TMI Blog1979 (4) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... ase point. Rubber is locally purchased from Kerala State and sold in Madras. The goods are despatched to the Madras factory along with N forms under rule 43(B) of the Rubber Rules. These forms have been recognised by the proviso to rule 35, clause (13), sub-clause (b), of the Sales Tax Rules as sufficient to operate as a delivery note for the purposes of sub-section (2) of section 29 of the Act. The Sales Tax Officer did not tax these transactions, as he took the view that they constituted transactions of inter-State sale not liable to be taxed under the local sales tax legislation, having regard to section 5A of the Act, which reads as follows: "5A. Levy of purchase tax.-(1) Every dealer who in the course of his business purchases from a registered dealer or from any other person any goods, the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under section 5, and either- (a) consumes such goods in the manufacture of other goods for sale or otherwise; or (b) disposes of such goods in any manner other than by way of sale in the State; or (c) despatches them to any place outside the State except as a direct result of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Tribunal, however, held that, as the Deputy Commissioner had wrongly refused the assessee's prayer for further time before proceeding to assess the escaped income, it was necessary to direct the Deputy Commissioner to dispose of the case after affording the assessee a reasonable opportunity to produce all the records and of being heard on his objection. 2.. Counsel for the assessee contended that the revisional power under section 35 of the Act cannot be exercised for the purposes of getting at escaped income for which the remedy is provided by section 19 of the Act ; and that, in exercising the power under section 35, it would not be permissible to trench upon the power provided under section 19 of the Act. It was contended that this position has been well-recognised and well-settled by judicial decisions. Before examining these decisions, we shall extract the relevant sections of the Sales Tax Act, 1963: "19. Assessment of escaped turnover.-(1) Where for any reason the whole or any part of the turnover of business of a dealer has escaped assessment to tax in any year or has been under-assessed or has been assessed at a rate lower than the rate at which it is assessable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal against the order has not expired; (b) the order has been made the subject of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal or of a revision in the High Court; or (c) more than four years have expired after the passing of the order referred to therein. (3) No order under this section adversely affecting a person shall be passed unless that person has had a reasonable opportunity of being heard." It would be useful to compare these provisions with the corresponding provisions of the General Sales Tax Act, 1125, with respect to which some of the decisions were rendered. Revisional jurisdiction was provided for by section 15(1), which reads as follows: "15. (1) The Deputy Commissioner may- (i) suo motu, or (ii) on application, call for and examine the record of any order passed or proceeding recorded under the provisions of this Act by any officer subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceeding, and may pass such order with respect thereto as he thinks fit: Provided that the Deputy Commissioner shall not revise any order or proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a notice to the dealer or licensee and after making such enquiry as he considers necessary. (5) The powers conferred by sub-rules (1) and (4) on the assessing authority or licensing authority may also be exercised by the appellate authority referred to in section 14 or, as the case may be, by the revising authority referred to in section 15, at any time within a period of three years next succeeding that to which the tax or, as the case may be, the licence fee relates, provided that such authority shall give the dealer concerned a reasonable opportunity of being heard before passing orders under this sub-rule." The rules quoted above are the result of certain amendments introduced in 1956. It was as a result of the amendment that sub-clause (5) of rule 33 was added giving the power of assessing escaped income to the revisional authority. The scheme of the 1963 Act is different; under that Act, the power of assessing escaped income is conferred by section 19 on the assessing authority; and the revisional power under section 35 is to be exercised by the Deputy Commissioner, namely, a higher authority than the assessing authority. 3.. In the face of these statutory provisions s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12(7) includes also the order of assessment made by the revising authority under section 23(3) and, in that view, held that the orders of assessment passed beyond thirty-six months from the end of the period in question were barred by limitation. The first contention urged on behalf of the State of Orissa is that the High Court is wrong in holding that an order of assessment of the revising authority is necessarily one made under section 12(7). The power of revision granted by section 23(3) is clearly a distinct and separate power from the power to assess after calling for a return in case of under-assessment or escaped assessment. The mere fact that in a particular case the revising authority has by a fresh order of assessment made the dealer liable for tax in respect of which he can be said to have been underassessed or to have escaped assessment does not make the two powers one and the same. We, therefore, find it difficult to agree with the High Court that section 12(7) includes also the reassessment made by the revising authority under section 23(3)." (underlining* ours) The case clearly defines the range of operation of the two powers. In State of Kerala v. Cheria Abdull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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." (emphasis* supplied) *Here italicised. It has to be noted that reference to the power of assessing escaped income was made only illustratively to define the limits of the revisional power and of travelling outside the record in exercise of the same. 5.. In Swastik Oil Mills Ltd. v. H.B. Munshi[1968] 21 S.T.C. 383 (S.C.)., the scope of the revisional power under the Bombay Sales Tax Act, 1946, fell to be examined. The Supreme Court referred to the Cheria Abdulla's case(2) and two other cases and observed: "In fact, when a revisional power is to be exercised, we think that the only limitations, to which that power is subject, are those indicated by this court in the K.M. Cheria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e two powers operate-the power to assess escaped turnover and the revisional power. 6.. In Deputy Commissioner v. Dhanalakshmi Vilas Cashew Co.[1969] 24 S.T.C. 491 (S.C.)., the Supreme Court was again concerned with the scope of the Deputy Commissioner's revisional power under section 15 of the Kerala General Sales Tax Act, 1125. It was observed that the power under section 15(1) of the General Sales Tax Act, 1125, is quite distinct and separate from the power under rule 33 to assess the escaped turnover. It was remarked, following the decision in State of Kerala v. M. Appukutty[1963] 14 S.T.C. 242 (S.C.)., that the Deputy Commissioner, while exercising his revisional jurisdiction under section 15(1) of the Act, would be restricted to the examination of the record to determine whether the order of assessment was according to law. But rule 33 confers power to assess escaped turnover which may normally be exercised on matters de hors the record of assessment proceedings. (We may observe that the earlier observation that the revisional jurisdiction is confined to the examination of the record may not stand scrutiny in the light of the decision in the Cheria Abdulla's case[1965] 16 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the opinion that the suo motu power of revision of the Deputy Commissioner is of wide amplitude and can be exercised in favour of the revenue as well as the taxpayer in order to correct any error or illegality committed by the assessing authority in his order of assessment." In Gurbaksh Singh v. Union of India[1976] 37 S.T.C. 425 (S.C.)., the Supreme Court considered the revisional power under the Bengal Finance (Sales Tax) Act, 1941. The principal point that was canvassed was that, in exercising the revisional power, the revisional authority is fettered by a period of limitation which is provided for in some of the other sections of the Act. The argument was repelled. The court observed: "It was pointed out by this court in the Swastik Oil Mills' case[1968] 21 S.T.C. 383 (S.C.). that the Deputy Commissioner when seeking to exercise his revisional powers was not encroaching upon the powers reserved to other authorities. The powers were not exercised for the purpose of assessing or reassessing an escaped turnover. The revisional powers were sought to be exercised to correct what appeared to be an incorrect order passed by an Assistant Collector and for such a purpose proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal powers for the purpose of satisfying himself as to "the legality or propriety" of any order of the custodian.' The following observations made by Ramaswami, J., in East Asiatic Co. (India) Ltd. v. State of Madras[1956] 7 S.T.C. 299. are also relevant: *Here italicised. 'The purposes of this Act are twofold, viz., the levy of a general tax on the sale of goods to supplement the lost revenues and for promoting the general public good ; and, secondly, to see that this is done under the provisions of the Act and not by carrying out in a capricious or arbitrary manner. Therefore, a revisional authority has to be created. What is revision ? The essence of revisional jurisdiction lies in the duty of the superior tribunal or officer entrusted with such jurisdiction to see that the subordinate tribunals or officers keep themselves within the bounds prescribed by law and that they do what their duty requires them to do and that they do it in a legal manner. This jurisdiction being one of superintendence and correction in appropriate cases, it is exercisable even suo motu as is clear from the numerous statutory provisions relating to revision found in various Acts and Regulations su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s* supplied) 10.. We were, however, pressed with the decision of the Supreme Court in the Appukutty's case[1963] 14 S.T.C. 242 (S.C.). and, in particular, with the decision of the Division Bench of *Here italicised. this Court in Kassim Kannu v. State of Kerala[1970] 26 S.T.C. 530. We shall turn to these decisions. The Supreme Court, in the Appukutty's case[1963] 14 S.T.C. 242 (S.C.)., was concerned with the provisions of rule 17 of the Madras General Sales Tax Rules, 1939, and the various clauses thereof, enacted under the rule-making powers conferred by section 19 of the Madras General Sales Tax Act, 1939. Section 9 provided for submission of returns by the assessee and, in case, no return is submitted by the assessee, the assessing authority shall assess the assessee to the best of his judgment. The grounds on which revisional power under section 12(2) could be exercised were illegality, irregularity and impropriety. Rule 17(1) deals with the assessment of escaped turnover by the assessing authority or the licensing authority. Rule 17(3-A) confers the power of assessing escaped turnover on the appellate and the revisional authorities, subject to the limitation that it had to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdiction of the Sales Tax Officer to assess escaped turnover under section 19 of the Act. The Division Bench thought that the pronouncements of the Supreme Court in the Appukutty's case[1963] 14 S.T.C. 242 (S.C.)., the Cheria Abdulla's case(2), the Swastik Oil Mills' case(3), the Dhanalakshmi Vilas Cashew Co.'s case(4) and the Nainan's case(5), all supported the proposition laid down by it. The position was stated thus: "On a consideration of these five decisions of the Supreme Court, what emerges on the question before us is that the revisional power of the Deputy Commissioner is a separate and distinct power; an independent jurisdiction; and that the two powers operate in two fields, so that they cannot overlap and the revisional power of the Deputy Commissioner cannot trench upon the power of the Sales Tax Officer to assess escaped turnover. If it does, it oversteps its field and is thus beyond the Deputy Commissioner's jurisdiction." 13.. We think that the Division Bench misunderstood the scope and effect of the five decisions of the Supreme Court referred to by it. We have surveyed each one of these decisions and highlighted the principles in each of them. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore him or to his reaching a wrong conclusion on the materials. This error in the assessment proceeding, section 34 authorises the Commissioner to correct (of course, only after giving the assessee a reasonable opportunity of being heard), without any limitation as to time and after making such enquiry as he thinks fit which means that he can gather fresh material and is not confined to the record of the proceeding. He may, subject to the provisions of the Act, pass such orders as he thinks fit which I should have thought means that he may do what the Income-tax Officer ought to have done in making the original assessment, namely, make an assessment in accordance with the provisions of the Act, taking the escaped income also into account. Or, he may ask the Income-tax Officer to do so. In so doing, it is the original order of assessment he is revising, not the exercise or non-exercise by the Income-tax Officer of his power to correct his own order of assessment under section 35. The Commissioner is in no sense exercising the powers of the Income-tax Officer under section 35, but only that officer's power to make the original assessment. That being so, it is difficult to understan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added to rule 17 to the effect that powers conferred under subrules (1) and (3) of rule 17 upon the assessing authority or the licensing authority may also be exercised by the appellate authority or by the revising authority within a period of five years next succeeding that to which the tax relates. This amendment makes the position clear that the legislature did not visualise a clearcut, well-defined, mutually exclusive jurisdiction of the assessing authority as against the revisional authority, each being restricted to operate in its own field without any overlapping." At the end of the discussion, the Division Bench concluded: "We are, therefore, of the opinion that the power of revision can be exercised by the Deputy Commissioner under section 32 to correct errors committed by the assessing authority in his order of assessment, irrespective of the question as to whether the said errors could also be corrected by the assessing authority himself. The power under section 32 is a distinct separate power and its exercise cannot be controlled by any power which may inhere in the assessing authority under section 16." A similar view has been taken by the Bombay High Court in Babu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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