988
A TAX OFFICER.CUM-REGIONAL TRANSPORT OFFICER
& ORS.
_v._
DURG TRANSPORT COMPANY (PVT.) LTD. DURG
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_July_ 30, 1971
(K. S. HEGDE AND A. N: GROVER, JJ.)
_Madhya Pradesh Motor Vehicles (Taxation_ _of_ _Passe11gers)_ _Act._ 1959.
_ss._ _6,_ 7 and _8-A.sses.ree not_ _filing_ _return-Proceedings under_ _s._ 7 _have_ _to_
_be_ _taken within_ _one_ _year-Escaped_ _assessment,_ _meaning of._
Where an assessee liable to pay passenser tax under the Madhya
Pradesh Motor Vehicles (Taxation of Passenscrs) Act, 1959 submita no
return as required by s. _5_ nor niakes the required deposit under s. 6 the
assessec escapes assessment and proceedings under s. 7 will have to be taken
within the period of ono. year mentioned in s. 8. [99IAJ
When the liability to tax is evaded by one method or the other there
is au escaped assessment. The term escaped assessment includes both rtonassessment as well as under assessment. [9900)
Clv!L APPELLATE JURISDICTION : Civil Appeal No. 2289 of
1968.
Appeal from the judgment and order dated August 18, 1967
of the Madhya Pradesh High Court in Misc. Petition No. 640 of
E 1966.
_I._ _N._ _Shroff,_ for the appellants.
_M. N. Phadke,_ and _K. L. Hathi,_ for the respondent.
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The Judgment of the Court was delivered by
Heade, J.-This is an appeal by certificate arising from the
decision of the High Court of Madhya Pradesh in Miscellaneous
!'etition No. 640 of 1966 on its file. The asscsscc is a Transport
Operator. It was liable to pay passenger tax under Madhya Pra·
desh Motor Vehicles (Taxation of Passengers) Act, 1959-hcreinafter referred to as "the Act". It is said that it failed to pay the
tax due from it for the period from October 1, 1961 to May 6,
1962. Admittedly it submitted no return as required by section
5 of the Act, nor did it make the required deposit under section
6 of that Act. No action appears to have been taken against It
till November 6, 1963 on which date the Tax Officer issued to it
a notice under section 7 of the Act. Thereafter he proceeded to
assess it. The impugned assessment order was made on June 19,
1965. That order was challenged before the Madhya Pradesh
(ll.T.O.V. DUllG TRANSPOllT _Htgde,J.)_ 919
High Court by means of a writ petition under sections 226 and A
227 of the Constitution. The High Court accepted that petition
and quashed the impugned order.
The question before this Court is whether the order of the
High Court is sustainable. The only question that ca.Jls for deci·
sion in this appeal is whether the proceedinas initiated by the Tax
Officer by means of a notice under section 7 of the Act was B
beyond the time prescribed and therefore the proceedings taken
were not maintainable against !he assessee. In order to answer
this question, we shall read sections _5,_ 6, 7 and 8 of the Act.
_Section_ (5) _Submission_ _of returns.-(!)_ In respect of the stage
carriage or stage carries held by him, the operator shall deliver
or cause to be delivered to the Tax Officer or to such prescribed
officer as the Tax Officer may specify a return in the prescribed
form and manner, either daily or at such intervals as ma.y be
prescribed :
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Provided that different rules may be prescribed for the purpose of this sub-section in relation to fleet-owner from those in D
relation to other operators.
12) When any return is received by a prescribed officer he
shall forward it to the Tax Officer within the prescribed period
and in the prescribed manner.
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_Section_ (6) _Tax to be paid every month into Government Trea-_
_sury.-The_ tax payable during any month in accordance with the
returns submitted under section _5_ shall be paid into a Government
treasury by the operator and the receipt evidencing such payment
forwarded to the Tax Officer, on or before such date or dates of
the month immediately succeeding as may be prescribed in the
case of fleet-owners and othe(' operators.
Ji'
. _Section_ (7) _Procedure where no returns are submitted, etc.-ln_
the following cases, that is to say
(a) Where no returns have been submitted by the
operator in respect of any stage carriage for any month
or portion thereof; or .
lb) where the returns submitted by the operator in
respect of any stage carriage for any month or portion
thereof appear to the Tax Officer to be incorrect or in·
complete;
the Tax ~cer shall, after givi_ng th~ operator a responsible op.\)Ortunity, m case (a~ ~f makmg his represcntabon if any, and
m case (b) of estabhshing the correctness and completeness of
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9UO SUPREME COURT REPORTS (1971] SUPP. s.c.R.
A the returns submitted by him, determine the sum payable to the
.:.•.:e Government by ~he operator by way of tax during such
month or portion thereof :
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Provided that the sum so determined shall not exceed the
rna.ximum tax which would have been payable to the State Government if the stage carriage had carried its full complement of
passengers during such month or portion thereof.
_Section_ (8) _Fares_ _e<caping_ _assessment.-If,_ for any reason,
the whole or any portion of the tax leviable under thi.• Act, for
any month has escaped assessment, the Tax Officer may, at any
time within, but not beyond, one year from the expiry of that
month, assess the tax which has escaped assessment, after issuing
a notice to the operator and making such inquiry as the officer
may consider necessary.
It may be noted that the expression "escaped assessment"
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ha6 not been defined in the Act. Therefore we have to consider
whether an assessment that was not made as a result of the
assessee not submitting his return can be considered as an escaped
assessment. According ·to Mr. Shroff, learned counsel for die
State of Madhya Pradesh, "escaped assessment" means an amount
that had escaped from being included in the tax assessed. Accord
E ing to him no amount can be considered as "escaped assessment"
unless there has been an assessment anterior to the finding out of
the amount that had escaped from being included in the a~
ment made. He submitted that only such cases come within the
scope of section 8. Accordi.ng to his submission when a return
is not submitted as a consequence of which there was no assessment the tax thus evaded does not become escaped assessment. This contention does not appeal to us. In our opinion,
when the liability to pay tax is evaded by one method or other
there is an escapement of Msessment. The term "escaped
assessment" includes both non-assessment as well as underassessment. When a person is not assessed to tax though he is
liable to be taxed be escapes ~mcnt.
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We are unable to agree with Mr. Shroff that while the legisfature fixed one year time within whioli a re-assessment has to
be made it fixed no time limit for making the assessment. This
is a _prima_ _facie_ unacceptable argument. The provisions of the
Act are somewhat similar to the Madhya Bharat Sales Ta« Act,
1950. While considering the meaning to be given to the expression "escaped assessment" this Court in _Regional_ _Assistant_ _Corn·_
_missioner_ _of Siles_ _Tax,_ _Indore_ v. _Malwa_ _V anaspati_ & _Chemical_
R.T.O. _v._ DURG TRANSPORT _(Hegde._ J.) **991**
## Company Ltd.(') held that where a dealer has not tiled the pres- A
cribed return of his turnover at all, it would be a case of "escaped
assessment" and the proceedings for assessment must be com
menced in respect of that turnover within the period of three
years prescribed by s. 10. We are of the opinion that the ratio
. of decision apply to the facts in the present case. Reading sections
6 to 8 together, we come to the conclusion that the proceedings **B**
under section 7 or section 8 will ·have to be taken within the period
of one year mentioned in section 8.
For the. reasons mentioned above, this appeal fails and the
same is dismissed. Under the circumstances we make no order
.as to costs.
**.K.** **B.** **N.** _Appeal Dismissed._
**(1)** [1968) 2 S.C.R. 431.
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