Judgment

HEGDE, J.: This appeal by special leave arises from the decision of the High Court of Allahabad in Sales Tax Reference No. 28 of 1964 on its file. That was a reference under S. 11 (1) of the U. P. Sales Tax Act, 1948 (to be hereinafter referred to as the Act). The two questions referred for the opinion of the High Court are:

"1: Whether a dealer can elect assessment year basis from previous year basis under rule 39 in a case in which Section 18 (4) applies warranting assessment on previous year basis?

2. Whether the election so made and the resultant original assessment on assessment year basis would operate as a bar warranting the subsequent assessment to be completed on assessment year basis?"

2. The assessee was a dealer in imported Vanaspati oil and Kirana. It started its business in the year 1952-53 but in that year it carried on business only for a part of the year. In respect of its turnover for that year, the assessment was made for the broken period under S. 18 (3) of the Act as it then stood. For the assessment year 1953-54, the assessee submitted quarterly returns. The assessing authority accepted the returns submitted by the assessee and assessed him on the basis of those returns. That assessment was not challengd by the assessee. Thereafter the assessing authority received information that some part of the turnover of the assessee had escaped assessment. Consequently a notice under S. 21 of the Act was issued and the escaped turnover was brought to assessment on the basis of best judgment assessment. The escaped turnover was determined at Rupees three lacs. The assessee challenged this reassessment before the Judge (Appeals). It contended before the Judge (Appeals) that the reassessment in question is invalid inasmuch as the assessing authority did not comply with the mandatory requirements of S. 18 (4) of the Act. Though the Judge (Appeals) found some force in that argument, it rejected the appeal of the assessee on the ground that as it had not challenged the original assessment, it was not open to it to challenge the reassessment made. Thereafter the assessee took up the matter in revision to the Board of Revenue but the Board also rejected the revision petition of the assessee on the ground that it is not open to it to challenge the reassessment as it had submitted to the original assessment. But at the instance of the assessee the Judge (Revisions) referrd the two questions mentioned earlier for the decision of the High Court. The reference was first heard by a Division Bench of the Allahabad High Court consisting of Manchanda and Beg JJ. Manchanda J. answered those questions in favour of the assessee whereasBeg J. answered those questions against the assessee. Thereafter the matter was placed before Oak J. who agreed with the view taken by Manchanda J.

3. The provisions of the Act which are relevant for our present purpose are Ss. 3, 7 and 18. In addition to these provisions, we must also read rule 39 of the rules framed under the Act. The aforementioned provisions to the extent relevant for our present purpose may now be read:

4. Section 3 which deals with the liability to tax says:

"Subject to the provisions of this Act, every dealer shall, for each assessment year, pay a tax at the rate of three ples a reupee on his turnover of such year, which shall be determined in such manner as may be prescribed."

(The other portion or the section is not relevant for our present purpose).

5. Section 7 which deals with determination of turnover and assessment of tax to the extent material reads as follows:

"Subject to the provisions of section 18, every dealer whose turnover in the previous year is Rs. 12,000 or more in a year shall submit such return or returns of his turnover of the previous year within sixty days of the commencement of the assessment year in such form and verified in such manner as may be prescribed:

Provided that the State Government may prescribe that any dealer or class of dealer may submit, i