JUDGMENT SACHCHIDANAND JHA, J. 1. Whether a dealer under the Bihar Finance Act, 1981 (in short, "the Act") is liable to file returns and can be subjected to assessment proceedings, etc., after closure of the business, is the precise question for consideration in this writ petition. 2. The facts of the case are brief and may shortly be stated as follows : The petitioner carried on business in foodgrains at its business premises at Upper Bazar in Ranchi town. For carrying on the business it got itself registered under the then Bihar Sales Tax Act, 1959 as well as Central Sales Tax Act, 1956. The case of the petitioner is that it closed its business with effect from March 31, 1982 after paying the admitted tax on the available stock as required under sub-section (4) of section 3 of the Act. Later, on December 27, 1982 it made an application for cancellation of the registration certificate. Earlier, it is said, for two consecutive year, i.e., 1980-81 and 1981-82, it had filed "nil" returns which were accepted and the petitioner's sales tax liability was assessed as nil. According to the petitioner, no information was sent to it regarding the aforesaid application for cancellation of the registration. On or about December 4, 1991 letter No. 3204 dated December 4, 1991 was served (copy is not on records of this case) in reply to which it submitted an application on January 9, 1992 in which it is stated that it had already closed its business which could be verified from the audited balance-sheet under the Companies Act, and thus was not required to pay the sales tax. Another notice was issued on October 13, 1992, presumably to file return for the first quarter of the year 1992-93, by the Deputy Commissioner of Commercial Taxes, Ranchi Eastern Circle. The petitioner appeared and reiterated its aforesaid stand. By order dated October 28, 1992 however penalty of Rs. 445 under section 16(8) of the Act was imposed for non-filing of the return for the first quarter of the period 1992-93 which was communicated in the form of demand notice on December 1, 1992, vide annexure 4. The petitioner received another demand notice for Rs. 7,500 on May 17, 1993 with respect to the assessment period 1984-85 vide annexure 6. The petitioner received another demand notice for Rs. 7,500 on May 17, 1993 with respect to the assessment period 1984-85 vide annexure 6. The petitioner came to learn that for the period 1983-84 also an ex parts assessment order had been passed on March 10, 1992. Copy of the said order, which he obtained later, is on the records of this case as annexure 7. It may be mentioned here that although the petitioner had not brought on record copy of the order dated January 29, 1993 leading to the aforesaid demand notice (annexure 6), the respondents have produced the same as annexure A to their counter-affidavit. From perusal of the said two orders dated March 10, 1992 and January 29, 1993 it would appear that for the periods in question, i.e., 1983-84 and 1984-85 the assessing officer made best judgment assessment under section 17(3) of the Act assessing gross turnover at Rs. 5 lacs and Rs. 1 lac and sales tax at 4 per cent at Rs. 20,000 and Rs. 4,000 respectively, besides penalty of Rs. 325 and Rs. 3,500 for late submission of the returns. The petitioner has challenged the validity of the said orders/notices contained in annexures 4, 6 and 7 to the writ petition. 3. Mr. R. K. Merathia, learned counsel for the petitioner, contended that the petitioner having filed application for cancellation of registration after two consecutive years of nil assessment, it was not obliged to file any return or to pay sales tax. 4. The respondents have filed counter-affidavit in which they have denied the petitioner's case of filing application for cancellation of registration. According to them, a dealer seeking to get his registration under section 14 of the Act cancelled is required to submit an application in form VII in the office of the concerned circle in which it has been registered. But in the present case no such application was filed. According to the respondents, until the registration under section 14 of the Act is cancelled, the concerned dealer is obliged not only to file returns but also to pay sales tax. The respondents have stated that as a matter of fact, even after the so-called closure of business and submission of the application for cancellation of registration, the petitioner continued to file returns regularly up to the year 1991-92. The respondents have stated that as a matter of fact, even after the so-called closure of business and submission of the application for cancellation of registration, the petitioner continued to file returns regularly up to the year 1991-92. Regarding the assessment made for the years 1983-84 and 1984-85 vide annexures 7 and 6, respectively, it is said that ex parts orders were passed as the petitioner failed to respond to the notice and the tax liability would have been barred by limitation. 5. Whether the petitioner filed any application for cancellation of registration in form VII or not is a disputed question of fact which cannot be resolved in this writ petition. I do not think it is necessary to go into that question either, in the facts of the case. It is not in dispute that for the assessment periods 1980-81 and 1981-82 the petitioner had filed "nil" returns and it had been assessed accordingly. The petitioner relying on the provisions of sub-sections (3) and (5) of section 3 of the Act contends that the liability to pay sales tax ceased after expiry of two consecutive assessment periods 1980-81 and 1981-82 during each of which its gross turnover did not exceed the "specified quantum" and therefore until the gross turnover during any period not exceeding 12 months thereafter exceeded the specified quantum, it cannot be held liable to either file return or pay the sales tax. 6. At this stage the provisions of section 3, so far as relevant, may be noticed as follows : "3. Charge of tax. (1) Subject to the provisions of this part, the sales tax or the purchase tax as the case may be, shall be paid by every dealer - (a) with effect from the date of commencement of the Bihar Finance Act, 1981 if his gross turnover during a period not exceeding twelve months immediately preceding the said date exceeded the specified quantum; (b) to whom clause (a) does not apply, with effect from the date immediately following the day on which his gross turnover during a period not exceeding twelve months immediately preceding such date first exceeded the specified quantum. Explanation. - In this section, the expression 'specified quantum' means - (i) to (iv) ...... : (v) in relation to any other dealer, Rs. 50,000; (vi) and (vii) ....... Explanation. - In this section, the expression 'specified quantum' means - (i) to (iv) ...... : (v) in relation to any other dealer, Rs. 50,000; (vi) and (vii) ....... : Provided that the State Government may, by notification published in the Official Gazette and subject to condition of one month's previous notice to increase or reduce the amount of specified quantum. (2) ......... (3) Every dealer who has become liable to pay tax under sub-section (1) shall, subject to sub-section (4), cease to be so liable for any period which follows the expiry of two consecutive years during each of which his gross turnover has failed to exceed the quantum specified in sub-section (1). (4) A registered dealer whose liability to pay sales tax has ceased under this part for any reason other than the entire transfer of his business to other persons, shall pay such tax on the stock of goods purchased by him after giving the declaration mentioned in the first proviso to clause (c) of sub-section (1) of section 21 and remaining unsold on the termination of his liability. (5) Every dealer whose liability to pay tax has ceased under sub-section (3) shall again be liable to pay such tax under clause (b) of Sub-section (1) with effect from the day following the date on which his gross turnover during a period not exceeding twelve months immediately preceding such date again exceed the quantum specified in the said clause. ............." 7. From the provisions of sub-section (1) of section 3 it would appear that every dealer is required to pay sales tax (or the purchase tax, as the case may be) where his gross turnover during the preceding 12 months period exceeds the specified quantum which, in the case of the present petitioner, was Rs. 50,000. Sub-section (3) grants exemption from payment of tax if his gross turnover does not exceed the specified quantum during two consecutive years. The exemption continues until the day the gross turnover exceeds the specified quantum during the preceding 12 months period. This, however, does not mean that he is exempted from the liability to file the return. Every dealer-whether his gross turnover exceeds or does not exceed the specified quantum during particular period-is required to file return. What sub-sections (3) and (5) provide is exemption from payment of tax. This, however, does not mean that he is exempted from the liability to file the return. Every dealer-whether his gross turnover exceeds or does not exceed the specified quantum during particular period-is required to file return. What sub-sections (3) and (5) provide is exemption from payment of tax. Thus even in cases where during the preceding two consecutive years the gross turnover of the dealer was lower than the specified quantum, the liability to file the return continues so long as the registration under section 14 stands. The reason is obvious. Return submitted by the dealer may or may not be accepted. If it is not, he may be liable to pay tax on the basis of records. 8. In the present case, therefore, the petitioner rightly continued to file the returns even after the alleged closure of business on March 31, 1982. The submission of Mr. Merathia that the returns were unwarrantedly filed under ignorance of law is misconceived. Since, admittedly, the returns were filed only up to 1991-92 and no return for the period 1992-93 was filed, the petitioner became liable to penalty under section 16(8) which has been levied on it, vide annexure 4 with respect to the first quarter of that year. 9. As regards the assessment-cum-penalty orders for the years 1983-84 and 1984-85, as noted above, these orders were passed behind the back of the petitioner on the basis of best judgment assessment. I do not want to go into the question as to whether the non-appearance of the petitioner in connection with the assessment proceedings for these two years was justified or not. In the facts of the case, I am inclined to give an opportunity to it to produce documents to show that its gross turnover during the said periods did not exceed the specified quantum. As already pointed out above, after the nil assessment for the years 1980-81 and 1981-82, by virtue of the provisions of sub-sections (3) and (5) of section 3, unless and until the gross turnover exceeded the specified quantum during any period of 12 months, it could not be held liable to pay sales tax. The exemption arising from the nil assessment for two consecutive years under sub-section (3) of section 3 continues till gross turnover exceeds the specified quantum. The exemption arising from the nil assessment for two consecutive years under sub-section (3) of section 3 continues till gross turnover exceeds the specified quantum. Since the respondent-authorities made best judgment assessment without looking into the records, it would only be just and proper to give an opportunity to the petitioner to produce the records and satisfy the assessing authority that its gross turnover during the periods in question, i.e., 1983-84 and 1984-85 did not exceed the specified quantum. The order of penalty under section 16(8) of the Act vide annexure 4, for the admitted non-filing of the return for the period 1992-93 or part thereof, however, does not require any interference. 10. It is open to the petitioner to file a fresh application for cancellation of registration under section 14 of the Act in form VII. If it does so, the same should be disposed of as early as possible in accordance with law. 11. For the reasons stated above the orders of assessment and/or the demand notice contained in annexures 6 and 7 to the writ petition and annexure B to the counter-affidavit are quashed and the matter is sent back to the Assistant Commissioner of Commercial Taxes, Special Circle, Ranchi for fresh consideration giving opportunity of hearing to the petitioner. The writ petition stands allowed accordingly. There will be no order as to costs. I agree. Writ petition allowed.