1979 (4) TMI 143 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Scope of revisional jurisdiction under the Sales Tax Act.
2. Distinction between the power of assessing escaped turnover and revisional power.
3. Correctness of the Division Bench ruling in Kassim Kannu v. State of Kerala.
4. Application of section 35 and section 19 of the Sales Tax Act.
5. Validity of the Deputy Commissioner's exercise of revisional power.

Detailed Analysis

1. Scope of Revisional Jurisdiction under the Sales Tax Act
The primary issue was whether the revisional authority under the Sales Tax Act could assess escaped turnover. The judgment clarified that revisional powers under section 35 are distinct from the power to assess escaped turnover under section 19. The revisional power is meant to correct errors in the legality, regularity, or propriety of the orders passed by subordinate officers.

2. Distinction Between the Power of Assessing Escaped Turnover and Revisional Power
The judgment emphasized that the power to assess escaped turnover is conferred on the assessing authority under section 19, while the revisional power under section 35 is vested in the Deputy Commissioner. These powers operate in different spheres, and the exercise of one does not infringe upon the other. The revisional power can address errors within the record of the case, whereas the power to assess escaped turnover can involve matters outside the original record.

3. Correctness of the Division Bench Ruling in Kassim Kannu v. State of Kerala
The Full Bench overruled the Division Bench ruling in Kassim Kannu v. State of Kerala, which had held that the revisional power under section 35 could not be used to assess escaped turnover. The Full Bench found that this ruling misunderstood the scope and effect of the Supreme Court decisions it relied upon. The correct principle is that revisional power can indeed address escaped turnover if it involves correcting errors in the original assessment.

4. Application of Section 35 and Section 19 of the Sales Tax Act
The judgment clarified that section 35 allows the Deputy Commissioner to revise any order passed by subordinate officers to correct errors, while section 19 specifically addresses the assessment of escaped turnover. The Deputy Commissioner's revisional power under section 35 is broader and can include directing the reassessment of escaped turnover if it corrects an error in the original assessment.

5. Validity of the Deputy Commissioner's Exercise of Revisional Power
The judgment upheld the Deputy Commissioner's exercise of revisional power in all three tax revision cases. In T.R.C. No. 12 of 1978, the Deputy Commissioner's remand for reassessment was deemed valid as it corrected an error in the original assessment. Similarly, in T.R.C. No. 27 of 1978 and T.R.C. No. 75 of 1978, the Deputy Commissioner's directions for fresh assessments were upheld as valid exercises of revisional power under section 35.

Conclusion
The Full Bench judgment affirmed that the revisional power under section 35 of the Sales Tax Act is broad and can include addressing escaped turnover if it corrects an error in the original assessment. The Division Bench ruling in Kassim Kannu v. State of Kerala was overruled, and the orders of the Sales Tax Appellate Tribunal were affirmed in T.R.C. No. 12 of 1978 and set aside in T.R.C. Nos. 27 and 75 of 1978. All revisions were dismissed with no order as to costs.