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TMI Blog1964 (10) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 8 of the said Act. The Deputy Commercial Tax Officer, Cannanore (Rural) gave the exemption claimed and assessed the tax on the turnover relating to transactions other than those exempted. The Deputy Commissioner of Commercial Taxes, Coimbatore Division, called for the record of the case of the respond- ents for the said assessment year, and in exercise of the powers under section 12(2)(i) of the Act directed a fresh enquiry in respect of the said exemption. He issued a notice on February 9, 1956, calling upon the respondents to show cause against the proposed revision of assessment. On the basis of fresh evidence, the Deputy Commissioner of Commercial Taxes came to the conclusion that the respondents did not act as commission agents but carried on the business of "outright purchase and sale" in respect of the entire turnover. On that finding, he revised the order of the Deputy Commercial Tax Officer and assessed the respondents on a larger turnover. The short question is whether the Deputy Commissioner of Commercial Taxes has jurisdiction under section 12(2)(i) of the Act, read with the relevant rule, rule 14-A, to make the order he did. It is well settled that a sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal is a continuation of the proceedings; in effect the entire proceedings are before the appellate authority and it has power to review the evidence subject to the statutory limitations prescribed. But in the case of a revision, whatever powers the revisional authority may or may not have, it has not the power to review the evidence unless the statute expressly confers on it that power. That limitation is implicit in the concept of revision. Section 12(2) is no doubt wider in scope than section 115 of the Code of Civil Procedure. Even so the revisional authority's jurisdiction is confined to the question of legality or propriety of the order or the regularity of the proceedings. The further limitation on that jurisdiction is that it can only exercise the same on the examination of the record of any order passed or proceedings taken by any authority. The section, therefore, not only limits the scope of its jurisdiction but also defines the material on the basis of which the said jurisdiction is exercised. The general expression that the authority "may pass such order as he thinks fit" must necessarily be confined to the scope of the jurisdiction. The revisional authority, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in respect of turnover of the value of Rs. 50,83,441-14-4 on the plea that it represented commission sales which were exempt from tax by section 8 of the Act. The Deputy Commercial Tax Officer, Cannanore (Rural) by order dated February 19, 1952, granted exemption from tax on the commission sales covered by section 8 and computed the net taxable turnover of the respondents at Rs. 16,84,060-11-9. By order dated February 26, 1952, the Deputy Commercial Tax Officer assessed Rs. 26,313-7-3 as the tax payable on the taxable turnover of the respondents. Some time before February, 1956, the Deputy Commissioner of Commercial Taxes, Coimbatore Division, called for the record of the case of the respondents for the assessment year in question in exercise of the powers under section 12(2)(i) of the Act and directed an enquiry into the validity of the claim about exemption in respect of the commission sales under section 8 of the Act. The Deputy Commissioner then issued a notice on February 9, 1956, calling upon the respondents to show cause against the pro- posed revision of assessment which would result in enhancement of tax. After hearing the objections raised by the respondents, by order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh evidence could not be sustained. In the view of the High Court the expression "the record of any order passed or proceeding recorded" under section 12(2) restricted the revising authority to the examination of the legality or propriety of the order of a subordinate officer or as to the regularity of the proceeding of such authority and prohibited consideration of any other evidence, and rule 14-A made by the State Government in exercise of the power under section 19 of the Act, which authorises the revising authority or the appellate authority to correct the amount of tax payable by the dealer after issuing a notice to the dealer and after making such enquiry as such appellate or revising authority considers necessary was ultra vires the Act. The State of Kerala in this appeal contends that the High Court has erred in declaring rule 14-A ultra vires and in disposing of its petition invoking the revisional jurisdiction of the High Court on that footing. To appreciate the argument it is necessary in the first instance to read the relevant provisions of the Act and Rules framed thereunder. Section 9 of the Act deals with the procedure of the assessing authority and section 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all rules made under this section shall be published in the Fort St. George Gazette, and upon such publication shall have effect as if enacted in the Act. The Advocate-General for the State of Kerala contends that rule 14-A was validly made in exercise of the powers under section 19 and that in any event the rule having by sub-section (5) of section 19 the effect as if it is enacted in the Act it is not liable to be declared invalid. The alternative ground advanced by the Advocate- General may be easily disposed of. The rules made under section 19 and published in the Government Gazette have by the express provision to have effect as if enacted in the Act: but thereby no additional sanctity attaches to the rules. Power to frame rules is conferred by the Act upon the State Government and that power may be exercised within the strict limits of the authority conferred. If in making a rule, the State transcends its authority, the rule will be invalid, for statutory rules made in exercise of delegated authority are valid and binding only if made within the limits of authority conferred. Validity of a rule whether it is declared to have effect as if enacted in the Act or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion authorising the making of a further enquiry for effectively exercising the appellate or revisional power, would in the case of a taxing statute fall within the scope of the Rules. Jurisdiction to revise the order or proceeding of a subordinate officer has to be exercised for the purpose of rectifying any illegality or impropriety of the order or irregularity in the proceeding. But in taking that course the procedure to be followed is prescribed by the Rules framed under section 19(1) to carry out the purposes of the Act and as further illustrated by the head (l), (k) and (j) of sub-section (2). In our view the amplitude of the power conferred by sub-section (1) and illustrated by sub-section (2) of section 19 takes in the power to provide for making further enquiry enabling the revising authority to exercise his powers, and unless the power so conferred expressly or by clear implication nullifies or is inconsistent with any provision of the Act, it must be regarded as validly exercised. Conferment of power to make further enquiry in cases where after being satisfied about the illegality or impropriety of the order or irregularity in the proceeding, the revising authority think ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Powers of the Income-tax Appellate Tribunal and the Commissioner are couched in the same terms as under the Act of 1922 [see section 154(1) and section 263(1)]. It cannot therefore be said that a provision which confers upon the appellate or revising authority power to make such inquiry as such appellate or revising authority considers necessary in itself amounts to enlarging the revisional or appellate jurisdiction. The only difference between the Income-tax Acts and the Madras General Sales Tax Act is that whereas the power to entertain the appeal or revision application and to make orders for further enquiry in the hearing of the appeal or revision is wholly dealt with by the provisions of the Income-tax Acts, under the Madras General Sales Tax Act the revisional jurisdiction and appellate jurisdiction are conferred by the Act, but the power of the appropriate authority in the exercise of the jurisdiction when it appears to the appellate or revising authority that the correct amount of tax payable by the dealer has not been paid to make a further inquiry as the authority considers necessary is conferred by the Rules. But that is no ground for regarding the conferment of power to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9(2)(b) in the assessing authority and has to be exercised in the manner provided. It would not be open to the revising authority to assume that power. The revisional power has to be exercised for ascertaining whether the order passed is illegal or improper or the proceeding recorded is irregular and it is in aid of that power that such orders may be passed as the authority may think fit. One of the inquiries in considering the legality or propriety of the orders passed by the sub- ordinate officer which the revising or the appellate authority may make is about the correctness of the tax levied and if after perusing the record the authority is prima facie satisfied about the illegality or impropriety of the order or about the irregularity of the proceeding, it may in passing its order direct an additional enquiry. Neither section 12 nor rule 14-A authorises the revising authority to enter generally upon enquiries which may properly be made by the assessing authorities and to reopen assessments. We are at this stage not called upon to express any opinion about the correctness of the order passed by the Deputy Commissioner on the merits. The High Court has not investigated that que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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