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Manordas Kalidas Vs. Commissioner of Sales Tax, Bombay - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSales Tax References Nos. 4 and 5 of 1966
Judge
Reported in[1969]24STC521(Bom)
ActsBombay Sales Tax Act, 1953 - Sections 9(2), 15 and 31; Bombay Sales Tax Act, 1946 - Sections 11, 11-A and 22; Bombay Sales Tax Laws (Validating Provisions)(Amendment) Act, 1959; Constitution of India - Article 226
AppellantManordas Kalidas
RespondentCommissioner of Sales Tax, Bombay
Appellant AdvocateS.P. Mehta, ;Y.P. Trivedi, ;S.S. Gaitonde and ;V.H. Patil, Advs.
Respondent AdvocateY.B. Rege, Adv.
Excerpt:
sales tax - revisional powers - section 31 of bombay sales tax act, 1953 - whether revision made by assistant commissioner of sales tax was justified and valid under section 31 - on facts and circumstances of case assistant commissioner not justified in exercising his revisional powers under section 31 and could not validly initiate proceedings for bringing to charge escaped turnover which power is vested in another authority under act. - - similarly the power to makes best judgment assessment is vested by section 9(2)(b) in the assessing authority and has to be exercised in the manner provided. in our opinion, the ultimate decision in that case was perfectly correct, but we are unable to affirm the view that the revisional power is governed by any period of limitation laid down in..........made by the assistant commissioner of sales tax was justified and valid under section 31 of the bombay sales tax act, 1953 ?' 2. the applicants are dealers in artificial silk and other products. the two periods with which the two references are concerned are : (1) from 1st october, 1948 to 31st march, 1950, and (2) from 1st april, 1950 to 31st october, 1952. 3. originally, the assessments in respect of each of these two periods were completed by assessment orders dated 4th may, 1951, in the case of the earlier period and 26th february, 1954, in the case of the second period. it appears that in the case of the applicants in income-tax proceedings, the income-tax officer passed an assessment order for the assessment year 1951-52 (samvat year 2005) on 28th march, 1956. thereafter the.....
Judgment:

Abhyankar, J.

1. Both these references, which raise a common question, will be disposed of by this order. The common question referred to us is as follows :

'Whether on the facts and circumstances of the case revision made by the Assistant Commissioner of Sales Tax was justified and valid under section 31 of the Bombay Sales Tax Act, 1953 ?'

2. The applicants are dealers in artificial silk and other products. The two periods with which the two references are concerned are :

(1) From 1st October, 1948 to 31st March, 1950, and

(2) From 1st April, 1950 to 31st October, 1952.

3. Originally, the assessments in respect of each of these two periods were completed by assessment orders dated 4th May, 1951, in the case of the earlier period and 26th February, 1954, in the case of the second period. It appears that in the case of the applicants in income-tax proceedings, the Income-tax Officer passed an assessment order for the assessment year 1951-52 (Samvat Year 2005) on 28th March, 1956. Thereafter the Assistant Collector of Sales Tax issued two notices to the applicants on 13th June, 1958, purporting to act under section 31 of the Bombay Sales Tax Act, 1953. One notice was in respect of the first period and the other was in respect of the second period covered by these two references. In both these notices, it was alleged that the applicants had suppressed sales to the tune of Rs. 20,00,000 from regular books of account for each of the two years 1948-49 and 1950-52 respectively, and therefore, it was proposed to revise the orders passed by the Sales Tax Officer for the said years by incorporating and adding sales to the extent of Rs. 20.00,000 to the turnover for each of these years and to subject the sales to tax at the rate of one anon in a rupee. Along with the notices, the Assistant Collector sent a letter of even date in which reference was made to certain portion from the order of the Income-tax Officer on the basis of which apparently the notices were issued. It is not now disputed that in both these notices the Assistant Collector purported to bring to charge the escaped turnover in respect of each assessment period.

4. After making enquiries, the Assistant Collector passed an order dated 3rd March, 1960, holding that the escaped turnover in the case of each year was to the extent of Rs. 10,00,000. From this order appeals were filed by the assessee and by his order dated 3rd October, 1962, the Deputy Commissioner of Sales Tax slightly reduced the amount of turnover which was treated as the escaped turnover. The applicants then approached the Sales Tax Tribunal in the exercise of its revisional powers and before the Tribunal, among other contentions, the applicants raised a contention regarding the jurisdiction of the Assistant Collector of Sales Tax to initiate proceedings for reassessing an escaped turnover in respect of the applicants in the exercise of revisional powers under section 31 of the Bombay Sales Tax Act, 1953. There were other contentions of law raised with which we are not concerned.

5. The Tribunal by its order dated 30th August, 1963, rejected the legal contentions raised by the applicants. It may be mentioned that the applicants had approached this court, invoking its extraordinary jurisdiction under the Constitution and challenging the notices under Article 226 of the Constitution. Among other grounds raised before the court in that petition the applicants had also contended that the Assistant Collector could not exercise revisional jurisdiction beyond a reasonable time. With regard to the latter contention, this court held that although the revisional jurisdiction must be exercised within a reasonable time and the yardstick of reasonableness will be the period prescribed for reassessment, as the Legislature had intervened and amended the Act of 1953 by the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act, 1959, it must be said that the notices issued were not beyond time and were therefore not invalid. The objection based on the limitation being thus negatived, and it having been held that the Assistant Collector had authority to issue notices in the exercise of revisional powers the petition was rejected. It may be mentioned that the petition was filed before this court as soon as the notices were issued and before any adjudication was made.

6. The contention of the applicants raised in the question referred to us is that the authority empowered to exercise revisional powers under the Bombay Sales Tax Act, section 31, or the Bombay Sales Tax Act, 1946, section 22, must act within certain limitations. It is urged that what the revising authority purported to do in this case amounted, in fact, and in law to the exercise of the powers of reassessment which could be exercised only by the authority mentioned in section 15 of the Bombay Sales Tax Act, 1953, or in section 11-A of the Bombay Sales Tax Act, 1946. That power could be exercised by the authority empowered to exercise jurisdiction as assessing authority, and that jurisdiction could not be arrogated by the authority exercising revisional jurisdiction either under section 22 of the Bombay Sales Tax Act, 1946, or section 31 of the Bombay Sales Tax Act, 1953.

7. The learned counsel for the applicants has strongly relied in support of this contention on a recent judgment of the Supreme Court in Civil Appeal No. 637 of 1967 decided on 29th November, 1967, in The Swastik Oil Mills Ltd. v. Shri H. B. Munshi. [1968] 21 S.T.C. 383. A copy of that judgment, which is yet not reported, has been made available to us at the hearing. After referring to another decision in that court The State of Kerala v. K. M. Cheria Abdulla and Company [1965] 16 S.T.C. 875, their Lordships then quoted the following passage from that judgment :

'It would not invest the revising authority with power to launch upon enquiries at large so as either to trench upon the powers which are expressly reserved by the Act or by the rules to other authorities or to ignore the limitations inherent in the exercise of those powers. For instance, the power to reassess escaped turnover is primarily vested by rule 17 in the assessing officer and is to be exercised subject to certain limitations, and the revising authority will not be competent to make an enquiry for reassessing a taxpayer. Similarly the power to makes best judgment assessment is vested by section 9(2)(b) in the assessing authority and has to be exercised in the manner provided. It would not be open to the revising authority to assume that power.'

8. The decision of this court in the applicants' case in Manordas Kalidas v. V. V. Tatke [1960] 11 S.T.C. 87 was also noticed by the Supreme Court in that judgment. In considering the arguments of the applicants, their Lordships observed as follows :

'It appears that, in view of the fact that proceedings for reassessment could have been taken under section 11-A in that case and, instead, revisional powers were sought to be exercised, that court held that the exercise of such revisional powers must be governed by the same limitation which applied to the exercise of power of reassessment. In fact, the correct principle that should have been applied in that case is the principle mentioned by us earlier laid down in K. M. Cheria Abdulla & Co. [1965] 16 S.T.C. 875. The revision should have been held to be incompetent on the ground that the power was sought to be exercised for assessment of escaped turnover which had not been assessed at all at the initial stage of assessment under section 11 and proceedings under section 11-A could have been competently initiated for bringing that turnover to tax. Instead, the court equated the proceeding in revision with the proceeding for reassessment and applied the 4-year period of limitation which was prescribed only for reassessment and not for exercise of revisional power. In our opinion, the ultimate decision in that case was perfectly correct, but we are unable to affirm the view that the revisional power is governed by any period of limitation laid down in section 11-A for proceedings for reassessment of escaped turnover.'

9. There is, thus, no doubt that what the proper order in the case of the applicants would be is indicated in no uncertain terms in this passage. We have, therefore, no difficulty in answering the question posed by the Tribunal to the effect that on the facts and circumstances of the case the Assistant Commissioner of Sales Tax was not justified in exercising his revisional powers under section 31 of the Bombay Sales Tax Act and he could not validly initiate proceedings for bringing to charge the escaped turnover which power is vested in another authority under the Act. We answer the question accordingly.

10. We may mention in fairness that the learned counsel appearing for the State did not contest the reference, and therefore, we think that this is a fit case where, though the question is answered in favour of the assessee, there should be no order as to costs. The applicants, however, would be entitled to refund of the fees of Rs. 100.

11. Reference answered accordingly.


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