1. These are three appeals filed by an assessee challenging the legality and the propriety of the assessment made by the Commissioner of Commercial Taxes in revision enhancing the assessment for the different periods on the ground that the Commercial Tax Officer and the Deputy Commissioner in appeal had omitted to take into account in estimating the gross turnover the expenditure incurred by the assessee over the maintenance of 22 servants amounting to Rs. 7,930 per year. The assessee is the proprietor of a hotel by name 'Ratan Cafe' located at Malleswaram, Bangalore 3. The Commercial Tax Officer determined the total annual sales of the assessee at Rs. 1,00,000 for the year 1956-57 and for the first and second half-years of 1957-58 at Rs. 50,000 each. This was a best judgment assessment as the accounts produced by the assessee did not record monthly sales of meal tickets and did not disclose the correct turnover. Being aggrieved by these decisions of the Commercial Tax Officer, the assessee preferred three appeals to the Deputy Commissioner of Commercial Taxes. That officer also held that the accounts were not verifiable and that the assessing officer was justified in estimating the turnover to the best of his judgment for all the periods under appeal. He, however, thought the assessment to be excessive as, in his view, the first year 1956-57 was the commencement of the new business and accordingly reduced the taxable turnover from Rs. 1,00,000 to Rs. 80,000. He took the same view even for the two half-years of 1957-58 and effected reduction accordingly by his consolidated order dated 13th April, 1959. Thereafter, the office of the Commercial Tax Officer, IV Additional Circle, Bangalore, was inspected by the Inspecting Officer in April, 1960 and he scrutinized the records of Messrs Ratan Cafe, Malleswaram, during the course of the inspection. As a result of this inspection, he reported to the Commissioner of Commercial Taxes on 18th April, 1960, that the expenditure over food supplied to the employees of the assessee had not been taken into account at the time of the assessment for the years 1956-57 and the two half-years of 1957-58 and that the same had escaped assessment to tax. On receipt of this resort, the Commissioner of Commercial Taxes suo motu called for the records relating to the assessment of Ratan Cafe and issued as notice dated 10th May, 1960, calling upon the assessee to show cause why the taxable turnover for the year in question should not be fixed at Rs. 1,05,595 and the order of the Deputy Commissioner of Commercial Taxes fixing the same at Rs. 80,000 should not be revised on the basis of the reasons given in the notice. The notice further called upon the assessee to show cause why for the same reasons the total turnover for each half-year of 1957-58 should not be fixed at Rs. 52,797 by including in the total establishment expenses the feeding charges of 22 savants. The notice mentioned that the feeding charges were assessed at Rs. 30 per servant per month. A second notice of the same date gave all the details and called upon the assessee to appear before the Commissioner on 1st June, 1960 at 2.30 P.M.
2. In response to these notices, the assessee appeared through his auditor, Sri Subramanyam, who admitted that the Commissioner had omitted the expenses on account of the 22 servants in estimating the total gross turnover, but submitted that as he had already fixed a high turnover of Rs. 80,000 for each of the years in question, there was no justification for enhancing the turnover. On the basis of the admission that the charges on account of the 22 servants had not been taken into consideration in calculating the total turnover, the learned Commissioner of Commercial Taxes came to the conclusion that it was a clear case of omission and accordingly enhanced the taxable turnover of the assessee to Rs. 1,05,595 for the year 1956-57 and to Rs. 52,797 for the first and the second half-years for the year 1957-58 and directed the tax to be levied accordingly.
3. It is against this order that the assessee has preferred the three appeals. The learned Advocate appearing on has behalf has contended that it was not open to the Commissioner to interfere with the assessment on the ground of factual omission in estimating the total turnover, unless there was any illegality committed by the subordinate authorities or an irregularity in the procedure adopted by them.
4. In order to examine the tenability of the contentions raised by the learned Advocate for the appellant, it is necessary to examine the powers of the Commissioner of Commercial Taxes in revising an order passed by a Deputy Commissioner in appeal. Section 15(2) of the Mysore Sales Tax Act, 1948, as amended by Amending Act No. XVII of 1955 was the law in force at the material date. It reads as follows :
'15. Revisional powers of Deputy Commissioner and Commissioner -
(1) * * *
(2) The Commissioner may, -
(i) suo motu, or
(ii) in respect of any order passed or proceeding recorded by the Deputy Commissioner under sub-section (1) or any other provision of this Act and against which no appeal has been preferred to the Appellate Tribunal under section 16, on application,
call for and examine the record of any order passed or proceeding recorded under the provisions of this Act by any officer subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceeding and may pass such order with respect thereto as he thinks fit : * * * *'
Sub-section (5) of section 15 which is also relevant for the purpose, requires that
'No order shall be passed under sub-section (1) or (2) enhancing any assessment, unless an opportunity has been given to the assessee to show cause against the proposed enhancement.'
It is not disputed that a due notice was issued to the assessee giving him an opportunity to show cause why the proposed enhancement as finally embodied in the impugned order should not be effected.
5. It is not disputed that the Commissioner has got the power of revision and that so far as the present case is concerned, there is neither illegality in the assessment nor irregularity in the procedure followed by any of the subordinate officers. We are therefore to determine the meaning and the scope of interference on the ground of propriety. The word 'propriety' has not been defined either in the Mysore Sales Tax Act or the General Clauses Act. This word however has been used in many enactments in sections dealing with the revisional power of the officer or authority invested with the powers of superintendence and control of his department. In Raman & Raman Ltd. v. Government of Madras ( S.C.J. 368), the Supreme Court had to deal with section 64-A as inserted by Madras Act (XX of 1948) in the Motor Vehicles Act (IV of 1939). The section reads thus :
'The State Government may, of its own motion or on an application made to it, call for the records of any order passed or proceeding taken under this Chapter by any authority or officer subordinate to it, for the purpose of satisfying itself as to the legality, regularity or propriety of such order or proceeding and after examining such records, may pass such order in reference thereto as it thinks fit.'
While determining the meaning of the word 'propriety', it has been observed :
'The word 'propriety' has nowhere been defined in the Act and is capable of a variety of meanings. In the Oxford English Dictionary (Vol. VIII), it has been stated to mean 'fitness; appropriateness; aptitude; suitability; appropriateness to the circumstances or conditions; conformity with requirements, rules or principle; rightness, correctness, justness, accuracy.''
6. In this connection, reference may be made to some cases which throw light on the meaning of the word 'propriety' used in connection with the powers of a revising authority. In the State of Madras v. Madura Knitting Company, Limited ( 10 S.T.C. 155), their Lordships of the Madras High Court considered the meaning of the word 'propriety' as used in section 12(2) of the Madras General Sales Tax Act, 1939, and rule 14 framed by the State Government. Section 12 of that Act is identical with section 15 of the Mysore Act. It was contend before their Lordships that the Commercial Tax Officer could only interfere with the orders passed by a Deputy Commercial Tax Officer if they were patently illegal or outside his jurisdiction or there was impropriety in the sense of misconduct like bribery or inducement by immorality being the cause for the order, and irregularity in the sense that the procedure was not followed. While rejecting this argument, Panchapakesa Ayyar, J., observed :-
'We are unable to agree. It will be meaningless, in our opinion, to have a hierarchy of officers inspecting the subordinate offices and examining the records and orders passed by the subordinate officers in money matters involving public revenue if these superior officers are not allowed to examine the correctness of those orders, which correctness will certainly, in our opinion, be one of the factors for determining the propriety of passing the orders, as held by the Supreme Court in Raman & Raman Ltd. v. Government of Madras ( S.C.J. 368), where the word 'propriety' has in an analogous enactment using the same expression, been defined as fitness; * * rightness, correctness, justness, accuracy.'
Basheer Ahmed Sayeed, J., who delivered a concurring judgment, observed that the provisions of the Act and the Rules, providing elaborately for an aggrieved assessee to agitate against orders of the various assessing officers, were clearly intended to set right defects found in the orders of the inferior taxing authorities and that they had been 'framed with the object of safeguarding the interests of the proper administration of the fiscal law and the prevention of loss of taxes payable to the Government.' That the powers of revision conferred by section 12(2) of the Madras General Sales Tax Act, 1939, on the respective authorities were intended both for the benefit of the State and the taxpayer was further affirmed by a subsequent decision of the Madras High Court in the State of Madras v. The India Coffee Board, Batlagundu ( 11 S.T.C. 1). It was contended before their Lordships that the power of revision was intended only to protect the interests of revenue. That contention was rejected on the ground that there was nothing in section 12 to warrant as assumption that such powers are given only to protect the interests of revenue and not to protect the interests of the taxpayer as well.
7. The other High Courts have also taken the same view as regards the scope of powers exercisable by revising authorities under identical provisions. The former Mysore High Court in Ganeshaiah v. Subba Bhatta and Three Others (I.L.R. (1954) Mys. 451), dealt with the powers of the High Court in revision. Their Lordships were dealing with section 4(2) of the Mysore Agriculturists' Relief Act, 1928, and section 10 of the Mysore Small Cause Courts Act, 1911, which provided for revision of the orders passed by subordinate Courts. Mallappa, J., observed that
'.......... The High Court will interfere however even on the findings of fact given by the lower Courts, when the conclusion arrived at by them lacks in legality when the finding is based on either inadmissible evidence or on misreading of evidence, when facts admitted are not taken note of in considering the point for decision when it is based on matters not in evidence and when the view taken by the lower Court lacks in propriety and could be said to be such as no reasonable man could taken on the evidence available.'
Section 10 of the Small Cause Courts Act used the words 'correctness, legality or propriety' while section 4(2) of the Agriculturists' Relief Act used the words 'legality or propriety'. Venkataramiya, J., who delivered a concurring judgment, opined that the words used in section 10 of the Mysore Small Cause Courts Act and those in section 439 of the Code of Criminal Procedure 'are wide enough to permit the High Court going into evidence where it considers that it is necessary to do so in the ends of justice. In his Lordship's view the word 'propriety' of a finding involves or implies a consideration of its correctness. The Kerala High Court in State of Kerala v. K. M. Cheria Abdulla & Co. ( 11 S.T.C. 295), had to consider the scope of section 12(2) of the Madras General Sales Tax Act. It approved the view taken by the Madras High Court in State of Madras v. Madura Knitting Company Limited ( 10 S.T.C. 155), and held that the word 'propriety' meant correctness. In its view the words 'may pass such orders with respect thereto as he thanks fit' 'do spell a very wide discretion'. The Patna High Court in Banarsi Lal v. Province of Bihar ( 3 S.T.C. 178), dealt with the revisional jurisdiction of the Revenue Board under section 20(3) of the Bihar Sales Tax Act and held that the Board was entitled to go into the question of fact. There is however no discussion of the provisions or of the meaning of the words used in the section.
8. From the aforesaid discussion, it would be clear that the revisional jurisdiction of the Commissioner of Sales Tax extends not only to a consideration of the question of legality of an order passed by or the regularity of the proceedings before the subordinate authorities, but also to a consideration of the correctness or justness of such order. This power is intended to be exercised both in the interest of the State as also of the assessee. In that context the word 'propriety' has to be interpreted as relating to the correctness, justness, accuracy or appropriateness of the orders passed by the subordinate authorities. The investigation should be directed to see that there is neither an omission on the part of the assessing officer so as to jeopardize the fiscal interest of the State, nor an excessive assessment so as to adversely affect the interest of the assessee. The power further implies that the authority can call for the records, go though them, consider the facts evidenced by the records and then enhance or reduce the assessment, so that justice is done between the State and the assessee. In doing so, if the order proposed to be passed affects the assessee adversely, he must be given a reasonable opportunity to show cause against the proposed enhancement.
9. Considered in the light of these conclusions, the present order of the Commissioner of Commercial Taxes has to be held as valid and proper. The subordinate authorities had not taken into consideration in assessing the total turnover, the expenses incurred over the feeding charges of the 22 servants maintained by the establishment. It appears from the proceedings before the Commissioner that that fact was conceded by the assessee before him. The rate of Rs. 30 per month per servant does not appear to be excessive or unreasonable. Where an assessee fails to produce regular and reliable accounts or other relevant material for the purpose of determining the total turnover, where the assessment is best judgment assessment, certain amount of estimation on the basis of approximate calculations is inevitable. The Deputy Commissioner has failed to take into consideration the amount which is substantial and the learned Advocate for the appellant has not been able to convince us that it was not so. The revisional jurisdiction is intended to safeguard, as observed above, the interest of the State also and where there is substantial omission on the part of the subordinate authorities in the calculation of the total turnover, the Commissioner in revision would be well within his power to modify the orders of the subordinate authorities and enhance the assessment. We would, however, like to emphasize that it is not every case of omission or commission in the calculation of the total turnover by an assessing authority that would justify the Commissioner invoking his revisional jurisdiction. There are cases where the omissions or commissions are trivial in nature and do not materially affect the fiscal interest of the State or of the assessee; the orders passed in such cases, though technically erroneous may not be called improper or unjust. Before invoking his powers of revision under section 15 of the Act the revising authority must be satisfied that the relevant order is improper, unjust or that the order levying tax is substantially adverse to the financial interest of the State or of the assessee. The power ought not to be exercised lightly or where it is likely to result in harassment. In our opinion, the facts before us disclose that the omission was of a substantial nature and the Commissioner was justified in enhancing the tax. The appeals fail and are therefore dismissed with costs. Advocate's fees Rs. 50, in one set.
10. Appeals dismissed.