Skip to content


Commissioner of Sales Tax Vs. Motor Machinery - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberS.T.R. No. 12 of 1971
Judge
Reported in(1976)5CTR(Bom)381; [1976]384STC78(Bom)
ActsBombay Sales Tax Act, 1959 - Sections 20, 55, 56 and 57
AppellantCommissioner of Sales Tax
RespondentMotor Machinery
Appellant AdvocateC.A. Phadkar, Adv.
Respondent AdvocateB.C. Joshi, Adv.
Excerpt:
.....order of assistant commissioner (ac) of sales tax passed in appeal is open to suo motu revision by deputy commissioner (dc) under section 57 (1) - plain reading of section 57 (1) makes it clear that revisional powers of dc orders does not exclude orders passed by ac in appeal - held, order of ac passed in appeal open to suo motu revision by dc under section 57 (1). - - 1. this is a reference under section 66(1) of the bombay sales tax act, 1959 (hereinafter referred to as 'the said act') and it arises an interesting question under section 57 of the said act. this contention was accepted by a learned single judge of this court but on appeal it was held by the division bench of this court which disposed of the appeal that the deputy commissioner exercised powers and performed..........the assistant commissioner of sales tax passed in appeal is not open to suo motu revision by the deputy commissioner under section 57(1) of the act ?' 2. the facts giving rise to the reference are as follows :- 3. on 3rd december, 1962 the respondent, a limited company, was assessed by the sales tax officer for the period from 1-1-1960 at 31-3-1960. the respondent inter alia manufactures and sells electric motors manufactured by it. the respondent had collected sales-tax and general sales-tax on the sales of electrical motors at an aggregate rate of 5% treating the goods as falling under entry no. 22 of schedule 'e' to the said act. the sales tax officer, in making the assessment, followed the statutory determination made by the then commissioner of sales tax under section 52 of the.....
Judgment:

Kania, J.

1. This is a reference under section 66(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as 'the said Act') and it arises an interesting question under section 57 of the said Act. The reference has been made at the instance of the Commissioner of Sales Tax and the question referred to us for our consideration is as follows :-

'Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the order of the Assistant Commissioner of Sales Tax passed in appeal is not open to suo motu revision by the Deputy Commissioner under section 57(1) of the Act ?'

2. The facts giving rise to the Reference are as follows :-

3. On 3rd December, 1962 the Respondent, a limited company, was assessed by the Sales Tax Officer for the period from 1-1-1960 at 31-3-1960. The Respondent inter alia manufactures and sells electric motors manufactured by it. The Respondent had collected sales-tax and general sales-tax on the sales of electrical motors at an aggregate rate of 5% treating the goods as falling under Entry No. 22 of Schedule 'E' to the said Act. The Sales Tax Officer, in making the assessment, followed the statutory determination made by the then Commissioner of Sales Tax under section 52 of the said Act in an earlier case and taxed these goods at 3% under entry No. 15 of Schedule 'C'. The surplus amount of tax which the assessee had collected was forfeited under the orders of the Sales Tax Officer. The assessee went in appeal before the Assistant Commissioner of Sales Tax against this order. Two points were agitated in that appeal, one of which was regarding the order of forfeiture passed by the Sales Tax Officer. The other contention was regarding the penalty levied by the Sales Tax Officer under section 36(1). The Assistant Commissioner set aside the order of penalty but so far as the order for forfeiture was concerned, confirmed the same. Against this order of the Assistant Commissioner dated 31st October 1963, the assessee went in second appeal before the Sales Tax Tribunal and while the second appeal was pending before the Tribunal, the Deputy Commissioner of Sales Tax (Adm.) II, Bombay City Division, issued a notice dated 2-8-1965 to the assessee under section 57 of the said Act in form No. 40 to the effect that he was proposing to revise suo motu the order of the Assistant Commissioner of Sales Tax, dated 31-10-1963. The Deputy Commissioner of Sales Tax ultimately passed an order revising suo motu the order of the Assistant Commissioner of Sales Tax at 5% under entry No. 20 of Schedule 'C' to the said Act. The assessee went in revision against this order of the Deputy Commissioner and challenged the authority of the Deputy Commissioner of Sales Tax to suo motu revise the order passed by the Assistant Commissioner of Sales Tax. The Tribunal took a view that the assessee should have filed an appeal and not a revision application and treated the revisional application filed by the assessee as an appeal. The Tribunal observed that there is no power in the Commissioner of Sales Tax to hear appeals against original orders passed by a Sales Tax Officer or any other officer subordinate to him. This power was invested in the Assistant Commissioner of Sales Tax. The Tribunal came to the conclusion that the power conferred by the said Act on an Assistant Commissioner by virtue of his office must not be confused with the power which are invested in the Commissioner of Sales Tax in the execution of his functions under the said Act and which the Commissioner is empowered to delegate to the Assistant Commissioner under sub-section (6) of section 20 of the said Act. On the basis of this reasoning, the Tribunal came to the conclusion that the Assistant Commissioner, in disposing of the appeal, could not be considered to be an officer appointed to assist the Commissioner and hence the Commissioner was not entitled to revise suo motu, under the power conferred on the Commissioner under section 57(1) of the said Act, an order passed by the Assistant Commissioner in disposing of a first appeal preferred to him under the provisions of section 55(1) of the said Act. It is the correctness of this view which is sought to be impugned by the Commissioner in this reference.

4. Since the arguments before us turn to a large extent on some of the provisions of the said Act, as they stood at the relevant time, it will not be out of place to take notice of the same as this stage.

5. Sub-sections (1), (2) and (6) of section 20 of the said Act a run as follows :-

'20(1) For carrying out the purposes of this Act, the State Government shall appoint an officer to be called the Commissioner of Sales Tax.

(2) To assist the Commissioner in the execution of his functions under this Act, the State Government may appoint Additional Commissioners of Sales Tax (if any); and such member of, -

(a) Deputy Commissioners,

(b) Assistant Commissioners,

(c) Sales Tax Officers, and

(d) Other officers and persons, and give them such designations (if any), as that Government thinks necessary.

(3) ..............

(4) ..............

(5) ..............

(6) Assistant Commissioners, Sales Tax Officers and other officers shall, within their jurisdiction, exercise such of the powers and perform such of the duties of the Commissioner under this Act, as the Commissioner may, subject to such conditions and restrictions as the State Government may by general or special order impose, by an order in writing delegate to them either generally or, as respects any particular matter or class of matters.

It may be mentioned here that sub-section (5) of section 20 provides that a Deputy Commissioner shall have and exercise in the area within his jurisdiction all the powers and shall perform all the duties, conferred or imposed on the Commissioner, by or under this Act, but power had been given thereunder to the Commissioner to direct the Deputy Commissioner not to exercise any particular duties as specified by him. Sub-sections (1), (2) and (3) of section 55 run as follows :-

'55. (1) An appeal, from every original order not being an order mentioned in section 56 passed under this Act or the rules made thereunder shall lie :-

(a) if the order is made by a Sales Tax Officer, or any officer subordinate thereto, to the Assistant Commissioner;

(b) if the order is made by an Assistant Commissioner, to the Commissioner;

(c) if the order is made by Additional Commissioner or Commissioner, to the Tribunal.

(2) In the case of an order passed in appeal by an Assistant Commissioner, a second appeal shall lie, at the option of the appellant, either to the Commissioner, or to the Tribunal.

(3) Every order passed in appeal under this section shall, subject to the provisions of sections 57, 61 and 62, be final.'

Sub-section (1) of section 57 read as follows :-

'57. (1) Subject to the provisions of section 56 and to any rules which may be made in this behalf :-

(a) the Commissioner, of his own motion within two years from the date of any order passed by any officer appointed under section 20 to assist him, may call for and examine the record of any such order and pass such order thereon as he thinks just and proper;

(b) the Tribunal, on application made to it against an order of the Commissioner (not being an order passed under sub-section (2) of section 55 in second appeal) within four months from the date of the communication of the order, may call for and examine the record of any such order, and pass such order thereon as it thinks just and proper.

The question before us is whether the Deputy Commissioner who exercised the functions of the Commissioner under section 57(1) of the said Act, in the present case, was entitled to revise the order, dated 31-10-1963, passed by the Assistant Commissioner in the appeal preferred by the assessee against the order of the Sales Tax Officer; and the determination of this question to a large extent turns on whether the Assistant Commissioner could be considered, for the purpose of section 57(1) of the said Act, as an officer appointed under section 20 to assist the Commissioner. It appears to us, on a plain reading of the provisions of sub-section (2) of section 20, the which we have already referred that an Assistant Commissioner is one of the officers the State Government is entitled to appoint to assist the Commissioner. In fact, sub-section (2) of section 20 which confers on the State Government the appointing power as far as the post of an Assistant Commissioner is concerned, in terms, provides that such appointment is to be made to assist the Commissioner in the execution of his functions under the said Act. The language of clause (a) of sub-section (1) of section 57 read with section 20(2) of the said Act, therefore, suggests that an Assistant Commissioner must be regarded as an officer appointed to assist the Commissioner in the discharge of his functions under the said Act. The Commissioner would therefore, subject to the provisions of Section 56, be entitled to revise any order passed by an Assistant Commissioner after following the procedure laid down in section 57 and the relevant rules. The contention of Mr. Joshi, the learned Counsel for the assessee, however, was that when the Assistant Commissioner was exercising his appellate authority under sub-section (1) of section 55 of the said Act, he could not be regarded as a person appointed to assist the Commissioner in the exercise of his functions under the said Act. It was submitted by him that although several functions have been specifically assigned to the Commissioner under the said Act, the provisions of sub-section (1) of section 55 showed that there was no power given to the Commissioner to hear an appeal against an original order made by a Sales Tax Officer, such power having been conferred by clause (a) of sub-section (1) of section 55 specifically on the Assistant Commissioners. Hence, according to Mr. Joshi in exercising his functions of hearing an appeal against the original order passed by the Sales Tax Officer, the Assistant Commissioner was not exercising any function delegated to him by the Commissioner or even any function assigned to or duty conferred on the Commissioner under the said Act but was acting in pursuance of his own statutory powers under section 55(1)(a) of the said Act and, therefore, he could not be regarded as an office appointed to assist the Commissioner. We find ourselves unable to accept this contention. The plain language of clause (a) of sub-section (1) of section 57, to which we have already referred shows that the Commissioner has a power to revise suo motu any order passed 'by an officer appointed under section 20 to assist him.' The question, therefore, is whether the order sought to be revised by the Commissioner was made by the Assistant Commissioner as an officer appointed under section 20 to assist the Commissioner and not whether the order was actually passed by him in the course of assisting the Commissioner. The words 'appointed under section 20 to assist him' are, in our opinion, descriptive of the officer whose order can be revised by the Commissioner and do not, in any manner, qualify the order or nature of the order which can be revised.

6. It was next sought to be contended by Mr. Joshi that when an Assistant Commissioner is given the work of hearing appeals, he must be deemed to be appointed as an Appellate Assistant Commissioner and cannot be regarded as an officer appointed to assist the Commissioner. We are afraid, there is no substance in this contention. Under the provisions of the said Act and the rules made there under, there is no provision at all for the appointment of an Assistant Commissioner as an appellate Commissioner as such. An Assistant Commissioner hearing appeals is only an Assistant Commissioner to whom the work of hearing appeals has been assigned or allocated by the Commissioner. It is merely by the virtue of such assignment or allocation of work that a particular Assistant Commissioner or particular Assistant Commissioner hear appeals under section 55(1). There is no separate or independent appointment of these Assistant Commissioners or Appellate Commissioners as contended by Mr. Joshi.

7. In connection with this question, it would not be out of place to refer to a decision of a Division Bench of this Court in H. B. Munshi's Case (1974) 34 Sales Tax Cases, p. 113. Although the question in that case was some-what different, some of the observations in the judgment are useful for the determination of the question before us and lend some support to the view which we have taken as indicated above. In that case the petitioner-company, carrying on business of manufacturing rubber beltings, was registered as a dealer under the said Act, viz., Bombay Sales Tax Act, 1959. The petitioner had collected sales-tax on the sales of rubber beltings at the rate of 3%. However, the Sales Tax Officer took the view, in his assessment orders that the petitioner was liable to pay sales tax at 5% on the sales of rubber beltings. On appeals by the assessee the Assistant Commissioner held that no sales-tax was at all attracted on the sales of rubber beltings by the petitioner but he passed orders forfeiting to the Government under section 37 of the said Act the amounts collected as sales-tax by the petitioner. The petitioner preferred second appeals which were heard by the Deputy Commissioner who set aside the order of forfeiture and directed the amounts to be refunded to the petitioner. Subsequently the Commissioner of Sales Tax revised the orders of the Deputy Commissioner and forfeited to the Government under section 37 of the said Act the amounts collected as sales-tax by the petitioners. The petitioner filed a writ petition in this Court where the principal contention of the petitioner was that when the Deputy Commissioner passed the orders in the appeals from the Assistant Commissioner's orders, he was exercising the powers of the Commissioner under section 55(1) (b) as a statutory delegate of the Commissioner and, therefore, the orders made by the Deputy Commissioner must be deemed to be the orders made by the Commissioner himself and it was not open to the Commissioner to revise such orders in exercise of his powers under section 57 of the said Act. This contention was accepted by a learned Single Judge of this Court but on appeal it was held by the Division Bench of this Court which disposed of the appeal that the Deputy Commissioner exercised powers and performed functions conferred upon him under the Act in his own right and not as a delegate or an agent not the commissioner and, therefore, the orders passed by the Deputy Commissioner in the second appeals, were clearly revisable by the Commissioner under section 57 (1) (a) of the said Act. It was held in that case that on a plain reading of sub-section (5) of section 20, there was no question of there being any statutory delegation in respect of powers and duties to the Deputy Commissioner and it could not be said that the Deputy Commissioner, when exercising the powers conferred upon him by enactment, was a delegate of the Commissioner or an agent of the Commissioner, although in that case it was not disputed that the Deputy Commissioner exercising his power or performing his functions under sub-section (5) of section 20 would be one of the officers appointed to assist the Commissioner (see page 123 of the report), yet there are certain observations in the judgment of the Division Bench, which are relevant for the purpose of the case before us, and these are as follows (page 124 of the report) :-

'......... As we have indicated above, on a plain reading of clause (a) of sub-section (1) of section 57 any order passed by the Deputy commissioner in second appeal has been made subject to revisional jurisdiction of the Commissioner under the said provisions because the Deputy Commissioner must be held to be and is in fact an officer appointed under section 20 to assist the Commissioner and, therefore, any order passed by the Deputy Commissioner in second appeal would be subject to the exercise of revisional jurisdiction by the Commissioner ..........'.

If a Deputy Commissioner is to be regarded as an officer appointed under section 20 to assist the Commissioner, we fail to see how it can be said that an Assistant Commissioner is not an officer appointed under section 20 to assist the Commissioner. The question as to the nature of his appointment. Mr. Joshi, on the other hand, in support of his contention, strongly relied upon a decision of a Division Bench of the High Court of Madhya Pradesh in Commissioner of Sales Tax, Madhya Pradesh, Indore vs. Shri Amarjeet Singh (1963) 14 S.T.C. 501. In that case the Commissioner had sought, under section 22-B of the Central Provinces and Bearer Sales Tax Act, 1947, to revise an appellate order passed by the Appellate Assistant Commissioner, after following the procedure laid down under that Act. The assessee went in appeal against this order of the Commissioner to the Tribunal who allowed the same and set aside the Commissioner's order on the view that there could be no revision under section 22-B of that Act of an order passed in appeal under section 22(1) of that Act, Mr. Joshi strongly relied on the observations in paragraph 6 of the report of the judgment which runs as follows :-

'..... That being so, we think that an appellate authority is in that capacity not within the expression 'any person appointed under section 3 to assist him' as occurring in section 22-B of the Act'.

This decision, in our view, is not of much assistance in the case before us. In the first place, the provisions which came up for consideration before the Madhya Pradesh High Court in that case are quite different from the provisions of the said Act which are in question before us. Although section 22-B of the Central Provinces and Berar Sales Tax Act, 1947, confers powers on the Commissioner to revise the orders passed by any person appointed under section 3 to assist him, a perusal of section 3 of that Act shows that there is no specific provision therein for the appointment of any Assistant Commissioner. Moreover, a reading of section on 22(1) of that Act shows that any dealer aggrieved by an original order under that Act, may appeal to prescribed authority against such order. As pointed out by the Division Bench (in paragraph 6 of the report), any person appointed under section 3 does not, by the mere fact of such appointment, become entitled to entertain or dispose of any appeal. He cannot do so unless he is named as one entitled so to do under the rules made under section 22(1) of that Act. The Division Bench further observed that, it might well be that the power to hear and decide an appeal is given to an authority not appointed under section 3. It was in view of these provisions that the Division Bench of the Madhya Pradesh High Court came to the conclusion that an Appellate Assistant Commissioner could not be regarded as a person appointed under section 3 of that Act to assist the Commissioner. In view of the fact that the provisions of the Bombay Sales Tax Act, 1959 with which we are concerned, are quite different, we fail to see how this decision can be of any assistance to Mr. Joshi in his aforesaid contention.

8. The next contention urged by Mr. Joshi was that under section 55(2) of the said Act a right was conferred on the assessee to go by way of second appeal against an order passed in appeal by the Assistant Commissioner either to the Commissioner or to the Tribunal and that such a right could not be taken away by the Commissioner or to the Tribunal and that such a right could not be taken away by the Commissioner exercising the powers of revision under sub-section (1) of section 57. We are unable to see any force in this contention. If the Commissioner has been given the power of revision suo motu we fail to see how merely because as a result of the exercise of such power the assessee might be deprived of his chance of going by way of second appeal, this can make a difference to the construction of these provisions. Moreover, it is not as if the assessee is helpless against an order passed by the Commissioner in exercise of his power of suo motu revision under section 57 (1) of the said Act. It is common ground before us that even against such an order the assessee could go by way of appeal to the Tribunal under the provisions of and hence we fail to see how this consideration is at all material in the construction of the provisions before us.

9. The final contention of Mr. Joshi is that section 57 only postulates the disturbance of a final order and in the present case the order passed by the Assistant Commissioner was not a final order because there was an appeal preferred by the assessee to the Sales Tax Tribunal against this order which was pending at the time when the Deputy Commissioner issued the notice of suo motu revision. We are unable to accept this contention either. When the appeal was disposed of by the Assistant Commissioner, he had passed a final order disposing of the appeal. Unless that order was in any manner disturbed by the Sales Tax Tribunal, it would continue to remain as the final order, subject to the revisional power of the Commissioner under section 57(1) of the said Act. Apart from this, a plain reading of the relevant provisions makes it clear that there is nothing in these provisions to exclude from the revisional power of the Commissioner under section 57(1) of the said Act. Apart from this, a plain reading of the relevant provisions makes it clear that there is nothing in these provisions to exclude from the revisional power of the Commissioner under section 57(1) of the said Act orders passed by the Assistant Commissioner from which appeals before the Tribunal are pending. This submission of Mr. Joshi must also be rejected.

10. Before parting with the matter, we may observe that one of the contentions raised by the department before the Tribunal was that the power of the Commissioner to revise the orders passed by the Assistant Commissioner in appeals must be upheld because there would otherwise be no remedy to the department if it was aggrieved by an appellant order passed by the Assistant Commissioner. In connection with this question, although the Tribunal has not determined the same, there are some observations in the judgment of the Tribunal which suggest that the Tribunal was prima facie inclined to take the view that even the department could appeal against an adverse decision by the Assistant Commissioner, although we do entertain some doubt about the correctness of this view, we do not propose to consider this question in this case because the Tribunal has not determined the same and this question in this case because the Tribunal has not determined the same and this question has not been seriously canvassed before us. Moreover, as we are taking a view in favour of the department, even apart from the aforesaid contention urged by the department before the Tribunal, we see no necessity of going into this question.

11. In the result, the question referred to us must, be answered in the affirmative. The assessee must pay to the Commissioner the costs of the reference fixed at Rs. 250/-.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //