9911796707
TMI Blog1970 (6) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 20 of the Bengal Finance (Sales Tax) Act, 1941, read with rule 80A of the Rules framed thereunder to admit or rely on the purported report dated 27th December, 1960, of the Commercial Tax Officer of the Central Section, pursuant to the enquiry under sub-section (1) of section 14 of the said Act, initiated long before the filing of the revision petition in question by the petitioner before the Commissioner of Commercial Taxes, West Bengal?" The Board of Revenue referred question (1) by its order dated 24th August, 1965, while this court by its order dated 27th September, 1966, directed the Board to refer question (2). The facts relevant for the purposes of these references are as follows: Messrs Ram Kanai Jamini Ranjan Pal Private Ltd. is a dealer registered under the Bengal Finance (Sales Tax) Act, 1941. The dealer's assessment under that Act is for the period of 4 quarters ending with the last date of Chaitra, 1364 B.S. The Commercial Tax Officer, Raja Katra Charge, assessed the dealer by his order dated 7th December, 1959. The Commercial Tax Officer for reasons stated in his order enhanced the gross turnover by Rs. 50,000 over the admitted figure of Rs. 35,93,402.84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of his powers under section 20(3) of the Bengal Finance (Sales Tax) Act, 1941, the Additional Commissioner was competent to reassess the gross turnover of the petitioner by taking into consideration additional material which had not been made available to the assessing officer?" The two relevant decisions of the Supreme Court on this point must first be noticed. One is the State of Kerala v. K.M. Cheria Abdulla & Co.[1965] 16 S.T.C. 875 (S.C.). This decision was concerned with the Madras General Sales Tax Act and its Rules. Mr. Chakraborty for the assessee relied on the observations of Subba Rao, J., drawing the distinction between an appeal and a revision at page 879 of the report. The observations on which Mr. Chakraborty relied are as follows: "There is an essential distinction between an appeal and a revision. The distinction is based on differences implicit in the said two expressions. An appeal 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all for the record of the order or the proceeding, and the record alone may be scrutinised for ascertaining the legality or propriety of an order or regularity of the proceeding. But there is nothing in the Act that for passing an order in exercise of his revisional jurisdiction, if the revising authority is satisfied that the subordinate officer has committed an illegality or impropriety in the order or irregularity in the proceeding he cannot make or direct any further enquiry. The words of sub-section (2) of section 12 that the Deputy Commissioner 'may pass such order with respect thereto as he thinks fit' means such order as may in the circumstances of the case for rectifying the defect be regarded by him as just. Power to pass such order as the revising authority thinks fit may in some cases include power to make or direct such further enquiry as the Deputy Commissioner may find necessary for rectifying the illegality or impropriety of the order, or irregularity in the proceeding. It is therefore not right baldly to propound that in passing an order in the exercise of his revisional jurisdiction, the Deputy Commissioner must in all cases be restricted to the records maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... patent on the face of the record but would extend to probing further into the records like calling for despatch registers and other evidence. Thereafter Shah, J., proceeds to make the following further observations at page 886 which are material for our purpose; "The power to hold an enquiry to take additional evidence is a procedural power in aid of the exercise of the revisional jurisdiction and if the revisional jurisdiction is not restricted only to cases of arithmetical errors or as the Tribunal called it 'arithmetic aspect', there is no reason to assume that the power under rule 14A to make such enquiry as the appellate or the revising authority considers it just to order or to make would be so restricted. But the power conferred by rule 14A by the use of the expression 'making such enquiry as such appellate or revising authority considers necessary' must be read subject to the scheme of the Act. It would not invest the revising authority with power to launch upon enquiries at large so as either to trench upon the powers which are expressly reserved by the Act or by the Rules to other authorities or to ignore the limitations inherent in the exercise of those powers." In a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice dated 25th October, 1960, the Commercial Tax Officer under section 14(1) of the Bengal Finance (Sales Tax) Act, 1941, gave the following direction to the assessee: "You are hereby directed to furnish the undersigned with the Serial Nos. of the cash memos. printed by you in 1363 B.S., 1364 B.S., 1365 B.S., 1366 B.S. and 1367 B.S. The names of the suppliers of these memos., relevant bills Nos. and dates, amount, dates of payment and modes of payment also are to be indicated. The information may be supplied to the undersigned on 31st October, 1960, at 4 p.m. positively." Pursuant to this notice, the assessee appeared before the Commercial Tax Officer. The finding is recorded by the Commercial Tax Officer: "In course of examination it was found that the dealer did not show on their cash memos. the year of issue. Only the dates and months are shown. On a prima facie examination also, the date of the cash memo. No. 31310-37 appears to have been tampered by a subsequent insertion of the numerals "66" after the date of issue. The actual date appears therefore to be 25-12 of some other year other than 1366. " The assessee was asked to explain and the Commercial Tax Officer records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock of goods of, or purchases, sales or deliveries of goods by the dealer or relating to any other matter, as may be deemed necessary for the purposes of this Act. (2) (a) All accounts, registers and documents relating to the stocks of goods of, or purchases, sales and deliveries of goods by, any dealer; and (b) all goods kept in any place of business of any dealer, shall at all reasonable times be open to inspection by the Commissioner. (3) If the Commissioner has reason to suspect that any dealer is attempting to evade payment of any tax under this Act, he may, for reasons to be recorded in writing, seize such accounts, registers or documents of the dealer as may be necessary, and shall grant a receipt for the same, and shall retain the same only for so long as may be necessary for examination thereof or for a prosecution." A glance at these sub-sections shows that this section (section 14) gives the power to the Commissioner for the production and inspection of accounts and documents. This was what was done by the notice set out above under this section by the Commercial Tax Officer dated 25th October, 1960. Obviously, this step is expressly authorised by the statute. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard. The assessee has been given every reasonable opportunity of being heard. Any other view would lead to this conclusion that the materials obtained under section 14 of the Bengal Act could not be used in any proceeding and that would be a useless paraphernalia. At this point, some argument is advanced about the dates. It would be recalled that the notice under section 14(1) of the Bengal Act was dated 25th October, 1960. At that point of time the revision petition had not been filed. The revision petition was filed on 10th November, 1960. Therefore, it is said that this notice, which came under section 14(1), came at a time when there was no actual revision petition by the assessee. The answer to this is that no doubt the revision petition was filed on 10th November, 1960, but it was during the pendency of the revision petition that this report of the investigation and examination by the Commercial Tax Officer came in and was duly forwarded to the Additional Commissioner of Commercial Taxes. It is difficult to see what is wrong in this procedure. This report was before the assessee who had every opportunity to answer it and produce any evidence to the contrary before the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bengal Act and the Rules made thereunder. The language of the statute here and the rules here are the governing factors. Section 20(3) of the Bengal Act makes it clear that the Commissioner in revision can revise any assessment or order passed. There will be no justification to qualify this power by saying that he cannot revise to bring in escaped assessment. This will be more than a very logical conclusion specially in the context of the Bengal Sales Tax Act because under this Act no right of appeal or revision is given to the revenue but such rights are given only to the dealer or the assessee. The language of section 20 saying "any dealer may in the prescribed manner appeal to the prescribed authority" etc. makes it plain. Even under section 21 of the Bengal Act the revenue cannot call for a reference either. What happens then where obviously an assessment or an order has been made which is prejudicial to the revenue? Who can correct it? The compelling answer is, the power of revision is in the Commissioner under section 20(3) to revise any assessment made or order made. The Madras High Court in East Asiatic Co. (India) Ltd. v. The State of Madras[1956] 7 S.T.C. 299., althou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the matter it will not be necessary to discuss in detail two other case on which Mr. Chakraborty for the assessee relied. We shall make however a brief reference to them. One is the State of Kerala v. M. Appukutty[1963] 14 S.T.C. 242 (S.C.)., a decision of the Supreme Court. That was a case on the Madras General Sales Tax Act and its Rules. There Kapur, J., made the observation at page 246 in delivering the judgment of the Supreme Court in these terms: "But the power to assess escaped turnover does not arise out of the revisional jurisdiction. In exercising revisional jurisdiction the Deputy Commissioner would be restricted to the examination of the record for determining whether the order of assessment was according to law." Truly, from the context, that observation appears to lend support to the argument of Mr. Chakraborty for the assessee. It is not clear however at all from the report whether the learned Judge was noticing the argument made or whether it was an observation enunciating the law. It is further clear from the observations at page 247 that there was a specific rule 17 in that case for escaped assessments. Therefore, there was no question of examining the impl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and "regularity of such proceeding". Section 15 of that statute is set out at page 493 of that report. Section 20(3) of the Bengal Act does not limit or qualify the power of revision of the Commissioner in this manner by use of such expressions as "legality" or "propriety" of the order or "regularity of such proceeding". There also under rule 33 as expressly observed by the learned Judge there was an express provision made for escaped assessment, and perhaps, that rule 33 had to expressly say so because the revision under section 15 of the Kerala General Sales Tax Act was there so limited unlike the revision under section 20(3) of the Bengal Act. It was submitted on behalf of the assessee that the Commissioner in revision under the Bengal Act could not enhance the assessment. In support of that submission Mr. Chakraborty for the assessee relied on section 20(2) of the Bengal Act dealing with appeals and where express provision was made there under section 20(2)(a) as "confirm, reduce, enhance or annul the assessment". Taking a leaf out of this expression in section 20(2) for appeal Mr. Chakraborty urges that no express power to enhance is given to revision under sub-section (3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Finance (Sales Tax) Act and particularly for that reason the learned Additional Commissioner was not competent to take into consideration the results of the enquiry. This specific point does not, however, appear to have been raised before the Board." That is the reason why he refused to state that point before this court and therefore was directed to do so by an order from this court. Now we shall discuss the arguments that have been advanced on this point and specially under rule 80A of the Bengal Sales Tax Rules. The rule-making power under the Bengal Act is contained in section 26. Section 26 of the Bengal Finance (Sales Tax) Act provides 'inter alia that subject to the conditions of previous publication, the State Government has power to make rules for carrying out "the purposes of this Act". Sub-section (2) of section 26 of the Act thereafter goes on to specify different subjects on which rules could be made without prejudice to the generality of the power conferred by sub-section (1). Among other specific subjects, sub-clauses (o) and (p) include the subject of the manner in which and the authority to which appeals against assessments may be preferred under section 20 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which he did not do in this case. But that does not exhaust the limits of his enquiry. The language of rule 80A shorn of its details expressly empowers the revisional authority to make such enquiry as it may think fit. Therefore, the Additional Commissioner in this case thought it fit, after it came to his knowledge that a proceeding or a report under section 14 had been made and that he should enquire on that report and proceeding and see the result of it. That is within the meaning of the word "enquiry" of rule 80A. The only limitation upon this naturally would be the well-settled rule of natural justice that if he acts really on such an enquiry, the assessee must have all reasonable opportunity to be informed about the result of the enquiry and to be heard in respect of that enquiry. That opportunity was given by the Additional Commissioner in this case. Nothing could be clearer than the notice which the Additional Commissioner of Taxes gave on 19th September, 1961, which stated inter alia as follows: "On discovery of fresh materials, as reported by the Commercial Tax Officer, Central Section, in his report dated 27th December, 1960 (copy enclosed), it appears that you have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this case, we are satisfied beyond any doubt that the material used in this case against the assessee has been rightly used without violation of any principle of natural justice and the assessee was informed of the material and he was given adequate opportunity of explaining it. We only need to observe that as at present advised, we are unable to associate ourselves with the view expressed by the decision of the Madhya Pradesh High Court in Commissioner of Sales Tax, M.P. v. M/s. Caltex (India) Ltd., SatnaA.I.R. 1968 M.P. 191., specially the observations appearing at page 194 in paragraph 6 of that report without a more detailed analysis of the C.P. and Berar Sales Tax Act, the M.P. General Sales Tax Act and the V.P. Sales Tax Rules, and in any event we are of the opinion that the decision in this reference must be governed by the language of the Bengal Finance (Sales Tax) Act and the Bengal Rules made thereunder. The other part of this question relates to the time element. But we have already discussed and expressed our view on that question. We are of the opinion that the fact that the enquiry under section 14(1) of the Bengal Act was initiated before the filing of the revis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
