tax and penalty were dismissed by the Assistant Commissioner of Sales Tax and the Board of Revenue.

3. Rule 33 of the Madhya Pradesh General Sales Tax Rules, 1959, provides that a notice of assessment under Section 18 (5) shall be in Form XVI, and ordinarily it shall give not less than 15 days from the date of the service to the assessee to show cause why he should not be assessed or reassessed to tax and/or to pay penalty. The notices served upon the appellants did not give them a clear period of 15 days to show cause. But we are unable to hold on that account that the notices and the assessments were invalid. We agree with the High Court that the rule is not intended to be "either invariable or rigid", and unless prejudice has resulted to the tax-payer the proceedings are not liable to be set aside". It is not even suggested that because of the insufficiency of time the appellants were unable to submit their explanation for failure to make their returns of turnover. Two cases on which reliance was placed by counsel for the appellants in support of the plea that the notices were invalid have, in our judgment, no bearing. In Messrs. Kajorimol Kalyanmal v. The Commissioner of Income-tax, U. P., 3 ITC 451 it was held that a notice under Section 22 (2) of the Income-tax Act, 1922, giving the assessee 29 days for filing the return was "entirely illegal". In Jamna Dhar Potdar and Co., Lyallpur v. Commissioner of Income-tax, Punjab, 3 ITR 112 it was held, following the judgment in Kajorimal Kalyanmal s case, 3 ITC 451 that a notice which does not give to a tax-payer under Section 22 (2) of the Income-tax Act, 1922 clear notice for furnishing a return, of thirty days from the date of service is illegal. But these cases were decided under Section 22 (2) of the Income-tax Act, 1922, before it was amended by the Income-tax (Amendment) Act 7 of 1939. Under the Section as it then stood, it was enacted that the Income-tax Officer shall serve a notice upon any person whose total income is in the opinion of the Income-tax Officer of such an amount as to render that person liable to pay income-tax. The Section was held to be mandatory. But the terms of Rule 33 of the Madhya Pradesh General Sales Tax Rules are plainly not mandatory. The answer given by the High Court on the first question must be accepted.

4. To appreciate the scope of the enquiry under the second question, the relevant provisions of the Act may be summar