PETITIONER:
MODI SUGAR MILLS LTD.
Vs.
RESPONDENT:
COMMISSIONER OF SALES TAX, U.P., LUCKNOW
DATE OF JUDGMENT:
16/11/1965
BENCH:
SIKRI, S.M.
BENCH:
SIKRI, S.M.
SUBBARAO, K.
SHAH, J.C.
CITATION:
1966 AIR 841 1966 SCR (2) 607
ACT:
U.P. Sales Tax Act, (15 of 1948), s. 7 and U.P. Sales
Tax Rules, rr. 39 and 40--Submission of returns on basis of
previous year--Election to submit turnover of assessment
year--Sanction of commissioner if necessary.
HEADNOTE:
For the assessment years 1948-49, 1949-50 and 1950-51,
the appellant was assessed on the-basis of returns filed for
the turnover of each relevant previous year. For the
assessment year 1951-52, the appellant, purporting to make
an election under r. 39(1) of the U.P. Sales Tax Rules,
filed returns of his turnover of the assessment year instead
of the previous year. The Judge (Revision) Sales Tax held
that without the sanction of the Sales Tax Commissioner
under r. 39(2), the appellant was not entitled to do so, and
the High Court also, on a reference, held against the
appellant.
In appeal to this Court,
HELD : The answer of the High Court should have been
in favour of the appellant. [610 HI
Under r. 39(1), the dealer makes a choice that he
will be assessed in respect of the turnover not of the
previous year, which is the normal position under s. 7, but
in respect of the turnover of the assessment year. Rule
39(2), requiring the sanction of the Sales Tax Commissioner
covers only the, case where such election has been made
under r. 39(1), that is, where the election has been made by
a dealer to be assessed in respect of the turnover of the
assessment year, and the dealer wishes to exercise a fresh
option. Even assuming that, when a dealer submits a return
in respect of the previous year under r. 40 be is treated to
have elected within that rule, yet, there is no provision
like r. 39 (2) which debars him from exercising the option
under r. 39(1). In the absence of an express provision like
r. 39(2), general principles cannot debar an assessee from
exercising a statutory right given to him. [611 A-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 535 of
1964.
Appeal by special leave from the judgment and order
dated July 25, 1961 of the Allahabad High Court in Sales Tax
Reference No. 460 of 1954.
A. V. Viswanatha Sastri and K. K. Jain for appellant.
C. B. Agarwala and 0. P. Rana, for respondent.
The Judgment of the Court was delivered by
Sikri, J. This appeal by special leave is directed
against the judgment of the High Court of Judicature at
Allahabad passed
608
in a reference made to it under s. II of the U.P. Sales Tax
Act, 1948 (U.P. Act XV of 1948)-hereinafter referred to as
the Act. In this reference the following question was
referred by the Judge (Revision), Sales Tax at the instance
of the appellant,Modi Sugar Mills Ltd., hereinafter called
the assessee:
“Whether a dealer who has been assessed
to tax on the turnover of the previous year
according to his election can change his
option and elect the assessment year by filing
quarterly returns without the previous
sanction of Sales Tax Commissioner
The High Court answered the question in the negative.
The answer to this question depends upon the
interpretation of S. 7(1) of the Act, and rr. 39, 40 and 41
of the U.P. Sales Tax Rules, and form IV prescribed under
these rules. These provisions are as under:
“S. 7-(1). 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 Provincial Government
may prescribe that any dealer or class of
dealers may submit, in lieu of the return or
returns specified in this section, a return or
returns of his turnover of the assessment year
at such intervals, in such form and verified
in such manner as may be prescribed, and
thereupon all the provisions of this Act shall
apply as if such return or returns had been
duly submitted under this Section.
Provided further that the assessing
authority may in his discretion extend the
date of the submission of the return by any
person or class of persons.
Rule 39 : Election of Assesment year.
(1) Any dealer may elect to submit returns of
his turnover of the assessment year in lieu of
the returns of the turnover of the previous
year, and shall signify such election in the
return filed by him in Form IV.
609
Provided that a dealer who did not carry on business
during the whole of the previous year shall elect to submit
his returns of the assessment year.
(2) A dealer who has once signified his election under
sub-rule (1) shall not again exercise his option so as to
vary the basis of assessment
Provided that the Sales Tax Commissioner may, for
reasons to be recorded in writing and on such conditions as
he deems fit permit a dealer to exercise a fresh option.
Rule 40. Submission of returns
Every dealer who elects to submit return of his
previous year shall, within sixty days of the commencement
of the assessment year, submit to the Sales Tax Officer a
return in Form IV showing his turnover for the previous year
Provided that no dealer whose turnover in the
previous year was less than Rs. 15,000 shall be required to
furnish such returns.
Rule 41. Returns of assessment year. (1) Every
dealer whose estimated turnover during the assessment year
is not less than Rs. 15,000 and who elects to submit returns
of such year shall before the last day of July, October,
January and April submit to the Sales Tax Officer, a return
of his gross turnover for the quarters ending June 30,
September 30, December 31 and March 31, respectively, in
Form IV
Provided that every dealer or firm, to whom the pro-
visions of sub-section (3) of Section 18 are applicable
shall submit such returns within seven days of the expiry of
each month during the year in which the business is
commenced.”
Before we deal with the interpretation of the
section and the rules it is necessary to give a few relevant
facts. It appears that for the assessment year 1948-49,
1949-50 and 1950-51, the assessee was assessed on the basis
of returns filled for the turnover of the previous year relev
ant to each of these assessment years. For the
assessment year 1951-52, however, the assessee purporting to
make an election under r. 39 of the rules filed returns of
his turnover of the assessment year instead of the returns
of the turn-
610
over of the previous year. The Judge (Revision) held that
without sanction of the Sales Tax Commissioner the assessee
was not entitled to do so.
Mr. Sastri, the learned counsel for the assessee,
submits that the above rules should be interpreted as
follows : Under sub-rule (1) of r. 39 the election is to Me
returns of the turnover of the assessment year instead of
returns of the turnover of the previous year and not vice
versa. Sub-rule (2) also deals with the same election,
i.e., the election to file returns of the turnover of the
assessment year instead of the turnover of the previous
year. Rule 40 does not displace the above reading of r. 39
because it covers the case of every dealer who wishes to
submit a return of the turnover of the previous year. There
is no other rule which deals with such a dealer, and he says
that the word ‘elects’ may perhaps have reference to the
election mentioned in form IV which we will presently
consider. At any rate, he says that sub-r. (2) of r. 39 has
nothing to do with the election mentioned in r. 40. He then
submits that r. 41 is concerned with the dealer who has
elected under r. 39(1) to submit returns of the turnover of
the assessment year and this rule provides various matters
in this connection.
The learned counsel for the State, Mr. C. B. aggarwala,
on the other hand, contends that S. 7 of the Act, read with
the rules, gives a dealer an option to file returns in
respect of the turnover of the previous year or returns of
the turnover of the assessment year, and he says that this
option is and can only be exercised in the first year when a
dealer becomes taxable under the Act, and it is this option
or election that is covered by sub-rule (2) of r. 39. He
relies strongly on form IV in which the following lines
occur
“I have elected to submit return of my
turnover of the previous year ending/month or
months of the assessment year”.
In the alternative he contends that even if r. 3 9 (2) does
not cover the filing of the returns of the previous year,
according to general principles the assessee having
exercised an option to be assessed in respect of the
turnover of the previous year cannot now change the basis of
assessment.
In our opinion the Judge (Revision) was in error in holding
that the assessee was not entitled to make an election under
r. 39 (1) without the sanction of the Sales Tax
Commissioner, and the answer to the question referred to the
High Court should be in favour of the assessee. Rule 39(2)
specifically mentions an elec-
611
tion under sub-r. (1) and there is only one kind of election
under r. 39(1) and that is for a dealer to elect to submit
returns of his, turnover for the assessment year in lieu of
the returns of the turnover of the previous year. In other
words, under r. 39(1) the, dealer makes a choice that he
will be assessed in respect of the turnover not of the
previous year, which is normally the rule under s. 7, but in
respect of the return of the turnover of the assessment
year. It seems to us that r. 39(2) covers only the case
where: election has been made by a dealer to be assessed in
respect of the turnover of the assessment year. It is true
that r. 40 also uses the word ‘elects’ but this may have
reference to the lines in form IV which we have already
reproduced above. But assuming that when a dealer submits a
return in respect of the previous year under r. 40 and he is
treated to have elected within r. 40, yet there is no
provision like r. 39(2) which debars him from exercising the
option under r. 39(1). In our opinion an express provision
like r. 39(2) was necessary to prevent a dealer from
exercising the option given to him under r. 39(1). We do
not express any opinion whether such a rule could validly be
made under s. 7 (1). We are not impressed by the argument of
Mr. Aggarwal that general principles debar the assessee from
exercising the option under r. 39 (1). It is a statutory
right given to the assessee and the general principles, if
applicable, cannot displace- the statutory right..
We may mention that the reasoning in the judgment under
appeal has been doubted in an unreported judgment of the
Allahabad High Court in M/s Mahesh Company Kahoo Kothi
Kanpur v.The Commissioner of Sales Tax, Uttar Pradesh(1).
In the result we accept the appeal, and answer the
question.referred to the High Court in the affirmative. The
appellant will have his costs here and in the High Court.
Appeal allowed..
(1) Sales Tax Reference No. 1623 of 1956; judgment delivered
on March 13, 1963
612