TMI Blog1985 (1) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.. For the assessment year 1972-73 the petitioner filed his return before the CTO inter alia claiming exemption from payment of taxes under the Act, on sales turnover of Rs. 51,465 representing sales of manure during the said period. On 16th January, 1974, the CTO accepting the said claim of the petitioner, completed his assessment for the said year. But, later the CTO exercising the powers conferred on him by section 12-A of the Act, affording necessary opportunity to the assessee and overruling his objections, reopened the assessment and held that his sales turnover was taxable as sale of "organic manure" under section 5(1) of the Act and accordingly brought the same to tax at the appropriate rate amounting to Rs. 1,800.28 (exhibit B). Against the said reassessment order, the petitioner filed an appeal under section 20 of the Act in Appeal No. 152 of 1975-76 before the Deputy Commissioner of Commercial Taxes (Appeals), Bangalore Division, Bangalore ("DC"), who by his order dated 5th January, 1976, allowed the petitioner's appeal and set aside the order of the CTO (exhibit C). 4.. On 12th March, 1976, the Commissioner of Commercial Taxes in Karnataka, Bangalore ("Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eep the transaction which is taxable, it is not for the court to strain and stress the language of the section so as to enable the taxpayer to escape the tax. " In C. Arunachalam v. Commissioner of Income-tax ILR [1984] 2 Kar 1387 (FB), a Full Bench of this Court, as late as on 26th October, 1984, reviewing all the earlier rulings and text books summarised some of the rules of construction of statutes as follows: "11. We shall presently consider these decisions, but before we do so, it will help the exposition which follows, if we explain the court's functions with respect to statutes lumped under the single term 'interpretation'. We know of no statute, which merely declares a rule, with no purpose or objective behind. Every statute whether addressed to individuals or institutions, has an aim and purpose. That would be gathered only by a rational study of the law. The rational study of law is, to a large extent, the study of its history or the path of the law. History must be a part of the study because, without it, we cannot know the precise scope of rules. We cannot find out why a rule of law has taken its particular shape. Such a study should be the first step towards an enlig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mate aid. By this means they clear up many things which would be unclear or ambiguous or doubtful.' This is how the courts with their creative powers have recently responded to what we may call it a ground clearing exercise where the words of a statute are not so plain and unambiguous. To put it shortly, the judges should not follow a blinkered way to lay down the law. They should use their hindsight as well. So far as the fiscal statutes are concerned, we must remember one more principle. The provisions in a fiscal statute are not to be so construed as to furnish a chance of escape and a means of evasion. In case of doubt, the fiscal statute should be construed in favour of and beneficial to the subject." With a brief back-drop of the legislation, we will first ascertain the scope and ambit of section 22-A of the Act without reference to the earlier rulings. 9.. As on 1st November, 1956, when the new State of Mysore (now called "Karnataka") comprising the areas specified in section 7 of the States Reorganisation Act of 1956 (Central Act No. 37 of 1956) ("SRC Act"), came into being, there were in force different Sales Tax Laws enumerated in section 40 of the Act, which contin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent provisions. Section 16 of the amending Act substituted section 21 of the original Act and conferred power of revision on the Assistant Commissioners and Deputy Commissioners of the areas against orders made by their subordinates specified therein. 16.. Section 18 of the amending Act inserted section 22-A conferring power of revision on the Commissioner. Section 22-A, that is material, reads thus: "22-A. Revision by the Commissioner or the joint Commissioner of orders prejudicial to revenue.-(1) The Commissioner or the joint Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by any officer subordinate to him is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. (2) The power under sub-section (1) shall be exercisable only within a period of four year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alidity of which was challenged by the appellant before this Court under section 24 of the Act, on the very grounds urged in this case. On 17th November, 1971, a Division Bench of this Court consisting of Govinda Bhat (as his Lordship then was) and Venkataswami, JJ., repelled the same in these words: "Sub-section (1) of section 22-A confers the power of revision in the Commissioner of calling for and examining the record of any proceeding under the Act and to make such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment if he considers that any order passed in the said proceeding by any officer subordinate to him is erroneous in so far as it is prejudicial to the interests of the revenue. Sri S.P. Bhat relied on sub-section (1) of section 3-A in support of his argument that the Deputy Commissioner as an appellate authority is not an officer subordinate to the Commissioner. The said sub-section reads thus: 'All officers and persons employed in the execution of this Act shall observe and follow the orders, instructions and directions of the State Government and the Commissioner: Provided that no such orders, instructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Section 3-A of the Act confers controlling powers on the State Government and the Commissioner. According to sub-section (1) of section 3-A of the Act, all officers and persons employed in the execution of the Act are obliged to follow any orders, instructions and directions issued by the State Government and the Commissioner. However, the proviso to the said section states that no such orders, instructions or directions shall be given so as to interfere with the discretion of the appellate authority in the exercise of its appellate functions. Learned counsel for the appellant argued that exercise of power under section 22-A of the Act would amount to interference with the discretion of the appellate authority in the exercise of its appellate functions. We do not see any force in the contention urged for the appellant. The power conferred under sub-section (1) of section 3-A of the Act to pass orders or issue instructions or directions to subordinate officers is purely in respect of administrative matters. This is made clear by the proviso by stating that the power to issue directions under sub-section (1) of section 3-A of the Act shall not be exercised in a manner so as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a Commercial Tax Officer (vide section 21 of the Act). 21.. An "appellate authority" under the Act cannot exist without an officer holding that post. The officer holding the post of an appellate authority cannot be treated as different from the appellate authority itself. If the officer is subordinate then, that officer holding the post, whether it be appellate or original, must necessarily be subordinate to the Commissioner. In this context, the appellate authority has to be interpreted as the officer holding the appellate authority under the Act, as subordinate to the Commissioner. We are of the view that the distinction sought to be made between an officer holding the post, the post or the appellate authority, is without a difference and is devoid of any merit. 22.. Sri Gandhi has next contended that an order of the appellate authority made final under section 20(6) of the Act without expressly making it subject to section 22-A of the Act is not revisable by the Commissioner under the latter provision. 23.. Section 20(6) of the Act on which strong reliance is placed by Sri Gandhi reads thus: "20. (6) Every order passed on appeal under this section shall subject to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special power of revision conferred on the Commissioner. We are of the view that the power conferred by section 22-A is in no way controlled by the provisions made for an appeal by the revenue. We see no merit in this contention of Sri Gandhi and we reject the same. 28.. In this case, the question whether the Commissioner can exercise his revisional power even after the revenue had availed the remedy of an appeal before the Tribunal or after the Tribunal had made its order one way or the other on such an appeal or also on an appeal of the assessee under section 22 of the Act, has not arisen. What we have said earlier, should not be understood as expressing our view on that question. 29. On the above discussion, it follows that our answer to question No. (1) has to be in the affirmative. Re. Question No. (2) 30.. Sri Gandhi has urged that section 22-A of the Act is violative of article 14 of the Constitution on the very grounds urged before the referring Bench. 31.. Sri Babu has urged that section 22-A is not violative of article 14 of the Constitution. 32.. The true scope and ambit of article 14 of the Constitution has been explained by the Supreme Court in a large nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Insolvency Act that safeguarded the debts due to the State in insolvency proceedings and the true legal position of the State vis-a-vis article 14 of the Constitution has expressed thus: ".........The natural and obvious meaning of the expression 'person' is a living human being, a man, woman or child, an individual of the human race. As used in law the word includes natural persons and artificial persons like corporations and joint stock companies, but it does not include a State or Government, for although a State is in the language of Vattel 'a moral person, having an understanding and a will, capable of possessing and acquiring rights and of directing and fulfilling obligations' the State in its political organisation is entirely different and distinct from the inhabitants who may happen to reside there. Similarly a Government cannot fall within the ambit of the expression 'person', for although in common parlance Government is synonymous with 'State', in actual fact the State is a country or assemblage of people while the Government is the political agency through which it acts. It is true that the State is capable of suing and being sued but that is so not because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedure to a certain class of taxevaders by a Special Investigation Commission, to which cases could be referred by Government, as against the normal procedure provided in the then Incometax Act in force for detecting tax-evasion of others. In those circumstances, the Court took exception to the former as violative of article 14 of the Constitution. But, that is not the position in the instant case. What is in issue here is whether the State must place itself in the position of another person in a taxation measure. We are of the view that the ratio in Suraj Mall Mohta's case AIR 1954 SC 545 does not really bear on the point. 37.. We will also assume that section 22-A provides for a special procedure or a power only on the State, denying the same to assessees under the Act. In such an event also, in the light of the principles enunciated by the Supreme Court in Lachhman Dass v. State of Punjab AIR 1963 SC 222 and Maganlal Chhagganlal (P.) Ltd. v. Municipal Corporation of Greater Bombay AIR 1974 SC 2009, the same does not contravene article 14 of the Constitution. 38.. Sri Gandhi has urged that section 22-A confers unguided, uncanalised, uncontrolled and arbitrary power on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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