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R.S. Rekhchand Mohta Spg. and Wvg. Mills (Private) Ltd. Vs. Commissioner of Sales Tax - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberCivil Reference Nos. 35 and 36 of 1957
Judge
Reported in(1959)61BOMLR90; [1959]10STC229(Bom)
ActsCentral Provinces and Berar Sales Tax Act, 1947 - Sections 22-B and 23(1) - Rule 57 ; Constitution of India - Article 286(1)
AppellantR.S. Rekhchand Mohta Spg. and Wvg. Mills (Private) Ltd.
RespondentCommissioner of Sales Tax
Appellant AdvocateM. N. Phadke, Adv.
Respondent AdvocateN.E. Abhyankar, Special Government Pleader
Excerpt:
.....- whether sales tax commissioner could exercise revisional power under section 22-b to affect orders passed prior to coming into force of section 22-b - under section 22-b commissioner entitled to revise orders passed prior to 01.12.1953 - revisional order to be passed maximum within two years from date of order sought to be revised. - indian penal code, 1860 [c.a. no. 45/1860].sections 124-a, 153-a, 153-b, 292, 293 & 295a; [f.i. rebello, smt v.k. tahilramani & a.s. oka, jj] declaration as to forfeiture of book held, the power can be exercised only if the government forms opinion that said publication contains matter which is an offence under either of sections 124-a, 153-a, 153-b, 292, 293, 295a of i.p.c., - xx of 1953. section 22, as it originally stood, was a composite..........of the c.p. and berar sales tax act calling upon the assessee to show cause why the assessment orders passed by the regional assistant commissioner, amravati, should not be set aside. in reply to the said notices, the applicant filed written objections contending inter alia that section 22-b which came into force on 1st december, 1953, by virtue of act no. xx of 1953, could not apply in respect of the assessment orders passed on 18th august, 1953, and the commissioner had no power to revise those orders by virtue of the powers conferred upon him under section 22-b. it may be mentioned that under the original orders, the regional assistant commissioner of sales tax, amravati, had granted exemption to the assessee in respect of certain sales of cloth, on the ground that these sales.....
Judgment:

Gokhale, J.

1. The assessee in both these civil references had submitted his returns under the Central Provinces and Berar Sales Tax Act, 1947 (XXI of 1947), for two years covering the period between 22nd October, 1949, to 9th November, 1950, and 10th November, 1950, to 30th October, 1951, and he was assessed by the Regional Assistant Commissioner of Sales Tax, Amravati, by his orders dated 18th August, 1953, in respect of both the periods. The amounts of assessments were paid by the assessee in pursuance of those orders. Thereafter, notices were issued by the Commissioner of Sales Tax, Nagpur, under section 22-B of the C.P. and Berar Sales Tax Act calling upon the assessee to show cause why the assessment orders passed by the Regional Assistant Commissioner, Amravati, should not be set aside. In reply to the said notices, the applicant filed written objections contending inter alia that section 22-B which came into force on 1st December, 1953, by virtue of Act No. XX of 1953, could not apply in respect of the assessment orders passed on 18th August, 1953, and the Commissioner had no power to revise those orders by virtue of the powers conferred upon him under section 22-B. It may be mentioned that under the original orders, the Regional Assistant Commissioner of Sales Tax, Amravati, had granted exemption to the assessee in respect of certain sales of cloth, on the ground that these sales were pure exports and they were exempted under the provisions of Article 286(1)(b) of the Constitution. The Commissioner rejected the assessee's contention regarding his revisional powers under section 22-B of the Sales Tax Act, and on the merits he took a different view from that taken by the Regional Assistant Commissioner of Sales Tax regarding the exemption to be given to the sales of cloth and held that the sales in question were taxable. He, therefore, set aside the assessment orders and remanded the two cases to the Regional Assistant Commissioner, with a direction to proceed with the assessment of the assessee in the light of his revisional orders. These revisional orders in the two cases were passed by the Commissioner on 26th April, 1954, that is to say, before the expiry of two years, from the date of the original orders which were passed on 18th August, 1953. Against this decision of the Commissioner, the assessee filed appeals before the Board of Revenue which was then the Appellate Authority, and the Board of Revenue of Madhya Pradesh relying upon its Division Bench ruling in Appeal No. 4/XXXIII-7 of 1955, dated 14th May, 1956, dismissed the appeals of the assessee. In respect of this decision of the Board of Revenue, the assessee filed applications under section 23(1) of the Sales Tax Act, requesting that the question as to whether the revisional powers under section 22-B of the Sales Tax Act could be made applicable to orders passed by the Regional Taxing Authority on 18th August, 1953, should be referred for decision to the High Court.

2. These applications came before the Sales Tax Tribunal which has now replaced the Board of Revenue and by its order dated 24th July, 1957, the Tribunal has referred to us the following two questions :

(1) Whether section 22-B applies to cases in which the order sought to be revised was passed before the said section came into operation

(2) Whether the Commissioner of Sales Tax was justified in law in re-opening the assessment made in these cases and making an order of remand

3. Now, Mr. Phadke, the learned Advocate appearing on behalf of the assessee, has contended, in the first instance, that under question No. (2) referred to us, the Sales Tax Tribunal intended that the High Court should also go into the question of the merits of the assessment order of the Sales Tax Commissioner. We are not prepared to accept this argument. It is clear from the record that the only question that was argued before the Board of Revenue of behalf of the assessee was whether the Sales Tax Commissioner could invoke the revisional powers conferred on him by section 22-B of the Sales Tax Act with a view to revising the orders that were passed before the said section came into force on 1st December, 1953. The merits of the order of assessment do not appear to have been challenged before the Board of Revenue, and, in our opinion, under the second question which has been framed by it, the Sales Tax Tribunal has not referred the merits of the assessment order to this Court.

4. The only question, therefore, which falls to be considered in these reference is whether the Sales Tax Commissioner could exercise his revisional powers under section 22-B of the Sales Tax Act, so as to affect orders which were passed prior to the coming into force of this section on 1st December, 1953; and it is contended by Mr. Phadke on behalf of the assessee that section 22-B, which, along with other sections, was inserted by the M.P. Act No. XX of 1953 in substitution of the original section 22, could not have any retrospective operation so as to affect the orders passed in these cases on 18th August, 1953. Now, in order to examine this contention, it would be necessary to look into the provisions of the original section 22 of the Sales Tax Act and the new sections which replaced it by virtue of the Amending Act No. XX of 1953. Section 22, as it originally stood, was a composite section dealing with appeals against original orders of the taxing authorities, as well as the revisional powers of the Commissioner, as also of the Tribunal. Under sub-section (4) of section 22, every order passed in appeal was, subject to the provisions of sub-section (5) and section 23, to be final. Under sub-section (5) of section 22, which dealt with the revisional powers, it was provided :-

'Subject to rules made under this Act and for reasons to be recorded in writing, the Commissioner upon application or of his own motion may revise any order passed under this Act or the rules thereunder by a person appointed under section 3 to assist him, and subject as aforesaid, the Tribunal may, in like manner, revise any order passed by the Commissioner :

Provided that before rejecting any application for the revision of any such order the Commissioner or the Tribunal, as the case may be, shall consider it and shall record reasons for such rejection.'

5. It is obvious from this sub-section that the Commissioner had the power to revise any order passed by an authority appointed under section 3 to assist him, either upon an application made by the assessee or by an action suo motu on his part. This power was to be exercised in accordance with the rules framed under the Act; and Mr. Phadke in this connection drew our attention to rule 57 of the C.P. and Berar Sales Tax Rules, 1947, which provided that an application for revision of an order shall be made within 30 days of the passing of the order. The proviso to this rule stated that no application for revision of any order of assessment passed in an appeal shall be entertained by any authority unless it was satisfied that the petition for revision raised a substantial question of law, and that the tax which penalty, if any, in respect of which the application was made, had been paid along with the application. It will, therefore, be observed from this rule that an application for revision, if it was preferred by the assessee, had to be made within 30 days of the passing of the order he sought to challenge. But there does not seem to have been any period of limitation if the Commissioner wanted to revise an original or appellate order acting on his own motion. By virtue of the Amending Act of 1953, the original section 22 was substituted by sections 22, 22-A, 22-B and 22-C. New section 22-A(1) refers to the power of the Commissioner on his own motion to call for the record of any proceedings under the Act, in which an order has been passed by any subordinate authority, and after making such enquiry or causing such enquiry to be made and subject to the provisions of the Act, to pass such order thereon as he though fit, provided the order so passed was not an order prejudicial to the dealer and the order under revision was not made more than one year previously. Under sub-section (2) of section 22-A, the Commissioner could be moved also by a dealer for revision, provided the application was made within one year from the date of the order sought to be revised. It would, therefore, appear from section 22-A(2) that instead of the period of 30 days provided under rule 57, the assessee was given the right to apply in revision to the Commissioner against or an original or appellate order within one year from the date of the order. Then comes section 22-B with which we are concerned in these references and it runs as follows :

'(1) The Commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by any person appointed under section 3 to assist him is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the dealer an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.

(2) No order shall be made under sub-section (1) after the expiry of two years from the date of the order sought to be revised.

(3) Any dealer objecting to an order passed by the Commissioner under sub-section (1) may appeal to the Tribunal within sixty days of the date on which the order is communicated to him'.

6. Section 22-C deals with the power of the Commissioner or the appellate authority to impose penalty, but we are not concerned in this case with that section.

7. Now, the whole of Mr. Phadke's contention in these references is that the powers given to the Commissioner under section 22-B are powers to revise orders of any authority subordinate to him and these powers can be exercised by him suo motu within an application by the assessee; and according to Mr. Phadke, these revisional powers could not be exercised by the Commissioner in respect of orders passed prior to 1st December, 1953, on which date this section came into force, because, according to Mr. Phadke, the new section gave a wider power of revision to the Commissioner than the old section 22(5) which ceased to have force on 30th November, 1953. The argument of Mr. Phadke appears to be that under rule 57, as it original stood, a revisional application against an order of assessment passed in appeal could only be entertained if the Commissioner was satisfied that the petition for revision raised a substantial question of law. Mr. Phadke concedes that this rule 57 would only apply to applications for revision made to the Commissioner but would not apply to action taken by the Commissioner suo motu. But he contends that the same limitation of a requirement of a substantial question of law will have to be imported when the Commissioner exercised his powers to revise the orders of his subordinates when he took action suo motu; and according to Mr. Phadke, under the present section 22-B the Commissioner is empowered to revise an order of any authority subordinate to him even if it is merely erroneous in so far as it is prejudicial to the interests of the revenue, and it is Mr. Phadke's contention that under the new section, the powers of revision conferred on the Commissioner are wider, and, therefore, that section cannot be given any retrospective operation. We are not prepared to accept this argument. Rule 57 dealt with applications for revision and it provided a period of 30 days within which the application for revision could filed. As I have already pointed out, under the new section 22-A(2) that period has been actually enlarged to a period of one year from the date of the order, so that the right of the assessee to file revisional application has been placed on a footing more beneficial to the assessee, inasmuch as under the new section 22-A he now gets a period of one year within which to make an application for revision. Rule 57, as it original stood, did not deal with the case of revision by the Commissioner acting suo motu, and the requirement in the proviso as to a question of law was confined to cases of revision of an order of assessment passed in appeal. We are not, therefore, prepared to accept Mr. Phadke's contention that the Commissioner's power of revision suo motu under old section 22(5) could only be exercised if the order of the subordinate authority was erroneous on a question of law. In our opinion, therefore, the present section 22-B does not impose any greater disability on the assessee when the Commissioner seeks to exercise his power suo motu on the ground that any order passed by the subordinate authority was erroneous in so far as it was prejudicial to the interests of the revenue. On the other hand, whereas under the old section 22(5) there was no period of limitation provided, within which the Commissioner could revise the orders of the subordinate authorities, under section 22-B, sub-section (2), the Commissioner can exercise his powers of revision, provided he does so before the expiry of two years from the date of the order sought to be revised. Therefore, in a sense, greater protection is afforded to the tax-paying dealer, in that no order passed by a subordinate authority would be subject to revision at the hands of the Commissioner acting suo motu after the expiry of two years from the date of the order.

8. The second contention of Mr. Phadke is that in the present case, the orders of assessment which were passed on 18th August, 1953, were in respect of the assessment period for the years 1949-50 and 1950-51. The Commissioner's order of revision is undoubtedly passed within a period of 2 years of the original order of assessment as provided under sub-section (2) of section 22-B. But Mr. Phadke contends that, in effect, the Commissioner seeks to reopen the assessment on the ground of a wrong deduction allowed by the Regional Assistant Commissioner, and that, according to Mr. Phadke, would come within the ambit of section 11-A, and since admittedly three years had elapsed on 26th April, 1954, from the first period of assessment, namely, 22nd October, 1949, to 9th November, 1950, at least the order of revision with reference to that period would be bad. In this connection, Mr. Phadke relies on a recent decision of a Full Bench of this Court in Special Civil Application No. 346 of 1957 decided on 23rd July, 1958 (Since reported as Bisesar House v. State of Bombay and others [1958] 9 S.T.C. 654. In our judgment, this argument is clearly misconceived. Section 11-A deals with the power of the Commissioner and of persons to whom these powers are delegated under section 16, to reopen an assessment where the authority is satisfied that any turnover of a dealer during any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom; and the power of the Commissioner under section 11-A is subject to the period of limitation of three calendar years from the expiry of the assessment period. It is true that section 11-A was given retrospective effect by M.P. Act No. XX of 1953 from 1st June, 1947, and that was possibly the reason why the Legislature provided for a period of three calendar years from the expiry of the assessment period, so that the assessees may not be subjected to harassment after a considerable lapse of time. Section 11-A deals with the power of the original assessing authority and has no relation to the revisional powers of the Commissioner provided under the old section 22(5) and under the present section 22-B. We are not, therefore, prepared to accept Mr. Phadke's contention that because section 22-B(2) does not correlate the period of limitation to the period of assessment, a greater disability is imposed on the assessee. What is contemplated under section 11-A is an action by the original assessing authority when it finds in consequence of any information which has come into its possession that there has been a case of under-assessment or escapement of assessment. The Full Bench of this Court on which Mr. Phadke relies decided to read sections 11 and 11-A together and held that notice issued under sub-section (2) of section 11 would be bad if it was issued three calendar years after the expiry of the period of assessment. But it has to be remembered that the notice contemplated under sub-section (2) of section 11 is a notice issued by the taxing authority before the original order of assessment is passed, and would, as the Full Bench points out, in the substantial sense be an initiation of fresh proceedings by the Commissioner. On the other hand, section 22-B(2) has itself provided for a period of limitation and that period is two years from the date of the order sought to be revised. There is, therefore, no scope for importing a further period of limitation from section 11-A as urged by Mr. Phadke. As I have already pointed out, under the original section 22(5) which was in force till 30th November, 1953, it was not necessary for the Commissioner to pass his order in revision within 2 years of the date of the order sought to be revised. The second contention of Mr. Phadke, therefore, that section 22-B could not affect orders passed prior to 1st December, 1953, because it is not correlated, in any matter, to the period of assessment and therefore, could not be given retrospective operation, is unsound and cannot be accepted.

9. Mr. Phadke has not disputed and cannot dispute the fact that the orders of assessment prior to 30th November, 1953, were not final but subject to the provisions of sections 22 and 23. Even prior to 30th November, 1953, the present orders could have been revised, and under section 22(5) the orders could have been revised even after the expiry of the period of 2 years from 18th August, 1953. Section 22-B which came into force on 1st December, 1953, actually places a further restriction on the revisional powers of the Commissioner, in that he has now to revise an order, if he takes action suo motu under that section within a period of two years from the date of the order sought to be revised. The principles on which the Court decides whether a statute is to be given retrospective operation or not are well settled. Every statute which takes away or impairs vested rights acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect of transactions or considerations already past, must be presumed, out of respect to the Legislature, to be intended not to have a retrospective operation : See Maxwell on Interpretation of Statutes, 10th Edition, page 215. But the presumption against retrospective construction has no application to enactments which affect only the procedure and practice of Courts or Tribunals, ibid page 225. As I have already stated, Mr. Phadke's argument that the present section 22-B casts a greater disability on the assessee cannot be accepted. In our judgment, the new section merely regulates the exercise by the Sales Tax Commissioner of his powers of revision and does not whittle down, in any manner, the rights of the assessee, or impose any greater disability on him. It seems to us, in the circumstances, that section 22-B, which came into force, on 1st December, 1953, involves really nothing more than an alternative of procedure designed to regulate the exercise of revisional powers by the Commissioner. In our opinion, therefore, under section 22-B, the Commissioner would be entitled to revise orders passed prior to 1st December, 1953, when that section came into force. At the same time, under sub-section (2) of section 22-B, the revisional order itself cannot be passed after the expiry of two years from the date of the order sought to be revised.

10. 7. As the questions framed by the Sales Tax Tribunal appears to us to be unnecessarily wider in scope, we propose to answer those questions as follows :-

(1) The revisional powers under section 22-B can be exercised by the Commissioner even in respect of orders or subordinate authorities passed prior to 1st December, 1953, provided the revisional order is passed by him before the expiry of two years from the date of the order sought to be revised; and

(2) The order of remand was justified in view of our answer to the first question.

11. The applicant-assessee will pay the costs of the State in both the references.

12. References answered accordingly.


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