TMI Blog2000 (12) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... 1991-92 dated October 31, 1991 passed by the then Deputy Commissioner of Commercial Taxes (now JCCT) (Appeals), Belgaum and restoring the assessment orders dated August 31, 1989 for the years 1985-86 and 1986-87 and orders dated January 7, 1991 for the assessment years 1987-88, 1988-89 and 1989-90 of the then Commercial Tax Officer (now Assistant Commissioner of Commercial Taxes) II Cr., Belgaum, respectively. 3.. S.T. As. Nos. 47-49 of 1996 are also filed under section 24 of the Act against the order dated March 21, 1996, passed in ZAC. SMR. 59 of 1995-96 on the file of the Additional Commissioner of Commercial Taxes, Belgaum, nullifying the appeal Order No. DC. AP. BG. KST. 870, 871 of 1989-90 KST. 41, 42 and 43 of 1991-92 dated October 28, 1991, of the then D.C.C.T. (now J.C.C.T.) (Appeals), Belgaum, and restoring the assessment orders dated January 7, 1991 for the assessment years 1987-88 and 1988-89 passed by the C.T.O. (now A.C.C.T.), II Cr., Belgaum, and assessment orders dated March 31, 1989 for the period from June 1, 1986 to November 2, 1986, passed by the then C.T.O. (now A.C.C.T.), II Circle, Belgaum, dated March 31, 1989. 4.. Appellants being aggrieved by the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, pass such orders thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment or directing a fresh assessment. Sub-section (3) prescribes the period of limitation within which the powers conferred on them can be exercised. 7.. In order to decide the question referred, it would be necessary to refer to the history of legislative amendments of section 22-A from time to time. The legislative amendment from time to time have been: "1-4-1964 to 31-12-1967 (Act 9 of 1964): (2) No order shall be made under sub-section (1), after the expiry of four years from the date of the order sought to be revised. Explanation.-In computing the period of limitation for the purposes of sub-section (2), any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 1-1-1968 to 31-3-1992 (Act 16 of 1967): "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 passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Joint Commissioner or the Commissioner shall not pass any order under sub-section (1) or sub-section (2), as the case may be, if,- (a) the time for appeal against the order has not expired; (b) the order has been made the subject-matter of an appeal under section 20 or section 22 or of a revision in the High Court; or (c) more than four years have expired after the passing of the order sought to be revised. (4) Notwithstanding anything contained in sub-section (3), the Joint Commissioner or the Commissioner, may pass an order under sub-section (1) or (2), as the case may be, on any point which has not been raised and decided in an appeal or revision referred to in clause (b) of sub-section (3) ................." 8.. By Karnataka Act 5 of 1993, sub-section (3) of section 22-A was again amended. It was made retrospective in operation with effect from April 1, 1992. The amended section 22-A with effect from April 1, 1992 reads: "22-A. Revisional powers of Additional Commissioner and Commissioner.-(1) The Additional Commissioner may on his own motion call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has expired after the passing of the order sought to be revised". By Act 5 of 1993 with effect from April 1, 1992 the Legislature has again reverted back to the words "exercise of power". But, instead of using the words "exercisable within a period of four years" has used the words "shall not exercise any power", if more than four years have expired after the passing of the order sought to be revised. At times, the exercise of power has been referable to the passing of the order, whereas at some point of time, as at present, the exercise of power is referable not to the passing of the order but to the exercise of the power to revise the orders. A debate has been going on in the courts from time to time as to whether exercise of power would be relatable to the initiation of the proceeding or to the passing of the final order. So long as the words used were that the authorities shall not pass an order after expiry of four years, reference could be to the passing of final order. Whereas in the case of exercise of power by calling for the record could be relatable to the initiation of proceedings. (Emphasis supplied). Here italicised. 10.. This point was examined for the first time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer to call for the records under section 21(2) is not a part of the quasijudicial power of the Commissioner to revise the orders of his subordinates. The power to call for the records is a part of the revisional power of the Commissioner. The expression 'shall be exercisable' found in section 21(3) refers to the commencement of the exercise of the power referred to, and not the completion of the exercise of that power. Like all periods of limitation, section 21(3) also refers to initiation of the proceedings and not its completion." 11.. This judgment was later on followed in Busunur Industries v. State of Karnataka [1986] 61 STC 123 (Kar). In this case their Lordships were considering the powers under section 22-A(2) of the Act. Following the decision in the case of Subba Rao [1967] 19 STC 257 (Mys) it was held: "In this case the court has ruled that the period of limitation of four years under section 21(3) of the Act as it stood then, which corresponds to section 22-A(2) of the Act should be reckoned from the date the records were called for and not from the date the order was made by the Commissioner (sic). We are of the view that this ruling is a direct authority on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner could be stated to have initiated action in exercise of power conferred upon him by that action and therefore notice was not barred by limitation. High Court did not accept the contention of the assessee that the initiation of proceedings was beyond the prescribed period of limitation. Following the decisions in Subba Rao's case [1967] 19 STC 257 (Mys) and Busunur's case [1986] 61 STC 123 (Kar) it was held that the Commissioner had initiated the proceedings when he examined the records sent by the Deputy Commissioner, but, decided to await the decision of the Supreme Court in B.R. Shetty's case [1981] 47 STC 369. The appeal filed by the assessee was dismissed. 13.. Assessee being aggrieved by the judgment of this Court, carried a further appeal to the Supreme Court. Special leave was granted. The apex Court reversed the order of the High Court on this point. Accepting the contention of the assessee and rejecting that of the Revenue, it was held as follows: "6. This stand of the Revenue is not correct for the simple reason that the note extracted earlier clearly suggests that no action was initiated under section 22-A as the judgment of this Court was awaited in B.R. Shetty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Company [1986] 62 STC 102 and the judgment of the Supreme Court in A. Vaikuntappa Setty's case [1999] 112 STC 647, rejected the contention of the counsel for the assessee that the Supreme Court had overruled the view of this Court to the effect that exercise of revisional power under section 22-A was relatable to initiation of proceedings for revising the order by calling for the record only and not to the passing of the final order revising the order sought to be revised. It was held that the Supreme Court had accepted the plea of the assessee on a limited point and did not decide on the larger question which had been decided in S. Subba Rao's case [1967] 19 STC 257 (Mys) and Busunur Industries's case [1986] 61 STC 123 (Kar). The contention of the counsel for the assessee that the Supreme Court took a different view and reversed the view taken by this Court was not accepted. It was held: "10. A perusal of the observation of the Supreme Court shows that what was held was that after the receipt of the records, the Commissioner did not initiate the action and postponed the same till the decision in B.R. Shetty's case [1981] 47 STC 369 (SC). Without going into the question as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings can either be initiated by issuing a notice within four years of the passing of the order sought to be revised or that the proceedings must conclude within four years of the passing of the order which was sought to be revised. Relying upon the view taken by this Court in the earlier judgments and for the reasons stated above, we do not find any merit in this appeal and dismiss the same with no order as to costs." 16.. Sri Gandhi, learned counsel appearing for the appellants, relying upon the judgment of the Andhra Pradesh High Court in Toshiba Anand Batteries Ltd. case [1995] 96 STC 664 and a subsequent judgment of the same High Court in Hyderabad Wire Allied Products v. Commissioner of Commercial Taxes [1999] 115 STC 286 and the judgments of the Supreme Court in State of Andhra Pradesh v. M. Ramakishtaiah Co. [1994] 93 STC 406 in which the judgment of the Andhra Pradesh High Court has been upheld and in A. Vaikuntappa Setty and Co. v. Commissioner of Commercial Taxes, Bangalore [1999] 112 STC 647 (SC), in which the judgment of this Court in Keshawa Trading Co. [1986] 62 STC 102, was reversed, argued that the division Bench judgments of this Court in Subba Rao's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial to the interest of the Revenue. Firstly, the power that can be exercised is to call for and examine the records; secondly, if necessary, to stay the operation of such order for such period as he deems fit; thirdly, after giving an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such orders thereon as the circumstances of the case justify. These three powers were described in Subba Rao's case [1967] 19 STC 257 (Mys.) to be the three facets of the same power. The Commissioner exercises his power to revise the order of the subordinate authority as soon as he calls for the record of the proceedings of the subordinate authority. Limitation prescribed in the section is for initiation of the proceedings to revise and not to the passing of the final order revising the order of the subordinate authority. All that section 22-A(3) says is that power conferred under section 22-A(1) and (2) is exercisable within four years from the date of the order of assessment that is proposed to be revised. Exercise of the power commences as soon as the records are called for. If that act is done within four years, the jurisdiction vests in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o above took a different view and indirectly reversed the larger question decided in Subba Rao's case [1967] 19 STC 257 (Mys) that, that the limitation prescribed under section 22-A is for initiating the proceedings by sending for the records within four years from the passing of the order sought to be revised and not to the passing of the final orders within four years from the passing of the order sought to be revised. Relevant observation of the Supreme Court in A. Vaikuntappa Setty Co.'s case [1999] 112 STC 647 has already been extracted in the earlier part of the judgment. A perusal of the observation of the Supreme Court shows that what was held was that after the receipt of the records, the Commissioner did not initiate the action but postponed the decision till the decision in B.R. Shetty's case [1981] 47 STC 369 (SC). It was held that for the reasons given in the show cause notice, the limitation for initiating the proceedings was not saved. The finding recorded by the High Court on the point of law was not reversed. The reversal was on the point of fact relating to interpretation to be placed upon the orders passed by the Commissioner postponing the initiation of procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that the authorities in exercise of their jurisdiction under sections 12-A, 21 and 22-A of the Act shall pass the orders referred to in the said sections within a period of three years from the date of initiation of such proceedings or calling for the records as the case may be. Section 22-B reads thus: "22-B. Limitation in regard to passing of orders in respect of certain proceedings.-(1) Notwithstanding anything contained in sections 12-A, 21 and 22-A, where any proceedings are initiated under section 12-A or any records have been called for under section 21 or 22-A, the authorities concerned shall pass orders referred to in the said sections, within a period of three years from the date of initiation of such proceedings or calling for the records, as the case may be: Provided that in respect of proceedings initiated or records called for before the date of commencement of the Karnataka Taxation Laws (Amendment) Act, 1997, orders shall be passed within a period of four years from such commencement. (2) In computing the period specified in sub-section (1), the period during which a proceeding has been deferred on account of any stay granted by any court or any other autho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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