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Commissioner of Sales Tax Vs. Hansraj Vishram Ravani - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberS.T.R. Nos. 65 to 72 of 1976
Judge
Reported in(1977)6CTR(Bom)368
ActsBombay Sales Tax (Procedure) Rules, 1954 - Rules 2 and 47(1); ;Bombay Sales Tax Act, 1953 - Sections 14, 15, 43 and 44; Bombay Sales Tax Laws Act, 1959 - Sections 52
AppellantCommissioner of Sales Tax
RespondentHansraj Vishram Ravani
Appellant AdvocateR.J. Joshi, Adv.
Respondent AdvocateB.C. Joshi, Adv.
Excerpt:
direct taxation - reassessment - rules 2 and 47 (1) of bombay sales tax (procedure) rules, 1954, sections 14, 15, 43 and 44 of bombay sales tax act, 1953 and section 52 of bombay sales tax laws act, 1959 - jurisdiction of sales tax officer (iii) challenged - section 52 did not validate any defective or invalid order of assignment made by collector or additional collector - held, sales tax officer (iii) had valid jurisdiction to pass assessment/reassessment order and notices issued and orders passed under sections 14 and 15 valid in law - sales tax officer (iii) could initiate proceedings under section 15 on ground that original assessment order section 14 was passed by sales tax officer license circle iii division bombay. - section 3: [s.b. mhase, d.s. bhosale & a.s. oka, jj] offences.....madon, j. 1. this is a group of eight references under s. 34(1) of the bombay sales tax act, 1953 (hereinafter referred to as 'the said act'), which can conveniently be disposed of by a common judgment. 2. the assessees, who are the respondents before us in all these eight references, are a partnership firm. the assessee-firm was registered as a dealer under the said act. the place of business of the respondents was situate within the jurisdiction of the sales tax officer, licence circle, iii division, bombay. at the relevant time, the sales tax, officer, licence circle, iii division, bombay, was one v. s. nadkarni. accordingly, the respondents were filing their quarterly returns before the said nadkarni. on october 28, 1955 the place of business of the respondents was raided by one v. s......
Judgment:

Madon, J.

1. This is a group of eight References under S. 34(1) of the Bombay Sales Tax Act, 1953 (hereinafter referred to as 'the said Act'), which can conveniently be disposed of by a common judgment.

2. The assessees, who are the Respondents before us in all these eight References, are a partnership firm. The assessee-firm was registered as a dealer under the said Act. The place of business of the Respondents was situate within the jurisdiction of the Sales Tax Officer, Licence Circle, III Division, Bombay. At the relevant time, the Sales Tax, Officer, Licence Circle, III Division, Bombay, was one V. S. Nadkarni. Accordingly, the Respondents were filing their quarterly returns before the said Nadkarni. On October 28, 1955 the place of business of the Respondents was raided by one V. S. Deshpande, who was the Sales Tax Officer (III), Enforcement Branch, Bombay, and certain books of account were seized. Thereafter in respect of the assessment year 1953-54, that is, April 1, 1953 to March 31, 1954, two assessment orders were made by the said Nadkarni, both dated October 31, 1955, one in respect of the general tax payable by the Respondents and the other in respect of the special tax payable by Respondents. On December 16, 1955 a notice was issued to the Respondents by the said Deshpande in which it was stated that it was revealed from the inspection of the Respondents' books of account that they had not kept a true account of the goods bought and sold by them and had thus contravened the provisions of S. 22 of the said Act. By the said notice the Respondents were called upon to show cause why the licence granted to them under S. 12 and 12A of the said Act should not be suspended. By this notice the Respondents were further called upon to submit their reply by December 28, 1955. On January 2, 1956 the said Deshpande issued to the Respondents two notices under S. 14 of the Act, one in respect of the assessment period April 1, 1954 to March 31, 1955 and the other in respect of the assessment period April 1, 1955 to September 30, 1955, directing the Respondents to attend before him on January 18, 1956 and to produce before him the evidence on which the Respondents might rely in support of their returns filed in respect of the said periods. On January 3, 1956 the said Deshpande issued a notice to the Respondents under S. 15 of the said Act in which it was stated that he was satisfied that the Respondents' turnover of sales of cloth amounting to Rs. 3,50,000 for the period April 1, 1953 to March 31, 1954 had escaped assessment or had been under assessed or had been assessed at a lower rate or that deductions for sales and purchases had been wrongly made from their turnover and directing them to attend before him on January 20, 1956 to show cause why the amount of tax payable by the Respondents in respect of such sales and purchases for the said period should not be assessed or reassessed. All these notices were served on January 4, 1956 upon one Chhogalal Dave and have been signed in Gujarati as follows :

'H. V. Ravani by the hand of C. Dave dated 4-1-56'

It is an admitted fact that the said Dave was the mehtaji of the Respondents. Thereafter in the beginning of March 1956 the said Deshpande issued a witness summons against the Respondents. In this summons the date is typed as '10-11-1955' and over it is put in ink the date '1-3-56'. At the foot of the said summons there is another date '2.11'. By this summons the Respondents were called upon to attend personally before the said Deshpande on March 3, 1956 at 11 a.m. This summons contains inter alia two columns, one headed 'Proceedings' and the other headed 'Under section.' Against the column headed 'Proceedings' it was first written in ink 'assessment against M/s. Hansraj Vishram Ravani.' These words have been scored out and instead of them the, words in ink 'of Investigation' have been written. In the column headed 'Under section' the figures '13-14' were first written. They have been scored out and instead of them the figure '23' is written S. 23 of the said Act confers power upon the Collector to direct a dealer to produce before him books of account and other documents and to furnish such information as he might require. It also confers power upon the Collector to search a dearer's place of business and seize his records S. 28 of the said Act confers power upon the Collector inter alia to summon and enforce the attendance of any person and examine him on oath S. 38 of the said Act deals with investigation of offences, and it confers power upon the Collector to authorize any person appointed under S. 3 to assist him to investigate offences punishable under the said Act, S. 13 of the said Act deals with the filing of returns, and S. 14 with assessment of taxes. It is difficult to understand how or why S. 23 was written in the column headed 'Under section' in the witness summons. The original intention in preparing this witness summons appears to be clear. It was to summon the Respondents for the purpose of examining them with respect to the returns filed by them, but when this was changed to investigations, it is difficult to understand why S. 23 of the said Act has been written instead of S. 38. This summons was served on the Respondents on March 2, 1956 and is signed on behalf of the Respondents by someone whose signature is indecipherable. In pursuance of the said summons, Mr. Vishnu Vyas, an advocate, appeared on behalf of the Respondents and applied for an adjournment on the ground that the senior partner of the Respondent firm, Hansraj Vishram Ravani, was sick, and produced a medical certificate in support of his application. Thereafter the Respondents sent their letter dated March 12, 1956 to the said Deshpande stating that as the said Hansraj was not keeping well, their mehtaji Chhogalal Dave would offer the explanation asked for, which would be binding on the Respondents. On March, 31, 1956 the said Deshpande passed four orders, namely, (1) an order of reassessment in respect of special tax under S. 15 of the said Act for the period April 1, 1953 to March 31, 1954, (2) an order of reassessment in respect of general tax in respect of the same period, also under S. 15 of the said Act, (3) an order of assessment for the period April 1, 1954 to March 31, 1955 under S. 14 of the said Act and (4) an order of assessment for the period April 1, 1955 to September 30, 1955 under S. 14 of the said Act. Against the said four orders the Respondents filed four separate appeals. All the said appeals were dismissed by the Assistant Commissioner of Sales Tax by four separate orders, all dated December 27, 1957. The Respondents thereafter filed four separate revision applications which too were dismissed by the Deputy Commissioner of Sales Tax by four separate orders, all dated March 28, 1962. Against these orders of dismissal of their revision applications the Respondents went in further revision to the Tribunal. The Respondents also applied for condonation of delay in filing the said revision applications. The Tribunal refused to condone the delay. Thereupon the Respondents filed four writ petitions in this High Court under Articles 226 and 227 of the Constitution, being Special Civil Application No. 302 of 1955 (with Special Civil Applications Nos. 303 to 305 of 1955) - Messrs Hansraj Vishram Ravani and another vs. The Maharashtra Sales Tax Tribunal and others decided by Abhyankar and Madon, JJ., on December 12, 1968 (Unrep.), and this High Court held that the orders of the Deputy Commissioner of Sales Tax were not communicated to the Respondents, and the period of limitation had not commenced to run, and, therefore, the question of condonation of delay in filing the revision applications before the Tribunal did not arise. Thereafter the Respondents were properly served with the said orders of the Deputy Commissioner of Sales Tax, and they filed fresh revision applications before the Tribunal. Amongst the contentions taken up by the Respondents were (1) that there could be no best judgment assessment in reassessment proceedings under S. 15 of the said Act, (2) that the said Deshpande, who was Sales Tax Officer (III), Enforcement Branch, Bombay, had no jurisdiction either to pass the said orders of assessment or reassessment, and (3) that the service of the notices under Ss. 14 and 15 of the said Act on the said Chhogalal Dave was not a valid service. When these matters came up before a Regular Bench of the Tribunal, the Bench referred these three points to a Special Bench for its decision. By a common judgment delivered in all the said four revision applications on July 24, 1969, the Special Bench of the Tribunal decided all these three points in favour of the Respondents. Following the decision of the Special Bench, the Regular Bench by a common judgment dated August 12, 1969 allowed all the said four revision applications and set aside the said orders of reassessment and assessment arising out of the judgment of the Special Bench of the Tribunal and the said order passed by the Regular Bench. Eight cases have been stated to us by the Tribunal at the instance of the Commissioner of Sales Tax, the Applicant before us in all eight References herein, and the following five questions of law referred to us in each of the said References by a common order of reference dated December 14, 1971, :-

'(1) Whether, the Tribunal was correct in law in holding that an authority acting under S. 15 of the Bombay Sales Tax Act, 1953, cannot resort to best judgment assessment

(2) Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that the order dated January 2, 1956 of the Additional Collector of Sales Tax (I), Bombay State, Bombay, was not valid in law, because the order was passed without giving reasons and without giving any opportunity to the Respondents of being heard

(3) Whether, on the facts, and in the circumstances of the case and on a true and proper interpretation of S. 52 of the Bombay Sales Tax Act, 1953, the Sales Tax Officer (III), Enforcement Branch, Bombay, had valid jurisdiction to pass assessment/ reassessment orders in the case of the Respondents, and the notices issued and orders passed under Ss. 14 and 15 of the Bombay Sales Tax Act, 1953, were valid in law

(4) Whether, on the facts and in the circumstances of the case and on a true and proper interpretation of S. 15 of the Bombay Sales Tax Act, 1953, the Tribunal was correct in law in holding that the Sales Tax Officer (III), Enforcement Branch, Bombay, could not initiate the proceedings under that section on the ground that the original assessment order under S. 14 of the Bombay Sales Tax Act, 1953, was passed by the Sales Tax Officer, Licence Circle, III Division, Bombay

(5) Whether, on the facts and in the circumstances of the case and on a true and proper interpretation of Rules 2(i) and 47(1)(i) of the Bombay Sales Tax (Procedure) Rules, 1954, the service of notice under Ss. 14 and 15 of the Bombay Sales Tax Act, 1953, on Chhogalal Dave was valid in law ?'

3. Sales Tax References Nos. 65 and 69 of 1976 relate to reassessment to special tax in respect of the period April 1, 1953 to March 31, 1954, the first arising out of the judgment of the Special Bench and the second out of the order of the Regular Bench; Sales Tax References Nos. 66 and 70 of 1976 also relate to reassessment for the same period and are in respect of reassessment to general tax, the first arising out of the judgment of the Special Bench and the second out of the order of the Regular Bench; Sales Tax References Nos. 67 and 71 of 1976 are in respect of the assessment for the period April 1, 1954 to March 31, 1955, the first arising out of the judgment of the Special Bench and the second out of the order of the Regular Bench; and Sales Tax References Nos 68 and 72 of 76 are in respect of the assessment for the period April 1, 1955 to September 30, 1955, first arising out of the judgment of the Special Bench and the second out of the order of the Regular Bench.

4. So far as the first question is concerned, both learned Counsels are agreed that our decision in Commissioner of Sales Tax vs. P. Ambalal and Co., would govern the case, and according to that decision it should be answered in the negative in favour of the Department.

5. The real controversy before us has ranged round questions Nos. 2 to 4 which deal with the jurisdiction of the said Deshpande to make the said orders of reassessment for the period April 1, 1953 to March 31, 1954 and the said orders of assessment for the period April 1, 1954 to March 31, 1955 and April 1, 1955 to September 30, 1955. In order to appreciate the arguments advanced before us on those it is necessary to refer to certain provisions of the said Act. The said Act as originally provided by S. 3(1) for appointment of a Collector of Sales Tax and such other persons to assist him as the State Government thought fit, and the definition of 'Collector' given in clause (5) of S. 2 was 'Collector means the Collector of Sales Tax appointed under S. 3.' There was no power in the State Government to appoint an Additional Collector. It, however, appears that an additional Collector was in fact appointed. A doubt having arisen about the validity of the appointment of the Additional Collector by Bombay Act 39 of 1956 the following definition was substituted for the one given in the original clause (5) :

'Collector means the Collector of Sales Tax and includes and be deemed to have ever included an Additional Collector of Sales Tax'.

Further, Sub-S. (1) of S. 3 was substituted with retrospective effect, conferring upon the State Government the power to appoint one or more persons to be Additional Collectors of Sales Tax, S. 3, as it stood at the relevant time, though with the amendment made later with respective effect by Bombay Act 39 of 1956, provided as follows :-

'3 Taxing Authorities. - (1) For carrying out the purposes of this Act, the State Government may appoint -

(a) a person to be the Collector of Sales Tax, and

(b) one or more persons to be Additional Collectors of Sales Tax, and

(c) such other persons to assist the Collector as the State Government thinks fit.

(2) A person appointed under sub-S. (1) shall, within the limits of the area specified to be within his jurisdiction, exercise such powers as may be conferred and perform such duties as may be imposed on him by or under this Act.'

S. 44 of the said Act provided as follows :-

'44. DELEGATION OF POWERS AND DUTIES AND TRANSFER OF PROCEEDINGS.

(1) Subject to such conditions and restrictions as the State Government may by general or special order impose, the Collector may, by order in writing, delegate any of his powers and duties under this Act to any person appointed under S. 3 to assist him.

(2) The Collector may transfer any proceeding or class of proceedings under any provision of this Act from himself to any person to whom he has delegated his powers and duties in respect thereof, and he may likewise transfer any such proceeding (including a proceeding already transferred under this sub-section) from one such person to another to whom the said powers and duties have been delegated or to himself.'

By an order dated May 18, 1953 the Collector of Sales Tax delegated to all Sales Tax Officers his powers and duties inter alia under Ss. 14 and 15 of the said Act, that is, his powers to assess and reassess dealers as also his powers and duties inter alia under the Rules which dealt with these two topics. By an order dated May 3, 1955 the said V. S. Deshpande, who was then Sales Tax Officer, Poona City, I Division, Poona, was transferred to Bombay as Sales Tax Officer, Licence Circle, III Division, Bombay. On August 20, 1955 the Government of Maharashtra issued a notification in the Finance Department, purporting to do so under S. 3(1) of the said Act. The said notification was as follows :

'FINANCE DEPARTMENT

Sachivalaya, Bombay, 20th August 1955. No. STO. 2255/125393-XIX. - In exercise of the powers conferred by sub-S. (1) of S. 3 of the Bombay Sales Tax Act, 1953 (Bom. III of 1953), Government is pleased to direct that the Assistant Collector of Sales Tax, Enforcement Branch, and the Sales Tax Officers Enforcement Branch, shall have jurisdiction over the whole State of Bombay in respect of such dealers as are from time to time assigned to them for all or any of the purposes of the Bombay Sales Tax Act, 1953. By the Collector or the Additional Collector of Sales Tax, Bombay State, Bombay, with effect from the date mentioned below :-

Designation of the Date.Officer.Assistant Collector of 7th April 1955.Sales Tax, EnforcementBranch.Sales Tax Officers, The date onEnforcement Branch. which they assumedcharge of theirrespective posts.By order and in the name of theGovernor of Bombay.V. L. GIDWANI,Secretary to Government.' The said V. S. Deshpande was a Sales Tax Officer in the Enforcement Branch, Bombay. By an order of the Collector of Sales Tax No E. 3 dated November 10, 1955 the Sales Tax Officers in the Enforcement Branch, Bombay were given different designations, and the said V. S. Deshpande was designated as Sales Tax Officer (III), Enforcement Branch, Bombay. On January 2, 1956 the Collector of Sales Tax passed the following order :-

'Read :- Government Notification FinanceDepartment No. 2255/135393-XIXdated 20.8.55.Read :- Letter No. INV/556/55/B-19568 dated16.12.55 from the Sales Tax Officer III,Enforcement Branch, Bombay. ORDER

No. Enf (Assgn)/40(H3) B/3 Bombay, 2nd Jan. 1956.

The case of M/s. Hansraj Vishrarm Ravani holder of Registration Certificate No. IC-964 (new) and Licence No. IC(L)-760 is assigned to the Sales Tax Officer III, Enforcement Branch, Bombay, for all purposes including opening of the assessment of the dealer for the period 1-4-50 to 31-3-54 and assessing the dealer for the period 1-4-54 to 30-9-55.

The Sales Tax Officer, Licence Circle, Division III, on whose file the case stands at present should immediately transfer the case to the Sales Tax Officer to whom it is transferred.

Addl. Collector of Sales Tax I, Bombay State, Bombay.

Copy forwarded for information to :-

(i) Sales Tax Officer III, Enforcement Branch, Bombay.

(ii) Collector of Sales Tax, Bombay State, Bombay.

(iii) Asstt. Collector of Sales Tax, Enforcement Branch, Bombay.

(iv) Copy forwarded for compliance to the Sates Tax Officer, Licence Circle, Dn. III, Bombay.

(v) Shri V. S. Deshpande, for information.'

As the notings above the said order show, this order was made in pursuance of the said Government Notification dated August 20, 1955 and a letter dated December 16, 1955 from the said Deshpande who had by that time raided the office of the Respondents and had seized their books of account and had on the same day as the said order of assignment namely, December 16, 1955, issued a notice to the Respondents to show cause why their licence under Ss. 12 and 12A of the said Act should not be suspended. It appears that by such orders of assignment as the one we have before us jurisdiction was conferred upon several officers in respect of such dealers as may be assigned to them by the Collector, Additional Collector or Assistant Collector. This jurisdiction was found to be legally defective, and accordingly in order to validate those defects the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act, 1959, (Bombay Act No. XXVI of 1959), was passed. The said Validating and Amending Act received the assent of the President on April 11, 1959 and was published in the Bombay Government Gazette, Extra Ordinary, dated April 18, 1959 at page 186. By S. 4 of the said Validating and Amending Act S. 52 was inserted in the said Act. The said S. 52 provided as follows :-

'52. VALIDATION OF CERTAIN JURISDICTION CONFERRED ON CERTAIN PERSONS.

Notwithstanding anything contained in this Act and notwithstanding any judgment, decree or order of a Court or Tribunal, the jurisdiction conferred,

(a) by Government Notification in the Finance Department, No. STO-2254/ 169983-XIX, dated the 31st January 1955, on the Sales Tax Officers, specified therein, and

(b) by Government Notifications in the Finance Department, No. STO-2355/125661-XIX dated the 10th June 1955, and

No. STO-2255/135393-XIX, dated the 20th August 1955, on -

(i) the Assistant Collector of Sales Tax, Enforcement Branch, with effect from the 7th day of April 1955, and

(ii) the Sales Tax Officers, Enforcement Branch, with effect from the date on which they assumed charge of their respective posts, in respect of dealers assigned to them from time to time for all or any of the purposes of this Act by the Collector, the Additional Collector of Sales Tax, Bombay State, Bombay, or, as the case may be, the Assistant Collector of Sales Tax having jurisdiction over the respective district or City, shall be deemed to have been validly conferred on them and the Collector, the Additional Collector of Sales Tax, Bombay State, Bombay, or, as the case may be, the said Assistant Collector of Sales Tax shall be deemed to have been duly invested with power so to assign dealers to the officers specified in clauses (a) and (b) (hereinafter referred to as 'the said officers'), and accordingly all powers exercised and all duties performed and anything done or action taken or purported to be done or taken (including any notices issued, orders made, assessments, imposition or recoveries of taxes made) under the provisions of this Act in exercise of the aforesaid jurisdiction by the said officers shall be deemed to have been validly and effectually exercised, performed, done or taken and shall not be called in question on the ground only that the jurisdiction was not duly conferred on the said officers under the said notifications or that the Collector, the Additional Collector of Sales Tax, Bombay State, Bombay, or the said Assistant Collector of Sales Tax was not duly invested with powers so to assign dealers to the said officers.'

By the said Validating and Amending Act certain other legal defects which had been found in the said Act and had been the subject of judicial pronouncements were sought to be validated. The Statement of Objects and Reasons to the said Validating and Amending Act inter alia provided as follows :-

'4. By certain notifications issued by Government under the Bombay Sales Tax Act, 1953, jurisdiction was conferred on certain officers of the Sales Tax Department only in respect of such dealers as may be assigned to them by the Collector, Additional Collector or Assistant Collector. The jurisdiction so conferred has been found to be legally defective and it is necessary to validate the action taken by the officers in pursuance of the powers and jurisdiction conferred on them by the said notification.

'5. In the present Bill it is proposed to make all the amendments and validating provisions necessitated by the circumstances mentioned above.'

6. The Special Bench of the Tribunal held that the said order dated January 2, 1956 was an order of transfer of proceedings under S. 44(2) of the said Act and that it gave subjectwise jurisdiction to the Sales Tax Officer (III), Enforcement Branch, Bombay. It further held that the said order was not valid in law because, though it was an appealable order, it was passed without giving any reasons and without giving an opportunity to the Respondents of being heard. The Special Bench of the Tribunal further held that since the said order was bad in law, it did not confer jurisdiction upon the said Sales Tax Officer

(III), Enforcement Branch, Bombay, either to assess or reassess the Respondents. So far as S. 52 of the said Act was concerned, the Special Bench of the Tribunal has referred to the said section as also to the Statement of Objects and Reasons to the said Validating and Amending Act and has also set out the arguments of learned Counsel for the assessees that the said S. 52 was not relevant as it dealt with territorial jurisdiction while the questions before the Tribunal were with respect to subjectwise jurisdiction. The Special Bench of the Tribunal has, however, not discussed the said section nor given any finding on the submissions made by learned Counsel for the assessees before it, but since it was held that the said order dated January 2, 1956 gave subjectwise jurisdiction to the said Sales Tax Officer (III), Enforcement Branch, Bombay, we take it that the Special Bench of the Tribunal accepted the argument advanced on behalf of the assessees that S. 52 was not relevant because it dealt with territorial jurisdiction only and not with subjectwise jurisdiction.

7. Before us learned Counsel for the Applicant has submitted that the said order dated January 2, 1956 was not a quasi judicial order as held by the Tribunal but was a purely administrative order made for administrative convenience; that it was not an order of transfer of proceedings against S. 44(2) of the said Act but was an order of assignment simpliciter under the said notification dated August 20, 1955, and, in the alternative, it was a composite order of assignment and transfer of proceedings that it being an administrative order, it was not appealable, inasmuch as the words which provided for the right of appeal in S. 30 of the said Act namely, 'Within sixty days from the making of an order of assessment either with or without penalty or the passing of any other order under the said Act,' should be so interpreted as to take colour from the preceding words, namely 'an order of assessment'; and that it being an administrative order, no notice to the Respondents was necessary nor was it necessary to give an opportunity to the Respondents to be heard or to record any reasons for the passing of the said order. Learned Counsel for the Applicant lastly submitted that assuming that the said order was bad in law and invalid, all defects in it were cured by reason of the validating provisions of the said S. 52.

8. Learned Counsel for the Respondents agreed with learned Counsel for the Applicant in one thing, namely, that this was as order of assignment simpliciter under the said notification dated August 20, 1955. He, however, submitted that so far as it concerns proceedings which were pending they could not be assigned in the fashion in which they were purported to be done by the said impugned order but must be transferred in exercise of the power conferred by S. 44 (2) of the said Act. On behalf of the Respondents it was further contended that this order affected the assessees; and since it was the practice of the Department, whenever there was a raid or books of account were seized, to have a reassessment either by the same officer who had jurisdiction initially over the dealer concerned or by another officer of the Enforcement Branch or the very officer of the Enforcement Branch who had raided the dealer's place of business and seized his books, an opportunity should have been given to the Respondents to be heard before their cases and matters were assigned to the said Deshpande so that the Respondents could have shown to the Additional Collector that the said Deshpande had a prejudice against them. It was further contended on behalf of the Respondents that there was no logical reason for restricting the scope of the words 'any other order' in S. 30 of the said Act to confine it to orders similar to orders of assessment and that since the order was an appealable one, unless an opportunity was given to the Respondents to appear and unless reasons were given in the order, the result would be wholly to nullify the right of appeal conferred by S. 30.

9. So far as S. 52 of the said Act was concerned, it was submitted on behalf of the Respondents that what the said section did so to validate the power conferred by the said notification dated August 20, 1955 upon the Collector and the Additional Collector to assign dealers to the Assistant Collector and Sales Tax Officers, but it did not validate any defective or invalid order of assignment made by the Collector or the Additional Collector.

10. On a careful analysis of the said S. 52 we find it unnecessary to consider the various arguments advanced before us and the number of authorities cited at the Bar, except in so far as they relate to the effect of S. 52 of the said Act. In order to appreciate why S. 59 was enacted, it is necessary to understand the position prior to the enactment of the said Validating and Amending Act of 1959. Under S. 3(1) of the said Act the State Government had the power to appoint a Collector of Sales Tax and Additional Collectors of Sales Tax and such-other persons to assist the Collector as the State Government might think fit. Sub-S. (2) of S. 3 provided that a person so appointed under sub-S. (1), within the limits of the area which were specified to be within his jurisdiction, was to exercise such powers as might be conferred and perform such duties as might be imposed upon him by or under the said Act. All the machinery sections of the said Act referred only to the Collector and nowhere mentioned any other Officer, save that by the amendment made with retrospective effect in the definition of the term 'Collector' given in clause (5) of S. 2 of the said Act the word 'Collector' was to be so read as to have always included an Additional Collector of Sales Tax. With respect to other officers, however, they could exercise any power or perform any duty of the Collector only if the Collector delegated such power or duty to them in exercise of his power of delegation conferred upon him under S. 44(1) of the said Act. So far as Sales Tax Officers are concerned, we have seen that by the said order dated May 18, 1953 the Collector had delegated to them all his powers and duties inter alia under Ss. 14 and 15 of the said Act, that is, of assessment and reassessment. The persons who could be appointed by the State Government under S. 3(1) to assist the Collector were set out in Rule 3(1) of the Bombay Sales Tax (Procedure) Rules, 1954 (hereinafter for the sake of convenience referred to as 'the said Rules'). These persons are the Assistant Collector of Sales Tax, Sales Tax Officers and Inspectors of Sales Tax. Sub-rule (4) of Rule 3 provided as follows :-

'Notwithstanding anything contained in sub-rules (1) and (2), where Collector under sub-S. (2) of S. 44 (of the Bombay Sales Tax Act, 1953) transfer any particular proceeding to a Sales Tax Officer or Assistant Collector having jurisdiction over a different area, such Sales Tax Officer or Assistant Collector shall thereupon have Jurisdiction in respect of such proceeding.'

The said Rules define 'Sales Tax Officer'. That definition was contained in clause (viii) of Rule 2 and was at the relevant time as follows :-

'9. In these rules, unless there is anything repugnant in the subject or context -

(viii) 'Sales Tax Officer' means in respect of any place of business of a dealer, the Sales Tax Officer, appointed as such with jurisdiction over the area in which such place of business is situated by the State Government under S. 3 to Assist the Collector.'

The Respondents held not only a registration certificate but also a licence issued to them under the said Act, and it is an admitted position that the Sales Tax Officer who would have jurisdiction over them for all purposes of the said Act would be the Sales Tax Officer, Licence Circle, III Division, Bombay, within whose area of jurisdiction the Respondents' place of business was situate. Under the said Rules, therefore, the Respondents were required to file their quarterly returns before the said Sales Tax Officer who would then proceed to assess them in respect thereof, and if an occasion arose, to reopen any assessment made by him. Any particular proceedings pending before the Sales Tax Officer Licence Circle, III Division, Bombay, could, however, be transferred to another officer by the Collector or the Additional Collector under S. 44(2) of the said Act. There was, however, under the said Act or the said Rules no power either in the Collector or the Additional Collector to me a dealer and assign him for all purposes of the said Act from one officer to another. The power of transfer was only in respect of proceedings. What, however, the State Government did was to issue a notification purporting to do so under sub-S. (1) of S. 3 of the said Act conferring jurisdiction upon the Assistant Collector of Sales Tax and Sales Tax Officers of the Enforcement Branch over the whole State of Bombay in respect of such dealers as were from time to time assigned to them for all or any of the purposes of the said Act by either the Collector or the Additional Collector. Even assuming in exercise of the powers under sub-s. (1) of S. 3 read with sub-s. (2) thereof or by itself there was power in the State Government to specify the jurisdiction of any of the Sales Tax authorities, there was no power in the State Government to confer jurisdiction upon them with respect to certain individual dealers, let alone such individual dealers as may be assigned to them at a future date by either the Collector or the Additional Collector. The power, therefore, conferred by the said notification dated August 20, 1955 upon the Collector and the Additional Collector to so assign dealers was not valid in law. Any assignment of dealers made by the Collector or the Additional Collector in pursuance of the power of assignment so purported to by conferred upon them would, therefore, be equally invalid, and, consequently, all actions taken, including assessment and reassessment by the Sales Tax Officers and the Assistant Collector to whom the dealers were so assigned would be invalid as being without jurisdiction. When this legal position was realized, the Legislature sought to rectify it by inserting S. 52 in the said Act. In addition to the said notification dated August 20, 1955 it appears that the Government had issued a notification dated January 31, 1955 conferring jurisdiction in respect of certain dealers upon certain Sales Tax Officers, a notification dated June 10 1955 conferring jurisdiction in respect of certain dealers upon the Assistant Collector and certain Sales Tax Officers of the Enforcement Branch, as also a notification dated April 7, 1955 conferring similar jurisdiction union the Assistant Collector of Sales Tax, Enforcement Branch. The same doubts about the validity of the said notification dated January 31, 1955, April 7, 1955 and June 10, 1955 were entertained by the Government. Accordingly, what the Government did by inserting the said S. 52 was to validate the jurisdiction so conferred upon the Assistant Collector and Sales Tax Officers as also to validate the power of assignment conferred upon the Collector, the Additional Collector and the Assistant Collector.

11. Bearing this in mind we will now analyse S. 52 of the said Act, with particular reference to the provisions thereof which are material for the determination of the References before us. Leaving aside the non-obstante clause, the section opens by stating that the jurisdiction conferred amongst others, the said notification dated August 20, 1955 upon inter alia Sales Tax Officers, Enforcement Branch, with effect from the date on which they assumed charge of their respective posts, in respect of dealers assigned to them from time to time for all or any of the purposes of the said Act by the Collector or the Additional Collector shall be deemed to have been validly conferred on them'. Thus, the very opening part of the said section validates the jurisdiction which was conferred upon the Sales Tax Officers of the Enforcement Branch by the Collector or the Additional Collector in exercise of the power conferred upon the Collector and the Additional Collector by the said notification dated August 20, 1955. It expressly states that the jurisdiction which is being validated is with respect to such dealers as were assigned to such Sales Tax Officers from time to time by the Collector or the Additional Collector, whether such assignment be for all purposes of the said Act or any of the purposes of the said Act. While construing this section we must bear in mind that what the Legislature intended to validate was the action taken by the Sales Tax Officers and the Assistant Collector upon whom such jurisdiction was purported to be conferred so that their orders and action could not be challenged on the ground of want of jurisdiction, and that is what the opening part of S. 52 did.

12. In order to obviate any argument with respect to the validity of assignment of dealers made by the Collector and the Additional Collector to Sales Tax Officers and the Assistant Collector of the Enforcement Branch it was also necessary to validate the purported assignment of dealers by the Collector and the Additional Collector. This The opening part of the said section next proceeded to do by providing that the Collector and the additional Collector should 'be deemed to have been duly invested with power so to assign dealers to the officers specified in clauses (a) and (b) (hereinafter referred to as 'the said officers.') The phrase 'so to assign' means to assign dealers from time to time for all or any of the purposes of the said Act. Thus, the opening part of the section put beyond all challenge not only the power exercised by the Collector and the Additional Collector of assigning dealers from time to time to various Sales Tax Officers and the Assistant Collector of the Enforcement Branch but also to jurisdiction conferred upon such Sales Tax Officers and the Assistant Collector by the said notification dated August 20, 1955 and the assignments made by the Collector and the Additional Collector to them there-after. Since the question of want of jurisdiction in this behalf would arise with respect Sales Tax Officers and the Assistant Collector of Sales Tax, Enforcement Branch, the section next proceeded to validate all those orders and actions so as to put them beyond challenge on the ground of want of competence or of jurisdiction. This the section did by providing that 'accordingly (that is, by reason of the validation of the power of assignment exercised by the Collector and the Additional Collector and the jurisdiction conferred upon the Sales Tax Officers and the Assistant Collector of Sales Tax, Enforcement Branch, under the said notifications including the said notification dated August 20, 1955 and the orders of assignment made thereunder) all powers exercised and all duties performed and anything done or action taken or purported to be done or taken (including any notices issued, orders made, assessments, imposition or recoveries of taxes made) under the provisions of this Act(that is, the Bombay Sales Tax Act, 1953) in exercise of the aforesaid jurisdiction by the said officers shall be deemed to have been validly and effectually exercised, performed, done or taken'. It would be borne in mind that the first part of the said section defines the words 'the said officers' as officers specified in clauses (a) and (b), that is, the Assistant Collector and the Sales Tax Officers of the Enforcement Branch. In order to ensure that the said section would not have the defect of placing the orders made and the actions taken by the Sales Tax Officers and the Assistant Collector of the Enforcement Branch beyond all challenge on any ground and to put it beyond challenge only on the ground of want or defect in jurisdiction. The section concluded by saying that they 'shall not be called in question on the ground only that the jurisdiction was not duly conferred on the said officers under the said notification or that the Collector, the Additional Collector of Sales Tax, Bombay State, Bombay, or the said Assistant Collector of Sales Tax was not duly invested with powers so to assign dealers to the said officers.' The concluding portion makes it expressly clear that the bar to the challenge was to two things only (1) to the jurisdiction conferred upon the Sales Tax Officers, Enforcement Branch, under the said notifications dated August 20, 1955 and the other notifications referred to earlier and the orders of assignment made thereunder by the Collector and the Additional Collector, and (2) to the exercise of the power of assignment of dealers inter alia By the Collector and the Additional Collector. Thus, the challenge on the merits to any order made by the Sales Tax Officers or the Assistant Collector of the Enforcement Branch or on any ground other than the one relating to their jurisdiction was not precluded. That this was the object of the Legislature is also shown by the Statement of Objects and Reasons which we have reproduced above which states that it was necessary 'to validate the action taken by the officers in pursuance of the powers and jurisdiction conferred on them by the said notifications.'

13. It was sought to be argued before us on behalf of the Respondents that what was validated by S. 52 of the said Act was only the want of jurisdiction of power in the Additional Collector to make the assignment to the said Deshpande, but the irregular or defective exercise of that power was not validated. We are unable to accept that argument. The exercise of the power of assignment was an exercise of a power which was not conferred upon the Collector or the Additional Collector. It was the exercise of power which did not exist at the date on which it was purported to be exercised in law. As this power did not exist in law at the date on which it was purported to be exercised, S. 52 was enacted in order to make this purported exercise of power valid for all purposes. It would be a contradiction in terms to say that a man could not argue that there was no power but he could argue that there was an irregularity or defective exercise of a non-existent power. The concluding portion of the said section clearly says that no action taken or orders passed by the Sales Tax Officers or the Assistant Collector of the Enforcement Branch could be called in question on the ground that 'the jurisdiction was not duly conferred' on these officers. The jurisdiction might not be duly conferred because either there was no power to confer jurisdiction or, assuming the power existed, it was defectively or irregularly exercised. The conferment of jurisdiction cannot be questioned on both these grounds.

14. It was next submitted that by the said notification dated August 20, 1955 and the said order of assignment dated January 2, 1956 what was done was to confer territorial jurisdiction upon the said Deshpande but not jurisdiction with respect to the subject-matter, that is to say, with respect to the sales tax proceedings or matters of the Respondents, and that for the said purpose an order of transfer of proceedings under S. 44(2) of the said Act was necessary We are equally unable to accept this submission. What the notification dated August 20, 1955 does is, to adopt the language used by the Tribunal, to confer jurisdiction both territory wise and subjectwise. The territorial jurisdiction conferred by the said notification upon the Assistant Collector and the Sales Tax Officers of the Enforcement Branch is the whole State of Bombay. The subjectwise jurisdiction is 'such dealers as are from time to time assigned to them for all or any of the purposes of the Bombay Sales Tax Act, 1953, by the Collector or the Additional Collector of Sales Tax, Bombay State, Bombay'. It is true that for the subjectwise jurisdiction to come into being, a further order of assignment by the Collector or the Additional Collector was necessary, and so far as the Respondents are concerned, that order of assignment was the one dated January 2, 1956. Reading the said notification and the said order of assignment the effect to our mind is clear. It transferred the case of the Respondents for all purposes to the Sales Tax Officer (III), Enforcement Branch, Bombay, and it expressly made it clear that in this was included the opening of the assessment for the period April 1, 1950 to March 31, 1954 and making it assessment for the period April 1, 1954 to September 30, 1955. By reason of the provisions of S. 52 of the said Act the said notification and the said order operated to confer valid jurisdiction upon the said Deshpande to issue a notice for reopening the assessment of the Respondents for the period April 1, 1953 to March 31, 1954 and to issue notices for the assessment of the Respondents for the periods April 1, 1954 to March 31, 1955 and April 1, 1955 to September 30, 1955.

15. It was next submitted on behalf of the Respondents that assuming by this notification and the said order of assignment jurisdiction was conferred upon the said Deshpande to assess or reassess the Respondents, the jurisdiction vested in the Sales Tax Officer, Licence Circle, III Division, Bombay was not taken away, and both, therefore, had concurrent jurisdiction. are unable to appreciate the relevance of this point. It is unnecessary for us to decide in this Reference whether by the combined operation of the said notification and the said order of assignment the said Sales Tax Officer, Licence Circle, III Division, Bombay was divested of his jurisdiction to assess or reassess the Respondents or whether both he and the Sales Tax Officer (III), Enforcement Branch, Bombay, possessed concurrent jurisdiction to do so. The question before us is not of the jurisdiction of the Sales Tax Officer, Licence Circle, III Division, Bombay, but of the Jurisdiction of the Sales Tax Officer (III), Enforcement Branch, Bombay, and S. 52 of the said Act puts that jurisdiction beyond challenge. For these reasons questions Nos. 2, 3 and 4 must be answered in favour of the Department.

16. So far as the fifth question is concerned, this is not a question which relates to the inherent jurisdiction of the said Deshpande to issue a notice of reassessment or assessment but it deals with the question of the validity of the service of the notice of reassessment and notices of assessment issued by the said Deshpande. S. 52 of the said Act does not bar any challenge to the validity of the service of the said notices. These notices were admittedly served on the said Chhogalal Dave. In Messrs S. K. Manekia vs. The Commissioner of Sales Tax we have held that so far as personal service is concerned, under the Bombay Sales Tax (Procedure) Rules, 1954, a notice could validly be served in the case of initiation of fresh proceedings only upon the dealer himself, and in the case of proceedings which have already started and where for the purposes of such proceedings the dealer has appointed an agent under clause (a) or clause (c) of S. 43 of the Bombay Sales Tax Act, 1953, service could either be upon the dealer or his said agent. It is an admitted position that Chhogalal Dave was not an agent of the Respondents within the meaning of clause (a) or clause (c) of S. 43. The service of notice upon him was, therefore, defective and bad and not valid in law. It was, however, sought to be argued on behalf of the Applicant that by his said letter dated March 12, 1956 the assessees stated that the explanation which the said Chhogalal Dave would give would be binding upon him and that, therefore, the Respondents accepted the said service of the notices upon the said Chhogalal. That does not appear to us to be a valid argument, because the said letter was written in connection with the witness-summons issued upon the Respondents for the purpose of investigation and not for the purpose of assessment or reassessment. It was further submitted on behalf of the Applicant that there were other facts which would show that the Respondents had acquiesced in the service of the said notices upon the said Chhogalal and that though in the case of a reassessment the reassessing authority would acquire jurisdiction only if a valid notice was issued and duly served on the assessee, the same did not apply to assessment proceedings and therefore, in any event with respect to the assessment proceedings it should be held that any defect in the service of the notice had been waived by the Respondents. We find that there is no question referred to us on the point of waiver of the said notices or any of them nor are there any facts on the record from which such an inference could be drawn nor has the Tribunal ascertained those facts or given its finding upon them. We are, therefore, not called upon to go into these questions. For these reasons question No. 5 must be answered in favour of the assessees, that is, the Respondents.

17. For the reasons set out above, we answer the questions submitted to us as follows :-

Question No. 1 in the negative. Question No. 2 in the negative. Question No. 3 in the affirmative. Question No. 4 in the negative. Question No. 5 in the negative.

18. In view of the facts that both sides have partially succeeded before us and the defect in the jurisdiction of the said Deshpande has been validated by a validating Act after he had made the said orders of assessment and reassessment, in our opinion, a fair order for costs would be that each party should bear and pay its own costs, and we direct accordingly in each of these eight References.


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