Kotval, J.:— The petitioners Messrs Ramkrishna Ramnath Bidi Merchants of Kamptee carry on the business of manufacture and sale of bidis, with their head office at Kamptee and branch offices at several other places such as Tumsar, Gondia, Bhandara, Tiroda, Nagpur, Akola and other places in Vidarbha. The petitioners are registered dealers under s. 8 of the Central Provinces and Berar Sales Tax Act, 1947 (XXI of 1947), hereinafter referred to as the Act. As registered dealers, the petitioners were making quarterly returns under s. 10 of the Act. For the period from November 7, 1953, to October 26, 1954, they had similarly made their returns. It is now not in dispute that these returns were not made upon the due dates under the Act but were delayed by some days. The respective dates on which the returns were due and were actually filed are shown in a tabular statement below:—
Return for the period ending.
Due date
Date of actual filing.
3-2-1954
3-4-1954
20-4-1954
2-5-1954
2-7-1954
27-3-1955
29-7-1954
29-9-1954
31-12-1954
26-10-1954
26-12-1954
27-3-1955
2. On November 11, 1957, the Assistant Commissioner of Sales Tax, Eastern Division, Nagpur, issued a notice against the petitioners. The notice was in form XII as prescribed by rule 32 of the Central Provinces and Berar Sales Tax Rules, 1947. By this notice, the petitioners were called upon to show cause why they should not be assessed and/or why a penalty should not be imposed upon them. The notice, it is not disputed, was issued under s. 10(3) read with s. 11(4)(a) of the Act though several other sections are mentioned at the top of the form.
3. The petitioners took objection to the issue of this notice and one of the grounds which they raised was that the notice had been issued beyond the period of three years from the date of the assessment of the petitioners for the said period. Thereafter, the proceedings before the Assistant Commissioner were stayed due to certain other proceedings pending in the High Court of Judicature at Nagpur and later on in the High Court of Bombay and because of the latter proceedings, the objection could not be disposed of. On June 7, 1958, however, the Assistant Commissioner of Sales Tax, Eastern Division, before whom the proceedings were pending, transferred the case to the Sales Tax Officer, Circle No. 2, Nagpur, respondent No. 1 before us. Thereafter, respondent No. 1 issued on December 27, 1958, a fresh notice in form XII under r. 32 of the Sales Tax Rules, against the petitioners. The petition is directed against the said notices dated November 11, 1957, and December 27, 1958, and the petitioners pray in the first instance that writs of prohibition or certiorari should be issued to quash the two notices referred to above. They also claim a writ of prohibition against respondent No. 1 prohibiting him from continuing the assessment proceedings pursuant to the second notice. The sheet-anchor of the special civil application is the decision of this Court in Bisesar House v. State of Bombay.1 In that case, the petitioner had made a return for the years from July 1, 1951, to June 30, 1954, and had paid the tax in accordance with the return. On December 31, 1956, notices were issued under s. 11(2) of the Act and were served upon the petitioner in that case so far as the first year was concerned, on January 4, 1957, and so far as the second year was concerned, on January 8, 1957. It was contended that the Sales Tax Authorities had no jurisdiction to issue these notices because having regard to the scheme of the Act, and particularly to the provisions of s. 11-A thereof, a notice under s. 11(2) could not be issued beyond three calendar years from the date of assessment of the petitioner. The Full Bench relied upon a previous decision of this Court in Comr. I.T v. Narsee Nagsee & Co. . 1956 58 Bom. L.R 950. and held that the notices were bad and that no such notices could be issued beyond three years from the date of the initial assessment. In the Bisesar House case, the Full Bench was impressed by one consideration and it was that if such a period of limitation were not imported into s. 11(2), the effect would be anomalous. The Full Bench held that whereas under s. 11-A the Legislature expressly limited the period of time during which the income which has been under-assessed, or escaped assessment or had been assessed at a lower rate could be assessed, still so far as the initial assessment under s. 11(2) is concerned, there would be no period of limitation whatsoever. This would lead to anomalous results. The learned Chief Justice who delivered the judgment on behalf of the Full Bench observed (p. 1400):
“…The peril to which we referred in the case of Narsee Nagsee and which we said it was our duty to save the assessee from, does not exist in this case. An order of assessment made under s. 11 at any time cannot possibly prejudice the assessee in any sense whatsoever. That order would not make him liable to pay any additional tax. That order will not put any further liability upon him. It would be merely a formal acceptance by the authority of the tax which the assessee has already paid, and there is no reason why in construing s. 11(1) we should import into it the period of limitation which the Legislature has incorporated in s. 11-A. The compelling necessity which drove us to do it in Narsee Nagsee's case does not exist. But the position is different with regard to s. 11(2). Section 11(2) is in the substantial sense an initiation of fresh proceedings by the Commissioner. It is open to the Commissioner to be satisfied with what the assessee has done and pass an order under s. 11(1). But if he is not satisfied, then he initiates fresh proceedings under s. 11(2) by issuing a notice. That undoubtedly is putting the assessee to the peril of the apprehension that as a result of the notice his tax might be enhanced. If the principle we have laid down in Narsee Nagsee's case is correct, then that principle would undoubtedly apply to the issuing of a notice under s. 11(2).”
4. Accordingly, the Full Bench held that if a case arises for the issue of a notice under s. 11(2) then it is clear that notice must be issued within three years, because if the notice is issued after three years, it would infringe the provisions of s. 11-A, because the Commissioner would be doing indirectly, if not directly, what the law prohibits him from doing, namely, to bring to assessment an escaped turnover which he could not do beyond the period of three years.
5. The decision of the Full Bench is binding upon us and obviously there is no question of considering whether it was rightly or wrongly decided. The present notices, however, are not notices under s. 11(2) as in the Bisesar House case. They are, as we have pointed out, notices issued under the provisions of s. 10(5) read with s. 11(4)(a). The form XII suggests that the notice to be issued under it can be under a variety of sections, but in the form in which the notice was served in the instant case it is obvious that all that the petitioners were called upon to do was “to show cause on or before 22-11-1951 why you should not be assessed and/or why a penalty should not be imposed upon you”. Obviously then the notices intended were under s. 10(5) read with s. 11(4)(a). This was also not disputed before us.
6. The relevant portions of these sections run as follows:—
“10. (3) If a dealer fails to comply with the requirements of a notice issued under sub-section (1) or a registered dealer fails to furnish his return for any period within the prescribed time to the prescribed authority without any sufficient cause, the Commissioner may, after giving such dealer a reasonable opportunity of being heard, direct him to pay, by way of penalty, a sum not exceeding one-fourth of the amount of the tax which may be assessed on him under section 11.”
“11. (4)(a). If a registered dealer—…
(a) does not furnish returns in respect of any period by the prescribed date,…
the Commissioner shall in the prescribed manner assess the dealer to the best of his judgment.”
7. Now, the contention of Mr. Phadke on behalf of the petitioners has been that if upon the ratio decidendi of the Full Bench case the Sales Tax Authorities could not take action under s. 11(2) to initiate fresh proceedings for purposes of assessment beyond three years, then with stronger reason could they not issue a notice under s. 10(5) upon failure to comply with the requirements of a notice under s. 10(1), or upon failure to furnish a return within the time prescribed, in order either to penalize the petitioners or to arrive at a best judgment assessment as required by s. 11(4)(a).
8. In support of his contention, Mr. Phadke has also referred to some decisions given by me in the Nagpur High Court. They are Ghanshyamdas Chhotalal v. P.N Trivedi and Firm of Ramkrishna Ramnath v. Assistant Commissioner of Sales Tax, Nagpur . 1956 Miscellaneous Petitions Nos. 437 of 1954 and 381 of 1955, decided by Kotval, J., on September 27, 1956 Unrep.., Daulatrao Narayanji Pawar v. B.D Deshpande . 1956 Miscellaneous Petition No. 285 of 1955, decided by Kotval, J., on September 27, 1956 Unrep.. and Ghanshyamdas Chhotalal v. P.N Trivedi . 1956 Miscellaneous Petition No. 12 of 1955, decided by Kotval, J., on September 24, 1956 Unrep... The principle decision in that set of cases was contained in my order in Daulatrao Narayanji Pawar v. B.D Deshpande. In the case last mentioned I was concerned with s. 11(5) of the Act. Under that section the Commissioner is empowered within three calendar years from the date on which the assessee was bound to apply for registration, to come to a best judgment assessment after giving the assessee a reasonable opportunity of being heard. Following an earlier Division Bench case in Firm Sheonarayan Matadin v. Sales Tax Officer, Nagpur,6 I held that under the section an assessment cannot be made for any period which expired three years prior to the date of the notice in form XII. Of the above cases Miscellaneous Petitions Nos. 12 of 1955 and 437 of 1954 were, in view of the States Reorganization Act, transferred to the Madhya Pradesh High Court, and in Regional Assistant Commissioner of Sales Tax, Nagpur v. Ghanshyamdas Chhotalal . [1958] M.P.L.J 140, S.C [1958] A.I.R M.P 148., a Division Bench of the Madhya Pradesh High Court reversed my decision in M.P 12 of 1955 and held that the period of limitation therein of three years cannot be imported into the construction of s. 11(5) of the Act.
9. On the other hand, my decisions in Miscellaneous Petitions Nos. 285 of 1955 and 381 of 1955 were transferred to this Court under a certificate under s. 59 of the States Reorganization Act. In Assistant Commissioner of Sales Tax, Nagpur v. Firm Ramkrishna Ramnath . 1959 Letters Patent Appeals Nos. 209 of 1956 and 210 of 1956, decided by Datar and Naik, JJ., on March 5, 1959 Unrep.., a Division Bench of this Court confirmed the view I had taken in view of the Full Bench decision in the Bisesar House case which by then had come to be decided. It is further to be noted that the Full Bench also considered the case in Regional Assistant Commissioner v. Ghanshyamdas, and the Full Bench dissented from that view and thus confirmed the view I had taken in M.P No. 12 of 1955. As a result of all these decisions, then two points are clear (1) that no action can be taken by the Sales Tax Authorities under s. 11(5) or s. 11(2) unless it is taken within three years from the date of the notice issued, and (2) that the authority of the Bisesar House case stands unchallenged so far as this Court is concerned, and we are, with all respect, bound to follow it.
10. Mr. Phadke invoked the principle of the decision of the Full Bench case in the present case also. We have already indicated that the proceedings taken in the instant case, however, are not under s. 11(2) but under the provisions of ss. 10(3) and 11(4)(a). It seems to us that there is a fundamental difference between the nature of the proceedings to be taken under these provisions of the Act and the proceedings to be taken under s. 11(2). We have already reproduced a passage from the Full Bench judgment to show that the ground on which the Full Bench took the view in that case was that the proceedings under s. 11(2) were in a “substantial sense the initiation of fresh proceedings” and that, therefore, fresh proceedings i.e for assessment for the first time could not be taken beyond three years after the assessee had made his return and paid the tax, especially when the Legislature expressly prohibited escaped income from being taxed after three years. In our opinion, however, the proceedings to be taken under s. 10(5) or s. 11(4)(a) cannot possibly partake of this nature.
11. The proceedings under s. 10(5) are obviously proceedings for the purpose of levying a penalty upon the dealer for failing to register or for failing to comply with the requirements of a notice under s. 10(1). Penal proceedings of this nature can, in our opinion, never be approximated to proceedings initiated for the first time for purposes of assessment. There is a palpable and recognisable distinction between a proceeding initiated by a taxing authority for collecting revenue on behalf of the public exchequer and one commenced for penalizing a person for failing to comply with some step which he was bound in law to take in an attempt to assess him. The proceedings under s. 10(3) are proceedings which, in our opinion, fall in the latter category.
12. Turning next to the provisions of s. 11(4)(a) also, it seems to us that the section provides a similar procedure. It provides that if a registered dealer does not furnish returns in respect of any period by the prescribed date, the Commissioner shall in the prescribed manner assess the dealer to the best of his judgment. Now, a best judgment assessment is no doubt founded upon a judicial exercise of judgment; nevertheless, it is not a judgment reached under formal procedure after taking evidence but is more or less a summary assessment; and the reason why the law thus permits recovery of tax by a summary assessment is that the assessee has failed to comply with a notice or with some requirement of the law and that, therefore, he may be penalized by the forfeiture of his right to a regular and considered assessment. The proceedings are taken “in terrorem” and the dealer is penalized by a “best judgment” assessment in default of compliance under s. 11(4)(a). Thus, the proceedings under both the provisions of law are analogous to proceedings for the purpose of imposing a penalty, and that, in our opinion, is the crucial point of distinction between the proceedings in the present case and the proceedings with which the Full Bench was concerned.
13. We do not think that we can import, therefore, the same considerations which prevailed with the Full Bench, into the present case. We do not think that the provisions of s. 11-A are attracted nor can they be used by way of analogy in the present case, because admittedly here we are not dealing with a case of initial proceeding with a view to assessment but we are dealing with a case where the petitioners are being proceeded with by way of a penalty for having committed a default.
14. The principles governing the interpretation of a taxing statute like the Sales Tax Act are now settled and here we cannot do better than reproduce the remarks of Viscount Simon, L.C in the Canadian Eagle Oil Co., Ld. v. The King . [1946] A.C 119. as governing the principle in cases of this kind (p. 140):
“…In the words of the late Rowlatt, J., whose outstanding knowledge of this subject was coupled with a happy conciseness of phrase, ‘in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.’ (Cape Brandy Syndicate v. Inland Revenue Commissioners9a).”
15. So viewed, we have no doubt that in the present enactments the Legislature intended to lay down a period of limitation in certain specific cases only and by contrast did not provide for any period of limitation in other cases. In the Sales Tax Act there is no period of limitation laid down within which proceedings under s. 10(3) or s. 11(4)(a) should be taken and the ratio decidendi being different we cannot extend to the present case the principle laid down in the Full Bench case or in the cases which were concerned with the interpretation of s. 11(5) as we shall presently show.
16. We, therefore, turn to the reference made by Mr. Phadke to s. 11(5) of the Act and to my decision in Miscellaneous Petition No. 381 of 1955 which, as we have said, was affirmed by a Division Bench of this Court in Assistant Commissioner of Sales Tax v. Firm Ramkrishna Ramnath. In that case I had no doubt taken the view that a three-year-period commencing from the date of notice was prescribed for proceedings under s. 11(5). It may also be argued that s. 11(5) also is concerned with a best judgment assessment, and yet a period of limitation was read into it but it may be pointed out that in s. 11(5) itself a period of limitation is mentioned and the only question that arose for decision in all the cases we have mentioned above in which that section fell to be construed was what was the meaning of the words “from the expiry of such period” in that section and whether the Commissioner should act within three years from the date when he first took action or within three years from the date of notice in Form XII. If the provisions of any other section had been invoked by way of analogy, such as s. 11-A as in the instant case, we have no doubt that the distinction between the two kinds of proceedings would have been pointed out as we have done above. In Sheonarayan Matadin's case as well as in all the other cases concerning s. 11(5) the decisions turned upon the plain construction of the section itself and not upon the applicability or analogy of any other section as is here claimed. There was certainly no reference made in those cases to s. 11A of the Act. In the present case the argument is that by analogy the period of limitation in s. 11-A should be read into s. 10(3) read with s. 11(4)(a).
17. In view of what we have said above, we are of opinion that the principle of the Full Bench case is inapplicable to the facts of the present case.
18. This was the only ground upon which the notices in the instant case were challenged. The application, therefore, fails and is dismissed with costs.
19. Application dismissed.