1. This is an appeal, under section 24(1) of the Mysore Sales Tax Act, 1957 (which will be referred to hereinafter as the 'Act') against the order of the Commissioner of Commercial Taxes in Mysore, Bangalore, in C.T.R.P. No. 337 of 1963-64 on his file. That was an order made by the Commissioner in exercise of his suo motu powers under section 21(2)(i) of the 'Act', whereunder he revised the order of the Commercial Tax Officer, Circle I, Hubli. The order in question relates to the assessment of the assessee, who is the appellant herein, for the assessment year 1957-58, the accounting period being 1st October, 1957, to 31st July, 1958.
2. It is admitted that during the accounting period, the assessee was dealing in cotton. From out of the cotton purchased by it during the accounting year, a portion of the cotton, i.e., of the value of Rs. 20,93,265, was not sold during that year. Only last purchases of the cotton within the State were exigible to tax, the levy being a single point levy. The Commercial Tax Officer did not bring to tax the value of the cotton purchased during the accounting period and not sold in that period. Evidently, he was of the opinion that those purchases would be exigible to tax only when the goods in question were sold outside the State, which event or events had not taken place during the accounting period. One other fact need be stated at this stage and that is, cotton is one of the declared goods.
3. When the above facts came to the notice of the Commissioner of Commercial Taxes, he took suo motu action under section 21(2) of the 'Act' and issued the following notice to the assessee on 6th February 1964 :
'No. CTRP. - 337/63-64 - Office of the Commissioner of Commercial Taxes in Mysore, Bangalore 1, dated 6th February, 1964.
Show cause notice under section 21(6) of
Mysore Sales Tax Act, 1957.
Subject : Mysore Sales Tax Act, 1957 - M/s. International Cotton Corporation (Pvt.) Ltd., Hubli - Year of assessment 1st October 1957 to 31st July, 1958 - Revision of Commercial Tax Officer's Order - Notice issued.
From the perusal of the assessment records for the period 10th October, 1957, to 31st July, 1958, it is seen that the Commercial Tax Officer, I Circle, Hubli, in his assessment order dated 29th April, 1961, failed to levy tax on the purchase turnover of Rs. 20,93,265 under section 5(4) of the Mysore Sales Tax Act, 1957, which was held in stock and which was sold outside Mysore State on consignment basis. Therefore, the assessment order passed by the Commercial Tax Officer was illegal, incorrect and improper.
Hence under the powers vested under section 21(2)(i) of the Mysore Sales Tax Act, 1957, I propose to add back the turnover of Rs. 20,93,265 and to tax at 1 per cent. under section 5(4) of the Mysore Sale Tax Act, 1957. You are, therefore, given an opportunity to state your objections, if any, either in person or through an authority representative or in writing before the undersigned at 4 p.m. on 4th March, 1964, failing which orders will be passed as proposed.
(Sd.) C. Narasimha Moorthy,
Commissioner of Commercial Taxes.
Messrs International Cotton Corporation (Pvt.) Ltd., Hubli, (through the Commercial Tax Officer, I Circle, Hubli.) '
The assessee sent its reply to the above notice on 11th April, 1964. Therein, it admitted that on 31st July, 1958, it was holding cotton worth of Rs. 20,93,265. It did not refute the allegation in the notice issued by the Commissioner of Commercial Taxes to the effect that the stock in question had been 'sold outside Mysore State on consignment basis'. On the other hand, it averred - 'but the allegation that the petitioner sold the said stock outside Mysore State is not borne out by the record of assessment of the petitioner for the year 1957-58. Hence, even if the allegation is correct, the same is extraneous to the record of the assessment for the year 1957-58 and cannot be acted upon in a proceeding under section 21 of the Mysore Sales Tax Act, 1957. Each of the assessment year is a self-contained unit.'
It was not disputed before us that taxable events are the purchase transactions and not the sale of those goods outside this State. Once the goods are sold to dealers not registered under the 'Act' or consumers in the State the purchase transactions in question become liable to be taxed. This position is concluded by the decision of this Court in The State of Mysore v. M/s. Pratapsingh Vasanthalal & Co. Raichur (C.R.P. No. 398 of 1959).
4. In the course of his arguments, Mr. K. Srinivasan, the learned counsel for the assessee urged the following contentions :
(1) Purchases of declared goods remaining unsold are not liable to be taxed under section 5(4) as it stood at the relevant time;
(2) The Commissioner of Commercial Taxes could not have looked into the records of the subsequent year or years, while suo motu revising the assessment order made by the assessing officer; and
(3) Purchases of declared goods sold outside this State on consignment basis are not liable to tax under section 5(4) of the 'Act'.
5. On the basis of the decision of this Court in Hormusji Hirjibhoy and Co. v. Commercial Tax Officer, Circle II, Hubli , the Commissioner came to the conclusion that the purchases of declared goods remaining unsold are liable to be taxed under section 5(4) of the 'Act' as it stood at the relevant point of time. Mr. Srinivasan is right in his contention that the authority of the decision relied on by the Commissioner is greatly shaken in view of the Full Bench decision of this Court in The State of Mysore v. Gujjadi Narayan Nayak and Another . But the turnover in question should be held to be exigible to tax in view of the language of section 5(4) of the 'Act'. The Commissioner of Commercial Taxes has found that the goods in question were sold by the assessee to a dealer not registered under the 'Act'. That being so, the purchases in question must be held to be last purchases in the State within the meaning of that expression found in Explanation I to section 5(4) of the 'Act'. We are unable to accept Mr. Srinivasan's contention that the expression 'sale to dealer not registered under the 'Act' found in clause (ii) of Explanation I to section 5(4) should be understood as a sale to a dealer inside the State, who has not registered under the 'Act'. He advanced this contention evidently because of the words 'sale to a dealer not registered under the 'Act' are immediately followed by the words 'to a consumer in the State'. We see no justification for constructing the words 'sale to a dealer not registered under this Act' as meaning 'sale to a dealer in this State not registered under the Act'. For so constructing we must read into the explanation the words 'in the State' immediately after the words 'dealer'. There is no justification for so doing. On a plain interpretation of the words in question, they must be held to include all dealers, whether they are in this State or not, if they are not registered under the 'Act'.
6. The next contention of Mr. Srinivasan was that while acting under section 21(2) of the 'Act', the Commissioner has to confine his attention to the examination of the record of the assessment order and the proceedings connected with that order. He contended that if the Commissioner had only looked into the assessment order and the relevant proceedings he would not have been able to discover that the goods in question had been sold by the assessee to a dealer outside the State after 31st July, 1958. For finding out that fact, the Commissioner had to investigate in to the records which had nothing to do with the assessment order or proceedings. According to Mr. Srinivasan, the course adopted by the Commissioner is not permissible under section 21 and, therefore, we should strike down the impugned order. In support of his contention, he placed reliance on the decision of the Madras High Court in The State of Madras v. Louis Dreyfus and Company Ltd. ( 6 S.T.C. 318), wherein a Full Bench of that Court observed that the rule empowering the Commercial Tax Officer to revise the orders of his Deputy Commercial Tax Officer, permitted him to call for and examine records of any order passed or any proceeding recorded by the Deputy Commercial Tax Officer. In that decision the Court proceeded to observe thus :
'Now what exactly is the meaning to be attached to the expression 'the record of any order passed'. The records which the revising authority calls for are the records of the assessment. They would include the assessment order as well as the order files of the assessing authority which would furnish the basis upon which the assessment order is passed. If in the assessment order the turnover which a dealer has returned or which has been gathered from the books is treated as not taxable or subject to any exemption and the revising authority is of the opinion that the order in this behalf is erroneous, the Commercial Tax Officer 'would have satisfied himself that such an order was not legal or proper'.'
7. The scope of a revision under rule 14(2) of the Rules framed under the Madras General Sales Tax Act. 1939, a rule somewhat similar to section 21(2) of the 'Act' again came up for consideration before a Bench of the Madras High Court in Ashok Leyland Ltd., Ennore v. The State of Madras ( 8 S.T.C. 210). Therein this is what the Court observed :
'The contention of the assessee both before the Tribunal and before us was, that the Commercial Tax Officer's revisional authority did not extend to an inspection of material not considered by the assessing authority, the Deputy Commercial Tax Officer. It was on the basis of the accounts or the abstracts of the accounts that the petitioner furnished that the Deputy Commercial Tax Officer came to the conclusion, that a turnover of about 111 lakhs of rupees was not liable to be taxed under the Act. Whether that view was correct was what the Commercial Tax Officer had to examine. That he had the undoubted jurisdiction to do. What was the material that the Commercial Tax Officer could examine when exercising his revisional powers was the question. Learned counsel for the petitioner assesses did not repeat before us the extreme contention he had apparently put forward before the Tribunal, that the Commercial Tax Officer could not look beyond the assessment order of the Deputy Commercial Tax Officer. Learned counsel for the petitioner complained that in addition to the material placed before the Deputy Commercial Tax Officer, the Commercial Tax Officer called upon the petitioner assesses to produce records in its possession. That, he contended, was beyond the jurisdiction of the Commercial Tax Officer.
8. What was the record a revisional authority could examine was indicated by a Full Bench of this Court in State of Madras v. Louis Dreyfus & Co. Ltd. ( 6 S.T.C. 318) :
'We are of the opinion that the expression 'record' would include not merely the assessment order but the entire assessment file ......'
9. If the assessee produced his accounts before the assessing authority and took them back, obviously it could not be said that the Commercial Tax Officer as the revision authority, could not send for the books on the narrow ground, that the books themselves were no longer in the office of the Deputy Commercial Tax Officer as part of his file. If abstracts of accounts had been filed, obviously the Commercial Tax Officer would be well within his jurisdiction to call upon the assessee to produce the original books themselves. If entries in the accounts were based upon other records, e.g., vouchers, bills, etc., then in the normal course they should have been examined by the assessing authority, and the Commercial Tax Officer would be acting well within his jurisdiction to call upon the assessee to produce evidence to support the entries in the account books, which were considered by the Deputy Commercial Tax Officer, the assessing authority. It was not case of the learned counsel for the petitioner that the Commercial Tax Officer took any irrelevant material into consideration, even from among the records in the assessee's possession, which it was called upon to produce. We are unable to hold that there was anything even irregular in the exercise of the jurisdiction vested in the Commercial Tax Officer by section 12 of the Act.'
10. We are in respectful agreement with the above observations. From these observations it follows that the revising authority can look into all the records which the assessing authority was required to look into. In the instant case, it was the duty of the assessing authority to find out whether the unsold stock of cotton had been sold subsequently in order to find out whether the purchases in question are 'last purchases'. If the assessing authority failed to do so, it was open to the revising authority to do what the assessing authority had failed to do. In the instant case, the assessing authority has failed to find out whether the cotton in question had been sold by the assessee and if so to whom. It is undisputed that the accounts of the assessee for the accounting period showed the purchases in question. These entries did put the assessing authority on enquiry, to find out as to what had become of the cotton in question. The assessing authority failed to do that. What the assessing authority failed to do, the Commissioner had done. Such an enquiry is within the scope of section 21(2) of the 'Act'.
11. Assuming that the Commissioner could not have looked into the accounts of the subsequent period to find out whether the purchases in question were last purchase, he could have, in exercise of his powers under section 21(2), reopened the assessment and directed the assessing authority to find out whether the purchases in question were last purchases made during the accounting period and if they are, to bring them to tax - See the decision of the Supreme Court in The State of Kerala v. K. M. Cheria Abdulla and Company : 1SCR601 . It is not disputed by the learned counsel for the assessee that the conclusions reached by the Commissioner are factually correct. His only grievance is that the Commissioner had no jurisdiction to investigate and find out the correct facts. Such a contention has to be considered as hypertechnical in view of our conclusion that the Commissioner could have directed the assessing authority to find out whether the purchases in question were 'last purchases' and if they are, to bring the turnover relating to those purchases to tax.
12. It is true, as pointed out by Mr. Srinivasan, that the Commissioner was wrong in stating in his order 'The Commercial tax Officer erred in not taxing this turnover on the ground that the cotton purchased from registered dealers in this State was not sold out in that year itself but was sold outside the State on consignment basis in the next year.' There is no such finding in the order of the Commercial Tax Officer. Obviously, that was an inference drawn by the Commissioner. But that makes no difference as regards our conclusion.
13. We are unable to agree with Mr. Srinivasan that the turnover relating to the purchases in question are not exigible to tax as the goods purchased were sold out of this State on consignment basis. It does not appear that it was contended before the Commissioner that the last purchases of declared goods in the State are not exigible to tax, if those goods are sold outside the State on consignment basis. There is no support for this contention from the language of section 5(4). That section does not make any distinction between sales on consignment basis and other sales. It is not the case of the assessee that when it purchased those goods it intended to sell them in the course of inter-State trade or commerce. Nor was it contended that the goods in question were sold in the course of inter-State trade or commerce. That being so, the purchases in question are exigible to tax.
14. No other contention was urged before this Court.
15. For the reasons mentioned above, this appeal fails and the same is dismissed with costs. Advocate's fee Rs. 100.
16. Appeal dismissed.