V.P. Gopalan Nambiyar, C.J.
1. The Sales Tax Officer, Perumbavoor, the District Collector, Ernakulam,and the Tahsildar, Kunnathunad Taluk, are the appellants in this appeal. Theychallenge the decision of a learned Judge of this Court who held that theproceedings taken for reassessment under Section 19 of the Sales Tax Act arebarred by limitation as provided in the section. The learned Judge upheld theobjection to that effect and allowed the writ petition of the assessee.
2. The assessment years with which we are concerned are 1963-64 to1966-67. The orders of reassessment for these years (exhibits P3 to P6) areall dated 31st January, 1975. The orders of assessment of the Sales TaxOfficer for these years are dated 6th January, 1968, and 10th January, 1968.There was an appeal against these orders of assessment to the AppellateAssistant Commissioner, who, by exhibit P1 order dated 4th August, 1969, setaside the assessment orders and directed the Sales Tax Officer to make a freshassessment in accordance with law and with the appellate order passed by thatauthority. In pursuance of this direction, exhibit P2 notice dated 4th July,1974, was issued, which resulted in the impugned orders exhibits P3 to P6.
3. Section 19 of the General Sales Tax Act, 1963, in so far as it ismaterial, reads:
19. Assessment of escaped turnover.--(1)Where for any reason the whole or any part of the turnover of business of adealer has escaped assessment to tax in any year or has been under-assessed orhas been assessed at a rate lower than the rate at which it is assessable, orany deduction has been wrongly made therefrom, the assessing authority may, atany time within four years from the expiry of the year to which the taxrelates, proceed to determine to the best of its judgment the turnover whichhas escaped assessment to tax or has been under-assessed or has been assessedat a rate lower than the rate at which it is assessable or the deduction thathas been wrongly made and assess the tax payable on such turnover afterissuing a notice on the dealer and after making such enquiry as it mayconsider necessary:
Provided that before making anassessment under this sub-section the dealer shall be given a reasonableopportunity of being heard...
It will benoticed that, on the language of the section itself, the bar of four yearsoperates only to 'proceed to determine the turnover' and not to the actualdetermination thereof. That is to say, once there has been a commencement ofthe proceedings for determining the turnover, a continuation thereof would notbe hit by the bar of limitation prescribed by the section. We are also of theview that, once the assessment proceedings have been carried up in appeal tothe appellate authority and remanded back to the Sales Tax Officer for freshassessment, the resultant proceedings are only a continuation of thoseoriginally started, and not a recommencement of fresh proceedings. Indeed,once the assessment proceedings are started, they run their course to theirfinal termination by way of appeal, revision or otherwise.
4. Thisposition has been now well-settled by the judicial decisions. In Sales TaxOfficer v. Sudarsanam Iyengar & Sons 1969 K.L.T. 783 at 785 the Supreme Courtwas dealing with Rule 33 of the Rules framed under the Kerala General SalesTax Act, 1125 M.E. After quoting the rule, the Supreme Court observed:
Now in view of the previous decisions the principle is firmlyestablished that the assessment proceedings under the Sales Tax Act must beheld to be pending from the time the proceedings are initiated until they areterminated by a final order of assessment. The distinguishing feature onwhich emphasis has been laid by the counsel for the respondent is that thelanguage employed in Rule 33 is such as to lead to only one conclusion thatthe final determination of the turnover which has escaped assessment and theassessment of the tax have to be done within three years. It is pointedout that in the other sales tax provisions which came up for consideration inthe cases mentioned above the words employed were 'proceed to assess', e. g.,Sub-sections (4) and (5) of Section 11 of the Punjab General Sales Tax Act.Our attention has been invited to the appropriate dictionary meaning of theword 'determine', which is 'to settle or decide'--to come to a judicialdecision (Shorter Oxford English Dictionary). It is suggested that the word'determine' was employed in Rule 33 with a definite intention to set thelimit within which the final order in the matter of assessment should be made,the limit being three years. We find it difficult to accept that in thecontext of sales tax legislation the use of the words 'proceed to assess' and'determine' would lead to different consequences or results. In thisconnection the words which follow the word 'determine' in Rule 33 must beaccorded their due signification. The words 'assess the tax payable' cannotbe ignored and it is clearly meant that the assessment has to be made withinthe period prescribed. Assessment is a comprehensive word and can denote theentirety of proceedings which are taken with regard to it. It cannot anddoes not mean a final order of assessment alone unless there is something inthe context of a particular provision which compels such a meaning beingattributed to it. In our judgment despite the phraseology employed in Rule33 the principle which has been laid in other cases relating to analogousprovisions in sales tax statute must be followed as otherwise the purpose of aprovision like Rule 33 can be completely defeated by taking certain collateralproceedings and obtaining a stay order as was done in the present case or byunduly delaying assessment proceedings beyond a period of threeyears.
In I.T.R. No. 68 of 1976, this Division Bench hadoccasion to point out that the period of limitation cannot be imported intoproceedings for assessment carried out in pursuance of an order of remanddirected by the appellate authority. This Court referred to Commissioner ofAgricultural Income-tax v. L. Kochuvareed [1976] 103 I.T.R. 799 (S.C.)reversing the decision of this Court in Smt. Lucy Kochuvareed v. Commissionerof Agricultural Income-tax [1971] 82 I.T.R. 845 (F.B.). This Court alsoreferred to the decision of the Supreme Court in Ghanshyamdas v. RegionalAssistant Commissioner of Sales Tax [1963] 14 S.T.C. 976 (S.C.) to the effectthat there can be no escapement of income so long as assessment proceedingsare pending; and to the decision, again of the Supreme Court, in AdditionalAssistant Commissioner of Sales Tax v. Firm Jagmohandas Vijay Kumar [1970] 25S.T.C. 74 at 77 (S.C.) that proceedings by way of fresh assessment inpursuance of an order of remand in appeal are only a continuation of theoriginal proceedings.
5. The learned Judge had placed reliance onthe decision in Mathai v. State of Kerala [1964] 15 S.T.C. 710. The decisionwas reviewed, and the reviewed judgment is reported in Deputy Commissioner ofAgricultural Income-tax and Sales Tax v. Mathai [1966] 18 S.T.C. 443. In thelight of the Supreme Court's pronouncement in Sudarsanam Iyengar's case, 1969K.L.T. 783 the principle of the decision can no longer be sustained. On theactual facts, it would be noticed that the first notice for reassessment wasitself beyond the period provided by Rule 33(1) of the General Sales TaxRules. The decision has therefore no application.
6. Counsel forthe respondent-assessee placed strong reliance on the decision of the SupremeCourt in Jaipuria Brothers Ltd. v. State of U.P., A.I.R. 1965 S.C. 1213 at1216. If the facts of the case are properly understood, there should be nodispute in appreciating the actual decision or the principle involved. Inthat case, the Sales Tax Officer issued a notice on 23rd July, 1955, for thepurpose of assessment for the year 1948-49. The assessee contended that, asthe original assessment under Section 21 of the U.P. Sales Tax Act had beenset aside by the Judge (Revisions), Sales Tax, no proceeding in connectionwith that assessment was pending, and reassessment was barred, as more thanthree years had elapsed since the end of the year of assessment. TheDivision Bench of the High Court ultimately took the view that the Sales TaxOfficer was competent to revise the order in view of the order of remand whichdirected the officer to make a fresh assessment against the assessee. TheHigh Court was of the view that the Sales Tax Officer was bound to comply withthis direction of the appellate authority, and that assessment proceedingscarried out in pursuance of such a direction from the appellate authoritycould not be governed by the period of limitation prescribed by Section 21 ofthe Act. It is pertinent to notice that Section 21 of the Act, as it stoodat the relevant time, as quoted in the judgment, read as follows:
Where the whole or any part of the turnover of a dealer has, forany reason, escaped assessment to tax in any year, the assessing authoritymay, at any time within three years from the expiry of such year, and afterissuing notice to the dealer and making such enquiry as may be necessary,assess the tax payable on such turnover.
On appeal, the Supreme Court was of the view that the view taken by theHigh Court could not be sustained. It was pointed out that the bar imposedunder the section was a period of three years from the expiry of the relevantyears for assessment mentioned in the section, and the said period wasunrelated to the question as to whether the order of assessment was anoriginal order or one falling within the language and the scope of an order ofremand from the appellate authority. At the same time, the court noticed that,by the time the order was made, Section 21 had been amended, and the amendmenthad retrospective operation. The portion of the amended section, which ismaterial for our purpose, is as follows:
21. (2) No orderof assessment under Sub-section (1) or under any other provision of this Actshall be made for any assessment year after the expiry of four years from theend of such year:
Provided that where the notice underSub-section (1) has been served within such four years the assessment orreassessment to be made in pursuance of such notice may be made within oneyear of the date of the service of the notice even if the period of four yearsis thereby exceeded:
Provided further that nothingcontained in this section limiting the time within which any assessment orreassessment may be made, shall apply to an assessment or reassessment made inconsequence of, or to give effect to, any finding or direction contained in anorder under Section 9, 10 or 11.
Explanation.--...
It was observed by the Supreme Court:
Thelegislature has given a clear retrospective operation to the amended sectionas from the date on which the principal Act came into operation, andcorrectness of the order of the Sales Tax Officer holding that there was nobar of limitation to the making of a fresh assessment pursuant to the order ofthe appellate or revising authority had to be adjudged in the light of Section21 as amended by Act 19 of 1956. The words used by the legislature are preciseand admit of only one interpretation that proceedings taken for assessment orreassessment in consequence of, or to give effect to, an order of theappellate or revising authority or an order passed by the High Court underSection 11 may be taken notwithstanding the expiry of the period prescribed bySub-section (2) of Section 21.
The decision is, therefore,quite understandable in the light of the statutory provisions dealt with andconsidered, but is of no assistance to the counsel for the assessee.
7.We would also refer to the decision of a Division Bench of this Court in TirurMedical Stores v. State of Kerala, I.L.R. [1978] 2 Ker. 24. That decisionreferred to the Sudarsanam Iyengar's case [1970] 25 S.T.C. 252 (S.C.) andpointed out:
Once proceedings have commenced within the timestipulated--which in the present case is not disputed--the proceedings canvalidly continue until a final order is made. The fact that the final orderwas made after the expiry of the period of limitation does not affect thevalidity of that order if the proceedings which culminated in the final ordercommenced within the 4-year period. That this is the correct position can nolonger be in dispute in view of the observations of the Supreme Court in SalesTax Officer, Special Circle, Ernakulam v. Sudarsanam Iyengar & Sons [1970] 25S.T.C. 252 (S.C.). That case related to Rule 33 of the Travancore-CochinGeneral Sales Tax Rules, 1950, which was as follows:
'Rule33. (1) If for any reason the whole or any part of the turnover of business ofa dealer or licensee has escaped assessment to tax in any year or if thelicence fee has escaped levy in any year, the assessing authority or licensingauthority, as the case may be, subject to the provisions of Sub-rule (2) mayat any time within three years next succeeding that to which the tax orlicence fee relates determine to the best of his judgment the turnover whichhas escaped assessment and assess the tax payable or levy the licence fee insuch turnover after issuing a notice to the dealer or licensee and aftermaking such enquiry as he considers necessary.
(2)...'
The SupremeCourt in that case rejected the contention of the assessee that State ofPunjab v. Murlidhar Mahabir Parshad [1968] 21 S.T.C. 29 (S.C.). Ghanshyamdasv. Regional Assistant Commissioner of Sales Tax, Nagpur [1963] 14 S.T.C. 976(S.C.) and State of Punjab v. Tara Chand Lajpat Rai [1967] 19 S.T.C. 493(S.C.) which were cited for the department, had no application to theinterpretation of Rule 33(1), as the relevant enactments in those cases usedthe expression 'proceed to assess', whereas Rule 33(1) used the expression'assess' and not 'proceed to assess'. It was contended by the assessee inSales Tax Officer v. Sudarsanam Iyengar & Sons [1970] 25 S.T.C. 252 (S.C.)that the expression 'proceed to assess' was not the same as 'assess' and,therefore, unlike in the cases cited for the department, the assessment underRule 33(1) had to be completed within the period of limitation. Thiscontention was totally rejected by the Supreme Court. The court said that theexpression 'assessment' was comprehensive enough to denote the entirety of theproceedings taken in respect of it. The ambit of that expression could not belimited to a final order of assessment. (para 5)
8. We are of the opinion that, in the light of the decisionsto which we have referred, the view taken by the learned Judge cannot besustained. We allow this writ appeal and set aside the judgment of the learnedJudge and direct that O.P. No. 4526 of 1975 will stand dismissed with no orderas to costs.