TMI Blog1955 (4) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... O.S.A. No. 62 of 1951 relates to an assessment for the year 1944-45. The Deputy Commercial Tax Officer, Harbour Division, who was the assessing authority, by his order dated 27th March, 1946, determined the total turnover of the respondents at Rs. 2,53,72,488-14-11 and tax on this basis was paid by them. Subsequently on 28th March, 1947, the Commercial Tax Officer, North Madras, issued a notice to them to show cause why the assess- ment should not be revised under rule 14(2) of the Madras General Sales Tax Rules and by his proceedings dated 31st March, 1947, he revised it by the inclusion in the turnover of a further sum of Rs. 30,03,650-12-6 and levied tax accordingly. The amount thus demanded was paid and the suit C.S.No. 446 of 1947 was filed by the assessees for the refund of the tax on the ground that the revision and reassessment were invalid. In the assessment proceedings which are the subject-matter of C.C.C.A. No. 137 of 1951, the Deputy Commercial Tax Officer, Harbour Division, by his order dated 26th March, 1946, determined the turn- over of the assessee at Rs. 2,02,26,736-0-0, the assessment in this case also related to 1944-45. The assessee preferred an appeal to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d completeness of any return submitted by him." Appeals from these orders are provided by section 11 which runs: "11. (1) Any assessee objecting to an assessment made on him under section 9, sub-section (2), may, within thirty days from the date on which he was served with notice of the assessment, appeal to such authority as may be prescribed:............ Provided that no appeal shall be entertained under this sub- section unless it is accompanied by satisfactory proof of the payment of the tax admitted by the appellant to be due or of such instalments thereof as might have become payable, as the case may be. (2) The appeal shall be in the prescribed form and shall be verified in the prescribed manner. (3) The appellate authority may, after giving the appellant an opportunity of being heard, pass such orders on the appeal as such authority may think fit. (4) Every order passed in appeal under this section shall, subject to the powers of revision conferred by sections 12 to 12C, be final." Before an amendment effected by Madras Act XXV of 1947 which came into force on 1st January, 1948, section 12 referred to in section 11 was in these terms: "12. The Board of Revenue may in its di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself does not prescribe the assessing authority nor the other authorities to whom appeals lie under section 11 and in fact the only specific authority named in the Act is the Board of Revenue in section 12. The hierarchy of officials who are to assess and exercise appellate jurisdiction over orders of the assessing authorities are left to be prescribed by the rules as section 2(a) of the Act defines an assessing authority as meaning any person authorised by the Provincial Government to make any assessment under the Act; and section 11 leaves it to the Provincial Government to name and constitute the appellate authorities to hear appeals from assessment orders. In exercise of these powers confided to them, the Provincial Government framed the Madras General Sales Tax Rules after satisfying the formalities prescribed for their promulgation. The gradation of officers is set out in rule 3, viz., Assistant Commercial Tax Officer, Deputy Commercial Tax Officer, and Commercial Tax Officer. The Assistant and Deputy Commercial Tax Officers are the assessing authorities under the rules. Under rule 13 of the Madras General Sales Tax Rules the Commercial Tax Officer is prescribed as the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next succeeding that to which the tax or licence fee relates, assess the tax payable on the turnover which has escaped assessment or levy the licence fee, after issuing a notice to the dealer or licensee and after making such enquiry as he considers neces- sary. (2) If for any reason any tax or licence fee has been assessed at too low a rate in any year the assessing authority or the licensing authority, as the case may be, may, at any time within the year or the year next succeeding that to which the tax or licence fee relates revise the assessment or the licence fee after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary." This rule also underwent a change as and from 7th February, 1948, from whence it ran: "17. (1) If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to the tax in any year or if the licence fee has escaped levy in any year, the assess- ing authority or licensing authority, as the case may be, may, at any time within the year or the two years next succeeding that to which the tax or licence fee relates, assess the tax payable on the turnover which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the challenge of the validity of rule 14(2) fall under two heads, (1) that the rule was contrary to an express provision in the Act, and (2) that the rule was not authorised by the rule-making power conferred by section 19. The first head of argument was formulated thus: Section 11(4) has enacted that every order passed in appeal under this section shall, subject to the powers of revision conferred by section 12, be final. This sub-section imports finality to an order of the Commercial Tax Officer subject only to one specified exception, viz., revision by the Board of Revenue. It was not therefore competent to the rule-making authority to enact a provision whereby this finality was impaired by the action of some other revi- sional authority. Stated in this broad form the argument is unexcep- tionable. But this has no application to the facts of the cases before us. In O.S.A. No. 62 of 1951, the order that was revised by the Commercial Tax Officer was an order of the Deputy Commercial Tax Officer from which no appeal had been brought and to which therefore the finality posited by section 11(4) was not attracted. This argument therefore cannot avail the assessee in O.S.A. No. 62 of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not reasonably be read as authorising rule 8. Section 28 was in these terms: "(1) The Provincial Government may make rules for carrying into effect the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing power, the Provincial Government may make rules- (a) in regard to any matter which is required to be prescribed by this Act; (1) (1941) I.L.R. 1941 Mad. 261. Page No: 326 (b) prescribing the form of and the fees to be paid in respect of applications under this Act; and (c) for removing any difficulty in giving effect to the provisions of this Act.............." The learned judges said: "Only sub-section (1) and clause (c) of sub-section (2) are relied upon in support of the contention that rule 8 is intra vires the Provincial Government. Sub-section (1) merely says that the Provincial Govern- ment may make rules for carrying into effect the purposes of this Act. In making a rule providing for appeals the Provincial Government is not making a rule for carrying into effect the purposes of the Act. It is adding something to the Act. The object of the Act is to grant relief to agriculturists by providing machinery for the scaling down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 17 relating to escaped assessment is applicable?" In the form in which it has been stated above, it is capable of only one answer namely that the two rules are mutually exclusive and that in cases which fall within rule 17(1) and where the jurisdiction to reopen the assessment is vested in the assessing authority, the Commercial Tax Officer would not have power to pass such an order under rule 14(2). And this was in fact conceded by the learned Advocate-General who appeared for the State. The point however debated before us-and we consider rightly-was the relative scope of rules 14(2) and 17(1). The argument addressed to us by the learned Advocate-General was that the two rules 14(2) and 17(1) have to be read together to define the precise content of each and so read rule 17(1) would be applicable only to cases where the turn- over of a dealer has been omitted to be taken into account by an assess- ing authority either because there was a deliberate concealment of such transactions by the assessee or because of any inadvertent omission on his part or on the part of the assessing officer. Only such cases could with propriety be termed cases where the turnover has escaped assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as rule 17(1) serve a common purpose, viz., to gather revenue which has improperly escaped but while rule 14(2) is directed to the correction of improper or illegal assessment orders which have levied less or more tax than justified, rule 17(1) lays emphasis on escaped turnover. The distinc- tion between the two provisions might be expressed by saying that rule 14(2) deals with escaped assessments and 17(1) with escaped turnovers, notwithstanding that the latter also would mean that a lesser amount of tax has been levied. So understood the two provisions would be com- pletely reconcilable and the two jurisdictions-to revise assessments and to reopen them-would each be assigned to the proper authority. The language of rule 17(1) is consistent with this construction. The "escape" that serves as the foundation of the jurisdiction to reopen an assessment is that of "turnover" and not, be it noted, an assessment. "Turnover" escapes when it is not noticed by the officer either because it is not before him by reason of an inadvertence, omission or deliberate concealment on the part of the assessee, or because of want of care on the part of the officer the turnover though in the books has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble turnover of the assessee or because of deductions allowed by him but fails to make a specific reference to these matters in the assessment order, in other words, where only the final result is reflected in the order without the details as how the computa- tion was made being specifically noted in it. In this class of cases if by the record were meant only the assessment order, there may not be any reference to the particular transaction or turnover though as a fact this has been considered by the assessing authority though omitted to be referred to in the assessment order. We are of the opinion that the expression "record" would include not merely the assessment order but the entire assessment file and in the intermediate cases also if from a perusal of the record or the assessment files the revising authority can find that the turnover was before the assessing officer it is com- petent for it to pronounce upon the legality or propriety of the assessment order under rule 14(2). We are of the opinion that the construction which we have placed upon the relative content of rules 14(2) and 17(1) gives proper effect to both the provisions and assigns to each the role which it was de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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