TMI Blog1964 (8) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover being determined as nil, this order of the Assessment Commercial Tax Officer was not communicated to the assessee and no demand under section 8(B)(2) or 3(2) of the Act of 1939 was issued to the assessee. After the decision of the Supreme Court in State of Madras v. M.A. Noor Mohammed Co. [1961] 1 S.C.R. 148; 11 S.T.C. 570., reversing the decision of the Madras High Court referred to above, the Deputy Commissioner of Commercial Taxes, after complying with the necessary formalities and after issue of notice to the assessee exercised his powers of revision under section 32 of the Act. By his order, dated 13th July, 1961, he held that the assessee was liable to pay sales tax on a net turnover of Rs. 15,62,076-15-4 at 3 pies per rupee for the assessment year 1954-55. The assessee preferred an appeal to the Sales Tax Appellate Tribunal but without any success. Even though several points were urged before the Tribunal, learned counsel confined himself to the question of the jurisdiction of the Deputy Commissioner while acting under section 32 of the Act. Arguments before us both on behalf of the assessee, as well as on behalf of the State were addressed on the footing that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his 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..........." It may be relevant to set out the corresponding provisions of the Act of 1939 regarding the right of appeal and powers of revision. Section 11 of the Act of 1939 (relevant portion) is as follows: "11. 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 the appellate authority may admit an appeal preferred after the period of thirty days aforesaid, if the authority is satisfied that the assessee had sufficient cause for not preferring the appeal within that period; Provided further 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........" Section 12(2) of the Act of 1939 runs thus: "12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a demand notice mentioning the particulars of the tax due from and payable by the assessee. In any event, no communication is necessary in the case of an order of assessment which determines the turnover as nil, resulting in no tax liability. When the order does not affect the rights of the assessee and when it is completely in his favour there is no need to communicate to him; (b) The assessee cannot claim to be aggrieved by an order of nil assessment and the has no right of appeal against such an order and so the condition specified in section 32(2)(a), the time for appeal against the order has not expired, has no application with the result that the bar in section 32(2)(b) does not apply and the Deputy Commissioner can exercise his powers of revision. When there is no right of appeal to the assessee in a particular situation, there can conceivably be no question of the time for preferring an appeal against the order not having expired; (c) If the order of the assessing authority has not been communicated to the assessee, it would only be a proceeding recorded by the assessing authority, and the Deputy Commissioner can well exercise his powers of revision. The condition that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of assessing authorities or other quasi judicial tribunals as the right of appeal under section 96, Civil Procedure Code, is intimately connected with the question of res judicata arising under section 11. Even under section 96, in some cases, the view has been taken that under particular circumstances of the case a party may have a right of appeal even though the formal adjudication, i.e., the decree is in his favour, if it can be postulated that he would be adversely affected by the judgment. The important question is always whether the party can be said to be adversely affected and so aggrieved by the decision in question. In Ebrahim Aboobaker and Another v. Custodian-General of Evacuee Property[1952] S.C.R. 696., a case arising under the Administration of the Evacuee Property Act, the question arose whether a party is entitled to prefer an appeal under section 7 from the order of the Custodian, and the Supreme Court held that when a person is given a right to raise a contest in certain matter and his contention is negatived them he is certainly a person aggrieved by the order disallowing his contention. In dealing with a return submitted by the assessee, the assessing au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. But under the present Act a right of appeal is conferred in respect of orders of assessment and miscellaneous orders like an order for production of account books under section 41, or establishment of check posts or barrier and inspection of goods while in transit under section 42 of the Act. A perusal of the several sections referred to in section 31 shows that under the scheme of the Act of 1959 a right of appeal is given to the dealer or the assessee whenever he is adversely affected or prejudiced by any proceedings or action taken by the assessing authority. The question next arises whether it is obligatory upon the assessing authority to communicate the order to the assessee and what legal consequences flow if it is not so communicated. Once the principle is accepted that the assessee has a right of appeal whether or not the order of the assessing authority results in a tax liability, considerations which apply to an order resulting in a tax liability regarding the necessity for the communication of the order would equally apply to the case of a nil assessment. The recognition of a right of appeal to the assessee necessarily carries with it a right to the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are made the exact tax liability which is due and payable by the assessee gets determined only after the assessment is complete. Even though there is no limit of time within which the assessments should be completed, once it is completed, the liability of the assessee would arise only when the order is communicated to him. An order of assessment though completed and signed by the assessing authority, if not communicated to the assessee, does not exist in the eye of law, so far as the assessee is concerned. In our opinion, the process of assessment under the Sales Tax Act which would result in an enforceable tax liability is complete only when the order of assessment is communicated to the assessee. But this does not mean that so far as the assessing authorities are concerned they can ignore every action taken because the order of assessment had been communicated. While determining the true scope of the appellate powers of the appellate authorities under section 31 and the revisional powers of the Deputy Commissioner and the Board of Revenue under sections 32, 33 and 34, it is important to bear in mind that those authorities cannot indirectly exercise such powers when they cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents were at that time a registered firm he held, as he was bound to hold, that no super-tax was to be levied. On some date before the end of March, 1927, he served on the respondents a notice of demand for the tax that he had determined was properly leviable. The assessment having been made under section 23(4) no appeal lay in respect of it. The assessment of the respondents was therefore final both in respect of income-tax and super-tax. Their liability in respect of both taxes had been finally determined and none the less because the question of their liability to super-tax had been determined in their favour. It was, indeed, contended before their Lordships that the assessment could not be regarded as having been determined inasmuch as the Commissioner might at any time, and apparently after any lapse of time, however long, cancel the registration of the respondent as a registered firm and so subject the respondents to liability to pay super-tax. Their Lordships would, in any case, hesitate long before acceding to a contention that would lead to so extravagant results. In their opinion, however, the contention cannot prevail. The Commissioner's powers under section 33 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up, in the case of an assessment completed and signed by the officer, but not communicated to the assessee, our conclusions are as follows: (a) The order of assessment can be communicated to the assessee without any time limit but no liability would arise till communication; (b) The limitation for the assessee to prefer either an appeal or a revision would commence to run only after the order is communicated to him; (c) So far as the department is concerned, it would become final and effective as if communicated to the assessee and the order can be revised or varied only subject to the provisions of the Act; (d) The time for exercising powers of revision would commence to run from the date of the order itself and there cannot be an enlarged period of limitation merely because the department takes its own time to communicate the order. The important changes effected in the relevant provisions in the Act of 1959 also clearly confirm this view. Under section 12 of the old Act as regards the commencement of the period of limitation there was no difference between a right of appeal or revision exercised by the assessee, and the powers of revision exercisable by the Deputy Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t after the expiry of the time limit of three years prescribed under section 12(4)(a) the Commercial Tax Officer had no authority to exercise his powers of revision. Jagadisan, J., delivering the judgment on behalf of the Bench rejected this plea holding that time would commence to run only from the date of the communication of the order, and as admittedly there was no such communication the Commercial Tax Officer could not be said to have acted in transgression of the time limit prescribed by section 12(4). In rejecting the assessee's contention, the learned Judge compared the provisions of the Sales Tax Act with the provisions of the Indian Income-tax Act and held that under the scheme of the Income-tax Act time would begin to run from the date of the order even though there was no communication but that under the Sales Tax Act the scheme was different. The learned Judge put the matter thus: (at page 670). "It is interesting to note that the provisions of sections 12(4) and 12(5) of the Madras General Sales Tax Act are sharply in contrast with the provisions of section 33-A and section 33-B of the Indian Income-tax Act, which provide a revisional jurisdiction to the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay institute a suit in the Civil Court within thirty days after the Sub-Registrar had passed the order refusing to register the document. There the suit was filed more than thirty days after the date of the Sub-Registrar refusing registration but within thirty days from the date of service of that order upon the plaintiff. The Bench held that limitation would commence to run only from the date of the communication of the order. Venkatasubba Rao, J., took the view that there can be no valid order unless it is made after notice to the parties affected by it or it is communicated to them and that a contrary view would be opposed to reason and principle. It was also held that if the order is made without previous notice and communication, it would not be operative. The other learned Judge, Madhavan Nair, J., concurred in that view and held that the words making an order in section 77 meant not merely the recording of the order of refusal in writing but communicating it to the party concerned, so as to bind him by it. Rajamannar, C. J., delivering the judgment in Muthiah Chettiar v. Commissioner of Income-tax, Madras[1951] 19 I.T.R. 402; I.L.R. [1951] Mad. 815., explained the position t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al sense. The matter was put thus at page 683: "Thus considered the making of the award cannot consist merely in the physical act of writing the award or signing it or even filing it in the office of the Collector; it must involve the communication of the said award to the party concerned either actually or constructively. If the award is pronounced in the presence of the party whose rights are affected by it, it can be said to be made when pronounced. If the date for the pronouncement of the award is communicated to the party and it is accordingly pronounced on the date previously announced, the award is said to be communicated to the said party even if the said party is not actually present on the date of its pronouncement. Similarly if without notice of the date of its pronouncement an award is pronounced and a party is not present the award can be said to be made when it is communicated to the party later. The knowledge of the party affected by the award, either actual or constructive, being an essential requirement of fair play and natural justice the expression the date of the award used in the proviso must mean the date when the award is either communicated to the party or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta as the main ground of the decision was based upon the scope of section 12, sub-sections (4) and (5). Even otherwise the scope of these observations should be understood with reference to the provisions of section 12 and cannot govern the instant case arising under section 32 of the new Act. So far as the assessing authority is concerned the order is complete as soon as he has signed the same and the delay or omission on the part of the department to communicate the same cannot be taken advantage of by the department. The obligation to communicate the order cannot be circumvented or evaded by the department and a power of revision exercised in contravention of section 32(2)(a). The assessee's right of appeal which would operate as a bar to the exercise of the powers of revision cannot be defeated by the negligence or the omission on the part of the department to communicate the order of assessment. The contention put forward by the learned Government Pleader would place the assessee completely at the mercy and caprice of the department. We have no hesitation in rejecting this argument as of no substance, and it is directly contrary to the scheme of section 32. The words proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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