TMI Blog2002 (12) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... In the meantime the assessing authority gave effect to the first appellate authority's order by passing a revised order dated June 26, 1993 (annexure D). After the order of the Tribunal the Deputy Commissioner, Agricultural Income-tax and Sales Tax, Ernakulam issued a notice dated June 27, 1995 under section 35 of the Act proposing to set aside the assessment. Though the assessee had sought for time to file objections and the same was granted as per communication dated July 6, 1995 the assessee did not respond to the notice. In the above circumstances, the Deputy Commissioner by his order dated July 27, 1995 (annexure E) set aside the revised order dated June 26, 1993 passed by the assessing authority and remanded the matter to the assessing authority for doing the assessment afresh in accordance with law. Aggrieved by this order the assessee filed appeal T.A. No. 549 of 1995 before the Sales Tax Appellate Tribunal, Additional Bench, Ernakulam. The Tribunal allowed the said appeal and cancelled the order passed by the Deputy Commissioner holding that the Deputy Commissioner has no power to reopen the assessment based on materials which were not in existence at the time when the ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct by any officer subordinate to him and to make such enquiry or cause such enquiry to be made and subject to the provisions of the Act may pass orders thereon. In other words, according to the Senior Counsel the Deputy Commissioner can go into the question of legality, regularity or propriety of the order passed by the assessing authority only on the basis of the materials available before the assessing authority while making the assessment. (2) Going by the scheme of the Act there is a distinction between the powers of the assessing authority to reopen the assessment under section 19 of the Act for getting at escaped turnover and the power of the Deputy Commissioner to correct illegalities in the orders passed by certain authorities under the Act. According to him, only the assessing authority, exercising powers under section 19, has got the power to conduct roving enquiries to find out whether there is any escapement of turnover or under-assessment whereas the Deputy Commissioner has no power to conduct any such roving enquiry for collecting materials to find out whether there is any escapement of turnover under assessment. The counsel submitted that the powers of the assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Court in Madras Rubber Factory Ltd. v. State of Kerala [1979] 44 STC 208 requires reconsideration in the light of the principles laid down in the aforementioned decisions and also in view of the fact that six or seven other High Courts on a consideration of the decisions of the Supreme Court had taken a contrary view. 6.. As already noted, the Deputy Commissioner had invoked the suo motu powers vested in him under section 35 of the Act on the ground that on verification of the assessment records it is noticed that a turnover of Rs. 26,71,517 as pointed out by the Intelligence Officer as per his Order No. IEC(E)15/91-92/88-89 dated May 18, 1992 was not considered for the assessment and that the quantum of suppression was re-examined by the assessing authority and fixed at Rs. 25,56,185 as per order dated March 24, 1994. The assessee did not file any reply to the notice issued by the Deputy Commissioner and the Deputy Commissioner had passed an order setting aside the assessment order dated June 26, 1993 (revised order passed pursuant to the order of the first appellate authority) and remitted the matter back to the assessing authority for doing assessment afresh according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting a person shall be passed unless that person has had a reasonable opportunity of being heard." 8.. By an amendment made by the Finance Act, 1993 published in the Kerala Gazette Extraordinary No. 767 dated July 29, 1993 an amendment was made to sub-section (1) thereof. After the said amendment sub-section (1) of section 35 reads as follows: "35. Powers of revision of the Deputy Commissioner suo motu.(1) The Deputy Commissioner may, of his own motion, call for and examine any order passed or proceedings recorded under this Act by any officer or authority subordinate to him other than an Appellate Assistant Commissioner which in his opinion is prejudicial to revenue and may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he thinks fit." 9.. The scope of the provisions of section 35 of the Act was considered by a Full Bench of this Court in Madras Rubber Factory Ltd. v. State of Kerala [1979] 44 STC 208 in view of the conflicting views expressed by two division Benches of this Court in O. Kassim Kannu v. State of Kerala [1970] 26 STC 530 and in C.C. Transport Company v. State of Kerala [1977] 40 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n [1970] 26 STC 251 (SC)." 11. In view of the conflict between these two division Benches the very same question, viz., the scope of revisional jurisdiction under the Act and as to whether in exercising the same it is open to the revisional authority to trench upon the powers and jurisdiction of getting at the escaped turnover and bringing the same to tax or assessment arose, the matter was referred to the Full Bench. The Full Bench after referring to the relevant provisions of the Act particularly sections 19 and 35 as also the analogus provision in the General Sales Tax Act 1125 and rule 33 of the Rules in paragraph 3 of the judgment observed as follows: "In the face of these statutory provisions sketching the ambit of the respective powers and, as a matter of first impression, there appears to be no bar or inhibition against getting at escaped income in exercise of the revisional power, so long as the grounds for exercise of that power are made out, viz., that the order is vitiated by illegality, irregularity or impropriety. This is the view that has been taken in more than one decision of the Supreme Court and of this and other High Courts. We are of the opinion that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaching a wrong conclusion on the materials and that this error in the assessment proceeding, section 34 authorises the Commissioner to correct 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. The majority decision in the above case was reversed by the Supreme Court in Commissioner of Agricultural Income-tax v. Lucy Kochuvareed [1976] 103 ITR 799. The Full Bench again considered the decision of the division Bench of the Madras High Court in F.K. Hasheeb Co. v. State of Madras [1966] 17 STC 38. Ultimately the Full Bench in paragraph 17 of the judgment held as follows: "We began the discussion of the question by recording our first impression on the statutory provision. The power of assessing escaped turnover and of revision are two distinct and separate powers. They have been conferred on two different authorities under sections 19 and 35, the latter power being conferred on a superior authority. An examination of the authorities has only confirmed our first impression." 12.. Based on the principles laid down as above, the Full Bench considered T.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n these circumstances, inspite of the persuasive submissions made by the Senior Counsel based on subsequent decisions of other courts also we are not inclined to throw the Full Bench decision which held the field for over 22 years for reconsideration by a larger Bench on the ground that other High Courts have taken a contrary view. Thus we dispose of the first two contentions taken by the Senior Counsel appearing for the respondent. The third contention raised by the Senior Counsel is that the illegality, if at all, is only in the original assessment order for 1988-89 passed on November 27, 1990 and therefore the order that could be corrected under section 35 is only that order. The Senior Counsel pointed out that in the instant case the Deputy Commissioner had not set aside the original order which has merged in the first appellate authority's order and that only the order passed by the revising authority giving effect to the first appellate order was set aside. We are unable to accept this contention also for the reason that when the original assessment order was modified by the first appellate authority and the assessing authority had given effect to the appellate order the only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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