TMI Blog1991 (2) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petitions were filed are: 3.. While submitting the returns, the assessee had sought exemption for the packing charges and succeeded. After the completion of the assessment proceedings, the Joint Commercial Tax Officer found that the exemption of tax for packing charges had been wrongly claimed and granted and consequently, treating it as a case of escaped turnover, he initiated action under section 16 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act") and issued notices to the assessee proposing to levy tax in respect of the escaped turnover. Ultimately, after receiving the objections from the assessee, by three separate proceedings, dated March 13, 1979, April 2, 1979 and April 2, 1979, he determined the escaped turnover relating to packing charges for the three years in question as amounting to Rs. 58,309 for 1972-73, Rs. 50,002 for 1973-74 and Rs. 78,375 for 1974-75. The escaped turnover was subjected to levy of tax at 31/2 per cent multi-point and notices in form B8 confining to the escaped assessment were issued. Projecting that the orders of reassessment issued under section 16 of the Act on March 13, 1979, April 2, 1979 and April 2, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts." The Revenue has come up in appeal. 4.. Appearing for the Revenue, the learned Additional Government Pleader (Taxes), submitted that the learned single Judge failed to notice the facts and circumstances of the case and erred in directing the refund of the tax paid on the original assessments, which were not in any case involved in the reassessment proceedings initiated and completed under section 16 of the Act and as such, the orders in the writ petitions could not be sustained. In reply, learned counsel for the respondent, relying upon the following observations of Ramaprasada Rao, C.J., in Deputy Commissioner (C.T.) v. Indian Refrigeration Industries Private Limited [1980] 46 STC 264, rendered on a difference of opinion between Sethuraman and Balasubrahmanyan, JJ., argued that after the reassessment had been made under section 16(1) of the Act, the original order of assessment stood set aside and the tax paid on the basis of an order which stood set aside was required to be refunded. "When the assessing officer proceeds to make a reassessment, he does so for the purpose of redetermining the annual taxable turnover as a whole. The reassessment order thus reflects the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided that no penalty under sub-section (2) shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition. (3) The powers under sub-section (1) may be exercised by the assessing authorities even though the original order of assessment, if any, passed in the matter has been the subject-matter of an appeal or revision. (4) In computing the period of limitation for assessment or reassessment under this section, the time during which the proceedings for assessment or reassessment remained stayed under the orders of a Civil Court or other competent authority shall be excluded. (5) In computing the period of limitation for assessment or reassessment under this section, the time during which any appeal or other proceeding in respect of any other assessment or reassessment is pending before the High Court or the Supreme Court, involving a question of law having a direct bearing on the assessment or reassessment in question, shall be excluded. (6) In computing the period of limitation for assessment or reassessment under this section, the time during which any appeal or proceeding in respect of any assessment or reassessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax due has to be on the entire taxable turnover, which had been subjected to tax at a rate lower than the one applicable on the earlier occasion. Here, unlike under clause (a), the entire assessment is reopened. An order made under clause (b) would, therefore, be an order of reassessment of the tax, obliterating as it were, the original determination of the tax liability at the lower rate. 7.. Even in sub-section (2), the Legislature has used the expression "assessment" for the purpose of clause (a) of sub-section (1) and not "reassessment", while considering the question of levy of penalty, which also goes to show that the distinction between assessment and reassessment was clearly present to the mind of the Legislature. Again, in sub-sections (4), (5) and (6), which deal with the computation of the period of limitation, the Legislature has used both the expressions, viz., "assessment" and "reassessment" to take care of distinct types of proceedings under clauses (a) and (b) of section 16(1) of the Act. It, therefore, follows that when the authority exercises its powers under section 16(1)(a) it only exercises the powers of "assessment" with regard to the escaped turnover. An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that order, but in the event the authority chooses to make a composite order by including in the order relating to the escaped turnover, the tax liability already determined in the original assessment proceedings by bodily lifting the original assessment order and adding to it the order under section 16(1)(a) of the Act, it may clothe the assessee with the right, while questioning an order under section 16(1)(a) to also question the original assessment, which has been included in the order under section 16(1)(a) of the Act and the period of limitation in such a case may commence from the date of the composite order, irrespective of the fact that the period for questioning the original order of assessment had expired from the date of the original assessment. It is, therefore, preposterous to contend that after the turnover which had escaped assessment is subjected to assessment, that alone reflects the total tax liability of the assessee and the original assessment on the turnover which had already been assessed becomes null and void, entitling the assessee to a refund of the tax already paid on the completed assessment which had become final. Acceptance of such an argument would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court was: "Whether it is open to an assessee, in an appeal against an order of reassessment, to take up matters which are already concluded against him in his original assessment?" It was in answer to that question, that relying upon certain other judgments, including those of the Apex Court in Commissioner of Sales Tax v. H.M. Esufali H.M. Abdulali [1973] 32 STC 77 and Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu [1977] 39 STC 177, the Bench expressed the opinion that once an assessment is "reopened", the initial order of assessment ceases to be operative and is replaced by the order of "reassessment". That decision, therefore, does not lay down any principle of universal application to orders made under section 16(1)(a) of the Act. The scope and authority of [1980] 46 STC 264 (Mad.) [Deputy Commissioner (C.T.) v. Indian Refrigeration Industries Private Limited] is limited and applicable to the context of that case alone. 9.. The question which fell for decision of the Supreme Court in Commissioner of Sales Tax v. H.M. Esufali H.M. Abdulali [1973] 32 STC 77 was altogether different. In that case, an assessment under the Madhya Pradesh General Sales Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mysore Sales Tax Act, 1957, rendered the judgment. Those facts also, therefore, are entirely different. In neither of the two judgments of the Supreme Court was a direct question involved as to the limited scope of assessment under section 16(1)(a) of the Act. Their Lordships were not called upon to consider whether or not an order of assessment on an escaped turnover under section 16(1)(a) of the Act is a distinct and separate order which covers only the amount escaping the assessment and that it does not obliterate, let alone render null and void the original assessment, where the same is not in any way involved in the proceedings under section 16(1)(a) of the Act. The question as to whether the original assessment retained its distinctive character, identity and operative force, after an order under section 16(1)(a) of the Act is made, was not at all involved for consideration. 11.. Reliance, therefore, on the observations (extracted supra) from [1980] 46 STC 264 (Mad.) [Deputy Commissioner (C.T.) v. Indian Refrigeration Industries Private Limited] to urge that by the order under section 16(1)(a) of the Act, in the instant case, the original order of assessment which neither f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a precedent should never be expanded unnecessarily beyond the needs of a given situation." 14.. Thus, considered in the light of the observations made by the Supreme Court with regard to the binding nature of the precedents and the proper manner of reading and interpreting the judgments of the Supreme Court and other courts, it becomes obvious that the observations in [1980] 46 STC 264 [Deputy Commissioner (C.T.) v. Indian Refrigeration Industries Private Limited] on which the learned counsel seeks to rely, have been torn completely out of context. The question which was involved in the three writ petitions was not involved at all in [1980] 46 STC 264 [Deputy Commissioner (C.T.) v. Indian Refrigeration Industries Private Limited]. It had not been considered in the context which arises before us. That judgment, therefore, cannot be said to be an authority or the precedent for deciding the question involved in the present appeals in the fact situation prevailing herein. A precedent is an authority only for what it actually decides and not, as the Apex Court said in Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71, for what may remotely or even logically follow from it. Pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t before the Tribunal and as such the Revenue cannot seek to canvass the correctness or otherwise of the original orders of assessment in appeals filed by the assessee against orders passed under section 16, bringing to charge certain escaped turnovers. The Tribunal has taken the view that the Revenue cannot file a petition for enhancement of the original assessment in an appeal filed against an order under section 16 for the reason that it is a separate and independent appeal from the one relating to the original order of assessment. The reasoning given by the Tribunal appears to us to be quite tenable. It is only when the original order of assessment comes before the Tribunal in some form or other, the Revenue can seek to canvass the findings given by the assessing authority in that order so far as they are against the Revenue, but not in appeals filed by the assessee against orders under section 16, where the subject-matter was only the escaped turnovers, and not the entire assessments." (Emphasis* ours.) 16.. Once again, in State of Tamil Nadu v. C.M. Tiles [1976] 38 STC 440 a Division Bench of this Court, after noticing with approval the view expressed in [1973] 32 STC 239 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from an order of reassessment can interfere with the determination of the turnover, in the first instance, in the original assessment. The argument of the learned Additional Government Pleader on this aspect of the scope of the appellate power was also based on State of Tamil Nadu v. C.M. Tiles [1976] 38 STC 440. The view expressed by this Court in that case can be restated in terms of a simple syllogism: A reassessment only adds the escaped turnover, and it does not reassess what is already assessed in the original assessment. The appeal is against the reassessment. Therefore, the appeal cannot deal with the turnover assessed in the original assessment." His Lordship then went on to hold that the law laid down in that case fell to the ground in view of the judgment reported in [1977] 39 STC 177 (SC) (Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu). 19.. Considering the facts and circumstances in which the judgments came to be rendered by the Supreme Court in [1973] 32 STC 77 (Commissioner of Sales Tax v. H.M. Esufali H.M. Abdulah) and [1977] 39 *[The passage quoted above is from the judgment of Balasubrahmanyan, J. and appears at page 283 of [1980] 46 STC-Ed.] STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case on the observations extracted above from [1980] 46 STC 264 (Mad.) [Deputy Commissioner (C.T.) v. Indian Refrigeration Industries Private Limited] completely divorced the context in which those observations came to be made. That judgment is not at all relevant or helpful to the assessee and the learned single Judge fell in error in allowing the writ petitions on the basis of the law laid down therein. 21.. Considering the facts and circumstances of the instant case, it is not disputed, as indeed it cannot be, that the orders passed under section 16(1)(a) of the Act, in respect of each of the three years, 1972-73, 1973-74 and 1974-75 on March 13, 1979, April 2, 1979 and April 2, 1979, respectively, were confined only to the turnover that had escaped assessment and were confined to the assessment of the escaped turnover only. The said orders did not deal with the original assessments which stood concluded. The orders under section 16(1)(a), therefore, did not wipe off or take away the characteristic or operative force of the orders of original assessment. Therefore, it would be a travesty of law to hold that the orders made under section 16(1)(a) of the Act had set aside the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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