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Sri Balaji Rice Company Vs. Commercial Tax Officer No. I, Nellore and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberW.P. Nos. 4170, 4255, 4411, 5864 and 8739 of 1982
Judge
Reported in[1984]55STC292(AP)
ActsAndhra Pradesh General Sales Tax Act, 1957 - Sections 1(2), 2(1), 4, 5, 5(1), 7A(2), 9, 12, 13, 14, 14(1), 14(4), 14(4A), 14(4C), 17, 17(1), 25, 31, 32, 32(1), 33 and 34
AppellantSri Balaji Rice Company
RespondentCommercial Tax Officer No. I, Nellore and ors.
Appellant AdvocateS. Dasaratharama Reddi and ;S. Krishna, Advs.
Respondent AdvocateThe Government Pleader for Commercial Taxes
Excerpt:
sales tax - jurisdiction - sections 1 (2), 2 (1), 4, 5, 5 (1), 7a (2), 9, 12, 13, 14, 17, 31, 25, 32, 33 and 34 of andhra pradesh general sales tax act, 1957 - business premises of petitioner inspected and stock seized by commercial tax officer no. ii (cto) - tax levied upon petitioner on basis of seizure by cto - petitioner contended that cto had no jurisdiction to assess petitioner - cto appointed under section 4 - powers can be exercised only within local limits to be fixed by state government - act beyond local limits will be ultra vires to powers conferred by section 4 - held, petition allowed as act of cto was without jurisdiction. - - 12. the points raised in these writ petitions can be better formulated and appreciated only if the relevant provisions of the act and the rules.....ramachandra rao, j.1. this batch of writ petitions is heard together and disposed of by a common judgment, as the major points that arise for consideration are common. 2. w.p. no. 4255 of 1982 : the petitioner herein is a registered dealer under the andhra pradesh general sales tax act carrying on business in paddy and rice at nellore. for the years 1979-80 and 1980-81 the petitioner filed returns of his turnovers before the 1st respondent, the commercial tax officer no. i, nellore, and the same were accepted with slight modifications. for the assessment year 1981-82, he filed monthly returns before the said officer and the assessment was not yet made by him. 3. while so, on 24th march, 1982, the 2nd respondent, commercial tax officer no. ii (intelligence), office of the commissioner of.....
Judgment:

Ramachandra Rao, J.

1. This batch of writ petitions is heard together and disposed of by a common judgment, as the major points that arise for consideration are common.

2. W.P. No. 4255 of 1982 : The petitioner herein is a registered dealer under the Andhra Pradesh General Sales Tax Act carrying on business in paddy and rice at Nellore. For the years 1979-80 and 1980-81 the petitioner filed returns of his turnovers before the 1st respondent, the Commercial Tax Officer No. I, Nellore, and the same were accepted with slight modifications. For the assessment year 1981-82, he filed monthly returns before the said officer and the assessment was not yet made by him.

3. While so, on 24th March, 1982, the 2nd respondent, Commercial Tax Officer No. II (Intelligence), Office of the Commissioner of Commercial Taxes, Hyderabad, inspected the business premises of the petitioner at Nellore and seized the stock in the mill premises of the petitioner and got the same scaled, and recorded his statement. Further, the petitioner was called upon to pay a sum of Rs. 20,577 towards tax for the year 1980-81 and another sum of Rs. 52,158 towards tax for the year 1981-82. The petitioner alleges that the statement was got recorded by the 2nd respondent from the petitioner and his clerk by coercion. While so, the petitioner received summons on 22nd June, 1982, under rule 56 of the A.P.G.S.T. Rules from the 2nd respondent to produce account books for the year 1981-82 on 28th June, 1982, for verification. The petitioner has thereupon filed this writ petition contending that the 2nd respondent has no jurisdiction to assess the petitioner, and that the conferment of powers of assessment on the 2nd respondent is illegal and contrary to the statutory provisions and is also arbitrary and discriminatory offending article 14 of the Constitution, and that on the date of the inspection on 24th March, 1982, the 2nd respondent was not invested with the powers of assessment, and therefore, he could not exercise the powers of assessment over the petitioner.

4. W.P. No. 4411 of 1982 : The petitioner herein is a dealer carrying on business of manufacture and sale of groundnut oil, groundnut cake, cotton lint, etc., at Proddatur, Cuddapah District. It is a registered dealer on the file of the 1st respondent, the Commercial Tax Officer, Proddatur. For the assessment year 1981-82, the petitioner filed monthly returns before the 1st respondent showing a net turnover of Rs. 1,67,28,968 and paid Rs. 6,21,820 towards sales tax payable on the said turnover. The assessment has not yet been completed by the 1st respondent. While so, the Commercial Tax Officer, Intelligence No. VI, working in the Office of the Joint Commissioner, Commercial Taxes, Hyderabad, inspected the business premises of the petitioner on 5th January, 1982, and seized some books of account and issued a show cause notice; and the 2nd respondent, the Commercial Tax Officer, Intelligence-I, Office of the Commissioner of Commercial Taxes (Enforcement Wing), Hyderabad, issued a show cause notice to the petitioner on 28th June, 1982, proposing to determine the net turnover at Rs. 2,22,20,392 for the assessment year 1981-82. The petitioner thereupon filed this writ petition challenging the said notice issued by the 2nd respondent.

5. W.P. No. 8739 of 1982 : The petitioner herein is a registered dealer on the file of the Commercial Tax Officer, Guntakal, Anantapur District, carrying on business in groundnut oil and cake. The petitioner filed monthly returns for the assessment year 1981-82 before the 1st respondent and paid the tax due thereon. The petitioner returned a gross turnover of Rs. 65,91,847 and a net turnover of Rs. 5,94,809 and claimed exemption on the turnover of Rs. 59,97,039 on the ground that the corresponding purchases were made from the registered dealers within the State of Andhra Pradesh, and that groundnut oil and cake are taxable on the point of first sale under items 24 and 28 of the First Schedule to the A.P.G.S.T. Act, and therefore, the second sale was exempt from tax. The 1st respondent accepted the genuineness of the transactions and determined the net taxable turnover at Rs. 5,94,809 by his order dated 26th June, 1982, and levied tax of Rs. 20,760 which was paid by the petitioner.

6. While so, on 12th June, 1982, the 2nd respondent, the Assistant Commissioner (Commercial Taxes), Intelligence, Kurnool, and the 3rd respondent, the Assistant Commercial Tax Officer, Intelligence, Kurnool, inspected the business premises of the petitioner. Alleging that there are some variations in the stocks, the 3rd respondent coercively collected Rs. 11,850 towards tax and Rs. 3,000 towards compounding fee on 14th June, 1982. Thereafter, the 2nd respondent issued a show cause notice on 9th November, 1982, which was received by the petitioner on 26th November, 1982, proposing to make provisional assessment for 1981-82 disallowing the exemption claimed in the returns, and directed the petitioner to file his objections within seven days. He also issued another show cause notice dated 12th November, 1982, proposing to levy penalty of Rs. 38,08,404 being three times of the tax and called upon the petitioner to file his objections within seven days. The petitioner has filed this writ petition challenging the action of the 2nd respondent proposing to make a provisional assessment and also proposing to levy penalty, and the action of the 3rd respondent in collecting tax and compounding fee.

7. W.P. No. 5864 of 1982 : The petitioner was a dealer carrying on business in groundnut oil at Hyderabad. For the period 1st April, 1981, to 31st August, 1981, the petitioner filed monthly returns before the Commercial Tax Officer, 8th Circle, Hyderabad, the assessing authority, showing a net turnover of Rs. 2,32,169 and the assessment is yet to be completed by the 1st respondent. While so, the business premises of the petitioner was inspected by the 2nd respondent, the Commercial Tax Officer, Intelligence No. III, Office of the Joint Commissioner of Commercial Taxes, Enforcement, Hyderabad, on 3rd October, 1981; and on 6th October, 1981, he attached an amount of Rs. 15,000 lying to the petitioner's credit with its banker, Union Bank of India, Siddiamber Bazar, Hyderabad, under section 17 of the Act, though there was no demand for payment of tax. Subsequently, the 2nd respondent passed a provisional assessment order on 5th March, 1982, for the period 1st April, 1981, to 31st August, 1981, estimating the tax due at Rs. 96,943 and after giving credit to the tax paid, raised a demand for the balance of Rs. 88,014. Against the said order, the petitioner preferred an appeal before the Deputy Commissioner of Appeals, Hyderabad I Division, on 30th March, 1982, disputing the turnover of Rs. 26,80,609. The said appeal was preferred as per the foot-note in the assessment order indicating the appellate authority. The 2nd respondent also took coercive steps to collect the balance of tax under threat of distraint order and collected Rs. 35,000 on 20th August, 1982. The appeal preferred to the Deputy Commissioner of Appeals having been dismissed, a second appeal has been preferred to the Sales Tax Appellate Tribunal and it is said to be pending. The petitioner has now filed this writ petition challenging the proceedings of the 2nd respondent relating to provisional assessment and also the attachment of the amount lying to the petitioner's credit with the Union Bank of India, and the order distraining the movables of one of the partners of the petitioner.

8. W.P. No. 4170 of 1982 : The petitioner herein is carrying on business in sale of fireworks under the name and style of M/s. Bhandari Satyanarayana, Fire Works Merchant at Naka Bazar, Secunderabad, the petitioner being the sole proprietor of the concern. The petitioner is a registered dealer under the Act and he has been filing returns regularly before the Additional Commercial Tax Officer, Circle No. 4, Secunderabad. While so, the respondent, the Commercial Tax Officer, Intelligence I, Enforcement Wing, Office of the Commissioner of Commercial Taxes, Hyderabad, inspected the business premises of the petitioner on 21st October, 1981, and seized the books and records. The returns for September, 1981, were to be filed on 25th October, 1981. But, as the entire records were taken away by the respondent, the petitioner could not file the returns for September, 1981, and October, 1981, in time. He, however, filed approximate returns for September and October, 1981, before the Assistant Commercial Tax Officer, Circle No. 4, Secunderabad.

9. On 14th May, 1982, the respondent issued a show cause notice to the petitioner and called upon him to submit his objections. As the petitioner's representation was not received by the respondent, he sent the same by registered post raising various objections to the assessment proposed to be made by the respondent. But the respondent without referring to the said objections proceeded with the assessment, and by the proceedings dated 9th June, 1982, determined the net turnover of the petitioner at Rs. 12,13,323.18 and levied tax of Rs. 1,13,446 at 8 1/2 per cent and called upon the petitioner to pay the sum within seven days. The petitioner has thereupon filed this writ petition challenging the said order.

10. Sri S. Dasaratharama Reddi, appearing for the petitioners in the first four writ petitions, advanced the main arguments and the same were adopted and supplemented by Sri S. Krishna, the learned counsel for the petitioner in W.P. No. 4170 of 1982.

11. The four contentions urged by the learned counsel are common to all the writ petitions. In W.P. Nos. 5864 and 8739 of 1982, several other contentions have also been urged, which shall be dealt with separately.

12. The points raised in these writ petitions can be better formulated and appreciated only if the relevant provisions of the Act and the Rules and the notifications made thereunder relating to assessment proceedings under the Act are set out. The Andhra Pradesh General Sales Tax Act, 1957, has been enacted to consolidate and amend the laws relating to levy of general tax on the sale or purchase of goods in the State of Andhra Pradesh and it extends to the whole of the State of Andhra Pradesh.

13. Section 2(1)(b) of the Act defines an 'assessing authority' as meaning :

'any person authorised by the State Government or by any other authority empowered by them in this behalf, to make any assessment under this Act.'

14. Sections 2(1)(bb), (d), (f-1), (g), (h-2) define Assistant Commissioner, Commercial Tax Officer, Deputy Commercial Tax Officer, Deputy Commissioner, and Joint Commissioner as meaning any person appointed under section 4 of the Act. Under section 2(1)(k), 'place of business' means any place where a dealer purchases or sells any goods or stores goods or keeps accounts of his purchases or sales or both. Under section 2(1)(m), 'registered dealer' means a dealer registered under the Act.

15. Section 4 is relevant for the purpose of these writ petitions, as one of the main points urged turns upon the interpretation of this section. The said section provides for appointment of several officers from Joint Commissioner to Deputy Commercial Tax Officer, and it reads, as follows :

'4. The State Government may appoint as many Joint Commissioners of Commercial Taxes, Appellate Deputy Commissioners of Commercial Taxes, Deputy Commissioners of Commercial Taxes, Assistant Commissioners of Commercial Taxes, Commercial Tax Officers and Deputy Commercial Tax Officers, as they think fit, for the purpose of performing the functions respectively conferred on them by or under this Act. Such officers shall perform the said functions within such local limits as the State Government, or any authority or officer empowered by them in this behalf, may assign to them.'

16. Section 12 provides for registration of dealers with the prescribed authority and for grant of a registration certificate. Under section 12(2)(d), where a dealer has more than one shop or place of business, he shall apply for registration and obtain a separate registration certificate in respect of each such shop or place of business.

17. Rule 3(i) of the A.P.G.S.T. Rules prescribes the 'registering authority' as the Assistant Commercial Tax Officer in whose jurisdiction the principal place of business of a dealer applying for registration under section 12 is situated. Rule 28 lays down the procedure for registration and the grant of a certificate of registration. Sub-rule (7) of rule 28 provides that where the dealer has more than one place of business, the registration certificate shall cover all such places of business.

18. Section 13 requires every dealer who is liable to tax under the Act to submit such return or returns relating to his turnover in such manner within such periods and to such authority as may be prescribed.

19. Rule 9 requires the dealer liable to pay tax to submit the return or returns to the assessing authority of the area in which his principal place of business is situated.

20. Section 14 provides for assessment of tax by the assessing authority. If he is satisfied that the return filed is correct and complete, he shall assess the tax payable on the basis thereof. If he is not so satisfied, he can assess to the best of his judgment the amount of tax due from the dealer after giving a reasonable opportunity to the dealer of proving the correctness and completeness of the return. Section 14(4) provides for reopening of the assessments where :

'the whole or any part of the turnover of business of a dealer has escaped assessment to tax, or has been under-assessed or assessed at a rate lower than the correct rate, or where the licence fee or registration fee has escaped levy or has been levied at a rate lower than the correct rate,'

21. by the assessing authority and also for levy of penalty by the assessing authority.

22. Section 14(4-A) prescribes a period of 4 years limitation for making an assessment or levy under sub-section (4). Under section 14(4-C), the powers conferred by sub-section (4) may also be exercised by any of the authorities higher than the assessing authority including the Deputy Commissioner and the Joint Commissioner concerned. Rules 31(1), (2) and (3) prescribe the assessing authorities who can exercise the powers of reopening assessments under section 14(4) of the Act. Sub-rule (1) of rule 31 merely gives effect to the provisions of section 14(4), 14(4-A) and 14(4-B). Sub-rule (2) of rule 31 prescribes the Deputy Commercial Tax Officer as the assessing authority in cases where with the addition of the turnover which has escaped assessment, the total turnover exceeds Rs. 50,000 but not more than Rs. 3 lakhs. Where such turnover exceeds Rs. 3 lakhs, under sub-rule (3), the Commercial Tax Officer is prescribed as the assessing authority. Under proviso (i), any higher authority including the Deputy Commissioner of the area concerned and the Joint Commissioner can exercise the powers of a lower authority conferred by sub-rules (1), (2) and (3). Under proviso (ii), the Commercial Tax Officer, Intelligence, specially appointed for the investigation of evasions, could also exercise the powers of an assessing authority 'in the case of all dealers in respect of whose transactions any suppression or omission (whether or not fraudulent or wilful) is detected by such officer or brought to his notice in any manner whatsoever'.

23. It has to be mentioned at this stage that the Government passed an order in G.O.Ms. No. 1091, Revenue, dated 10th June, 1957, exercising the powers conferred by section 2(1)(b) of the Act authorising certain officers to exercise the powers of an assessing authority. Initially, the assessing authorities are Deputy Commercial Tax Officer, Commercial Tax Officer and Commercial Tax Officer (Special) who are assigned local limits within which such officers have to perform the functions prescribed by the Government or any other authority or officer empowered by them in that behalf.

24. In exercise of the powers conferred by section 4, the Government issued orders in G.O.Ms. No. 1130, Revenue, dated 18th July, 1964, published in the Andhra Pradesh, Gazette dated 6th August, 1964, delegating 'to the Board of Revenue the power to notify the local limits within which the Deputy Commissioners, Assistant Commissioners, Commercial Tax Officers and Deputy Commercial Tax Officers may perform the functions respectively conferred on them by or under the Act'.

25. Pursuant to the powers so delegated, the Board of Revenue (Commercial Taxes), by notification dated 2nd December, 1975, published in the Andhra Pradesh Gazette dated 18th December, 1975, at page 1163 in Part II assigned to the Assistant Commissioners and Commercial Tax Officers the jurisdictions specified in the annexure thereto. By virtue of this assignment, several Assistant Commissioners and Special Commercial Tax Officers (Evasions) have been given jurisdiction over one or more revenue districts. For instance, serial No. 5 prescribes the jurisdiction or limits of the Special Commercial Tax Officer (Evasions), Guntur Division with head quarters at Guntur as 'revenue districts of Guntur, Prakasam and Nellore'.

26. Subsequently, the Commissioner of Commercial Taxes who has replaced the Board of Revenue, by virtue of section 8 of the Board of Revenue (Replacement by Commissioners) Act, 1977, exercising the powers delegated by G.O.Ms. No. 1130 dated 18th July, 1964, redistributed the jurisdiction to certain Assistant Commissioners (C.T.)(Int.) and Commercial Tax Officers (Int.) by notifications C.C.T.'s Ref. C2/5065/80 and C.C.T.'s Ref. C2/1012/81-3 dated 24th December, 1981, which were published in the Andhra Pradesh Gazette dated 4th February, 1982, at pages 181 and 182. By virtue of these notifications, the Assistant Commissioners of Commercial Taxes at Kakinada, Kurnool and at Hyderabad, and ten Commercial Tax Officers (Intelligence) with head quarters at Visakhapatnam, Vijayawada, Chittoor, Warangal, Eluru, Guntur, Nellore, Hyderabad-I Division, Hyderabad-II division and Hyderabad-III Division have been conferred with jurisdiction over the entire State of Andhra Pradesh.

27. Thereafter, the Government purported to amend the proviso to rule 31(3) in G.O.Ms. No. 433, Revenue (S), dated 30th March, 1982, by substituting the expression : 'a Joint Commissioner, an Assistant Commissioner (Intelligence) and a Commercial Tax Officer (Intelligence)' for the words 'a Commercial Tax Officer'. By reason of this amendment to rule 31, proviso (ii), a corresponding notification was issued by the Government in exercise of the powers under section 2(1)(b) of the Act, in G.O.Ms. No. 434, Revenue (S), dated 30th March, 1982, published in the Andhra Pradesh Gazette dated 1st April, 1982, amending the second proviso empowering the Joint Commissioner, Assistant Commissioner and a Commercial Tax Officer specially appointed for the investigation of evasions, to exercise the powers of assessing authority over the entire State of Andhra Pradesh in cases of whose dealers in respect of whose transactions any suppression or omission, whether or not fraudulent or wilful, is detected by such officer or brought to his notice in any manner whatsoever.

28. Another notification was issued under section 2(1)(b) by the Government in G.O.Ms. No. 1059, Revenue (S), dated 27th July, 1982, further amending the second proviso to para 2 of the G.O.Ms. No. 1091, Revenue, dated 10th June, 1957 as amended by G.O.Ms. No. 434 dated 30th March, 1982. By this amendment, the words 'and shall always be deemed to have been so empowered to exercise' have been inserted in the second proviso, thereby intending to confer on the Joint Commissioner, Assistant Commissioner, Intelligence, and Commercial Tax Officer, Intelligence, the powers under the second proviso with retrospective effect. The third proviso introduced by G.O. No. 1059 provides that :

'where any officer specified in the foregoing proviso undertakes the assessment of any dealer in pursuance of the powers conferred by the said proviso, the assessing authority of the area having jurisdiction to assess such dealer shall not exercise such jurisdiction for the relevant period or year.'

29. It is also necessary to refer to another notification issued by the Commissioner of Commercial Taxes on 18th September, 1982, in exercise of the powers conferred by sub-clause (iii) of clause (c) of sub-rule (1) of rule 33 specifying that 'in the case of an assessment made or a penalty levied on any dealer by a Commercial Tax Officer (Intelligence) an appeal shall lie to the Appellate Deputy Commissioner in whose jurisdiction the principal place of business of the dealer is situated'.

30. These are the relevant provisions of the Act and the Rules and the notifications which have been brought to our notice and which are relevant for the purpose of deciding the points raised in this batch of writ petitions.

31. The contentions urged on behalf of the petitioners may now be set out :

(1) Under section 4 read with section 2(1)(b), the officers under the Act can only perform the functions under the Act within such local limits as assigned to them by the State Government or any authority or officer empowered by them in that behalf, and that such officer cannot be empowered to function throughout the State of Andhra Pradesh for making assessments under the Act, and therefore, the Assistant Commissioners of Intelligence and the Commercial Tax Officers, Intelligence, not being officers authorised to perform the functions within the local limits, have no jurisdiction to take any proceedings against the petitioners for making assessments or levying taxes and penalties, and therefore the notification dated 24th December, 1981, issued by the Commissioner, published in the Andhra Pradesh Gazette dated 4th February, 1982, fixing the entire State of Andhra Pradesh as the jurisdiction of officers mentioned therein, and the second proviso to G.O.Ms. No. 1091 dated 10th June, 1957, as amended by G.O. No. 434 dated 30th March, 1982, are ultra vires.

(2) Even assuming that they are intra vires, the second proviso to G.O. No. 1091 as amended by G.O. No. 434 does not lay down any guidelines for exercising the powers of assessment by the several officers mentioned therein, and it is arbitrary and discriminatory and causes undue hardship to the dealers, and no appeal is also provided against the orders of assessment made by the said officers, and therefore, the rule is arbitrary and discriminatory and violative of the rights under article 14 of the Constitution.

(3) The said second proviso to para 2 of G.O. 1091 as amended by G.Os. 434 and 1059, has no retrospective effect, and the officers mentioned therein cannot exercise powers of an assessing authority with respect to turnovers relating to periods prior to the coming into force of the said notification.

(4) The provisions of G.O. No. 1091 as amended by G.O. No. 434 apply only to cases of dealers in respect of whose transactions any suppression or omission, whether or not fraudulent or wilful, is detected and not to cases where turnovers are disclosed and exemptions are claimed by the dealers from assessment but disallowed by the concerned assessing authority.

32. We shall now consider the aforesaid points seriatim.

33. Point No. (1) : Sri S. Dasaratharama Reddi, the learned counsel for the petitioners, contended that while under section 2(1)(b), assessing authority is defined as any person authorised by the State Government or by any other authority empowered by them in this behalf to make any assessment under the Act, under section 4, the Government appoints the several officers mentioned therein for the purpose of performing the functions respectively conferred on them by or under the Act and such officers shall perform the said functions within such local limits as the State Government or any other authority or officer empowered by them in that behalf may assign to them. Therefore, the State Government or any authority or officer empowered by them in that behalf can only assign 'local limits' for all the said officers mentioned therein and cannot fix the whole of the State of Andhra Pradesh for making assessments.

34. On the other hand, it is contended by Sri J. V. Suryanarayana, the learned Government Pleader, that section 2(1)(b) which defines 'assessing authority' as any person authorised by the Government or any authority empowered by them in that behalf to make any assessment under the Act, does not impose any territorial limitations with regard to making an assessment by any assessing authority and that the provisions of section 4 latter part, cannot be read as limiting the power under section 2(1)(b) to authorise any person to make any assessment under the Act. But, we do not think that this submission of the learned Government Pleader can be accepted. Section 2(1)(b) merely refers to conferment of powers of assessment on any person authorised by the State Government or any other authority empowered by them in that behalf, whereas section 4 first part empowers the Government to appoint the officers mentioned therein for the purpose of performing the functions respectively conferred on them by or under the Act. The latter part of section 4 provides that the State Government or any authority or officer empowered by them in that behalf shall assign local limits for the purpose of performing the functions under the Act by the said officers. The word 'local' according to the Chambers's Twentieth Century Dictionary means 'of or belonging to a place : confined to a spot or district'. According to the Webster's New World Dictionary, 'local' means 'relating to place; of, characteristic of, or confined to a particular place : as, items of local interest; restricted, narrow, confined'. In the context in which the expression 'local limit' occurs in the latter part of section 4, it can only mean a limited area and it cannot mean the whole of the State of Andhra Pradesh. In section 1(2), it is stated that the Act extends to the whole of the State of Andhra Pradesh. Thus, the legislature has itself drawn a distinction between the whole of the State of Andhra Pradesh and the local limits in the State of Andhra Pradesh. Necessarily, therefore, it follows that the local limits mentioned in the latter part of section 4 can only comprise an area or territory which is part of, but something less than the whole of the area or territory of, the State of Andhra Pradesh.

35. While fixing the territorial jurisdiction of the officers mentioned in section 4 for the purpose of assessing dealers covered by the second proviso to G.O. No. 1091 as amended by G.O. No. 434, the State Government or any authority or officer empowered in that behalf can only fix a territorial jurisdiction which is less than the whole of the State of Andhra Pradesh. Moreover, according to the definitions of 'Assistant Commissioner', 'Commercial Tax Officer', 'Deputy Commercial Tax Officer', 'Deputy Commissioner', 'Joint Commissioner', they are all persons appointed under section 4 and their powers are exercisable only within local limits to be fixed by the State Government or any authority or officer empowered by them in that behalf, and any fixation of the territorial jurisdiction which is not confined to local limits but extends to the whole of the State of Andhra Pradesh will be clearly ultra vires the powers conferred by the latter part of section 4 on the State Government or any authority or officer empowered by them in that behalf.

36. There is yet another reason for the legislature directing local limits to be assigned for the performance of the functions by the officers appointed under section 4. The assignment of local limits for performance of functions by the officers is designed to avoid inconvenience and hardship that may be caused to the dealers who are liable to be assessed to sales tax under the Act. Therefore, the expression 'local limit' occurring in the latter part of section 4 should be given a limited and narrow meaning as meaning an area which is less than the whole of the State of Andhra Pradesh.

37. Sri J. V. Suryanarayana has invited our attention to the decision of the Supreme Court in Jagannath v. State of Maharashtra : AIR1963SC728 . In that case, sub-section (1) of section 14 of the Criminal Procedure Code as amended by the Bombay Act (23 of 1951) was challenged as ultra vires article 14 of the Constitution. Section 14(1) of the Code as amended reads as follows :

'14. Special Magistrates. - (1) The State Government may, in consultation with the High Court, confer upon any person who holds or has held any judicial post under the Union or a State, or possesses such other qualifications as may, in consultation with the High Court, be specified in this behalf by the State in Government by notification in the Official Gazette, all or any of the powers conferred or conferrable by or under this Code on a Judicial Magistrate in respect to particular cases or to a particular class or classes of cases, or in regard to cases generally in any local area.'

38. It was observed therein that 'The State Government was, under the amended Code, competent to appoint a person with the requisite qualifications a Special Magistrate and to confer upon him the powers conferred or conferrable under the Code on a Judicial Magistrate in respect of a particular case or a particular class or classes of cases or in regard to cases generally in any local area.'

39. Their Lordships further observed that :

'the expression 'local area' includes any part of a State, and it may cover more than one district.'

40. From this observation, it is sought to be contended by the learned Government Pleader that as the expression 'local area' includes any part of a State, it means the whole of the State, and that a similar meaning should be given to the expression 'local limits' occurring in the latter part of section 4 of the Act. But, we are unable to agree with this submission. Firstly, it cannot be said that the passage occurring in the Supreme Court decision extracted above, namely, 'the expression 'local area' includes any part of a State and it may cover more than one district' would mean that it covers the whole of the State. We do not think that their Lordships of the Supreme Court intended to construe the expression 'local area' as including the whole of the State. Further, in the instant case, the expression used in the latter part of Section 4 is 'local limits'. Therefore, 'local limits' means different territorial limits, and only different territorial limits can be fixed for each of the officers mentioned in the said section 4 for performing the functions respectively conferred on them by or under the Act. If plurality of officers are invested with the powers of assessing the same dealer, it will result in great hardship and inconvenience to the dealers in travelling to the offices of different officers and producing accounts before different officers and will greatly handicap the dealers in making their representations and it will also lead to conflicting and contradictory orders of assessment.

41. In Dayaldas Kushiram v. Commissioner of Income-tax (Central) : [1940]8ITR139(Bom) the provisions of section 64 of the Income-tax Act, 1922, which prescribes the officers, who have to exercise the powers of assessment, reads as follows :

'64. (1) Where an assessee carries on business at any place, he shall be assessed by the Income-tax Officer of the area in which that place is situate or, where the business is carried on in more places than one, by the Income-tax Officer of the area in which his principal place of business is situate.

(2) In all other cases, an assessee shall be assessed by the Income-tax Officer of the area in which he resides.

(3) Where any question arises under this section as to the place of assessment such question shall be determined by the Commissioner.'

42. Referring to the said section, Beaumont, C.J., made the following observations, which are apposite for the purpose of this case :

'Section 64 was intended to ensure that as far as practicable an assessee should be assessed locally, and the area to which an Income-tax Officer is appointed must, so far as the exigencies of tax collection allow, bear some reasonable relation to the place where the assessee carries on business or resides.'

43. For all the foregoing reasons, we are unable to agree with the contention of the learned Government Pleader that under section 4 latter part, either the State Government or any authority empowered by them in that behalf, can fix the whole of the State as local limit for the performance of the functions under the Act by the officers mentioned in section 4. Therefore, neither the State Government exercising the power under section 4 nor the Board of Revenue (now the Commissioner, Commercial Taxes), to which the Government delegated the power by G.O. No. 1130, Revenue, dated 18th July, 1964, to notify the local limits under section 4, can fix the territorial jurisdiction of the officers as comprising the whole of the State of Andhra Pradesh and they can only fix the territorial limits which are less than the territory of the whole of the State of Andhra Pradesh. If so, it follows that the two notifications issued by the Commissioner in C2/5065/80 and C2/1012/81-3 both dated 24th December, 1981, and published in the Andhra Pradesh Gazette dated 4th February, 1982, allocating jurisdiction over the entire State of Andhra Pradesh to the Assistant Commissioners (CT) (Intelligence) and Commercial Tax Officers (Intelligence) mentioned therein are ultra vires the powers of the Commissioner and cannot confer any jurisdiction on the said officers to exercise the powers of assessment under section 14 read with rule 31 of the Rules. Accordingly, we hold that the impugned proceedings taken by the Assistant Commissioner (Intelligence) or the Commercial Tax Officers (Intelligence) against the petitioners to make assessments are illegal and without jurisdiction. On this ground alone, the impugned proceedings taken by the said officers are liable to be quashed. But, as arguments have been advanced on the other points also, we shall consider the same.

44. Point No. (2) : By reason of conferment of powers of assessment on the three Assistant Commissioners (Intelligence) and ten Commercial Tax Officers (Intelligence) by the Commissioner by the notification dated 24th December, 1981, published in the Andhra Pradesh Gazette dated 4th February, 1982, a dealer is liable to be assessed not only by any of the said officers but also by the local Commercial Tax Officer under section 14(1), and also the authorities higher to him including the Deputy Commissioner and Joint Commissioner under section 14(4-C) and also by the Special Commercial Tax Officer (Evasions), to whom one or more districts have been assigned by the Commissioner's notification dated 2nd December, 1975, published in the Andhra Pradesh Gazette dated 18th December, 1975. Thus, a plurality of officers have been conferred with powers to assess a single dealer without laying down any guidelines as to who should exercise the power of assessment. No doubt, the second proviso to G.O. No. 1091 as amended by G.O. No. 434 confers power on the Joint Commissioner and Assistant Commissioner (Intelligence), and Commercial Tax Officer (Intelligence), to exercise the powers of assessing authority over the entire State of Andhra Pradesh in cases of all dealers in respect of whose transactions any suppression or omission, whether or not fraudulent or wilful, is detected by such officer or brought to his notice in any manner whatsoever, and cannot exercise the powers of an assessing authority in other cases, and the third proviso provides that when any such officer undertakes the assessment of any dealer under the second proviso, the assessing authorty of the area having jurisdiction to assess such dealer shall not exercise such jurisdiction for the relevant period or year. Even so, the same powers are exercisable by the Commercial Tax Officer having jurisdiction over the area and also the other authorities higher to him and the Special Commercial Tax Officer (Evasions). Thus, it is not possible to postulate as to which officer among the said officers will exercise the powers of assessment over a particular dealer. Even in cases covered by the second proviso to G.O. No. 1091, it is not clear as to which of the said officers mentioned therein can exercise the powers of the assessing authority. No guidelines have been laid down for exercising the power of assessment by the aforesaid officers. Therefore, while in the case of one dealer, the local Commercial Tax Officer or the Special Commercial Tax Officer (Evasions) may exercise the powers of assessment, in the case of others, the Assistant Commissioners, Intelligence, or the Commercial Tax Officers, Intelligence may exercise such power and thus, the power to assess is capable of being exercised in a discriminatory manner. Further, the dealers carrying on business in a particular place are being subjected to assessment by the Assistant Commissioners, Intelligence, and Commercial Tax Officers, Intelligence, having their head-quarters in far off places, and this will certainly create hardship and inconvenience to the dealers with regard to appearing at distant places and production of books and accounts. Further, rule 33 which provides for appeals does not seem to provide for appeal against an assessment order made by the Assistant Commissioner, Intelligence, or Commercial Tax Officer, Intelligence.

45. The learned Government Pleader contends that under rule 33(1)(c)(iii), an appeal lies against any assessment passed or proceedings recorded 'by a Commercial Tax Officer having jurisdiction over the area of more than one division, to the Appellate Deputy Commissioner of Commercial Taxes specified by the Commissioner of Commercial Taxes', and that the Commissioner has, by his order dated 18th September, 1982, passed in exercise of the said powers conferred by rule 33(1)(c)(iii), specified that 'in the case of an assessment made or a penalty levied on any dealer by a Commercial Tax Officer (Intelligence) an appeal shall lie to the Appellate Deputy Commissioner in whose jurisdiction the principal place of business of the dealer is situated'' Firstly, rule 33(1)(c)(iii) refers only to an assessment passed or proceeding recorded 'by a Commercial Tax Officer having jurisdiction over the area of more than one division' and not a Commercial Tax Officer, Intelligence. A Commercial Tax Officer having jurisdiction over the area of more than one division cannot be equated to a Commercial Tax Officer, Intelligence, having jurisdiction over the entire State of Andhra Pradesh. Therefore, rule 33(1)(c)(iii) does not, as it stands, empower the Commissioner of Commercial Taxes to specify an Appellate Deputy Commissioner of Commercial Taxes for the purpose of appeal over the assessment passed or proceeding recorded by the Commercial Tax Officers, Intelligence, and therefore, the notification issued by the Commissioner in his reference dated 18th September, 1982, specifying the Appellate Deputy Commissioner as the appellate authority in the case of assessments made by the Commercial Tax Officer, Intelligence, is illegal and without jurisdiction. Further, rule 33(1)(c)(iii) does not cover cases of assessments made by the Assistant Commissioners, Intelligence, and no remedy of appeal is available to dealers in such cases. The learned Government Pleader fairly submitted that rule 33(1)(c)(iii), as it stands, does not provide for appeals against assessments made by the Assistant Commissioners, Intelligence. Thus, in the case of assessments made by the local Commercial Tax Officers or Special Commercial Tax Officers (Evasions), the remedy of appeal is available to dealers assessed by such officers, whereas in the case of dealers subjected to assessment by the Commercial Tax Officers, Intelligence, and Assistant Commissioners, Intelligence, no remedy of appeal is available. Thus, the dealers assessed by the Assistant Commissioners, Intelligence, and Commercial Tax Officers, Intelligence, are discriminated against by depriving them of a valuable remedy of appeal. Thus, the availability of remedy of appeal is made to depend upon which out of the several assessing authorities exercises the powers of assessment over the dealers, and thus the power of assessment is capable of being exercised in an arbitrary and discriminatory manner.

46. For the foregoing reasons, we hold that the powers of assessment conferred on the Commercial Tax Officers, Intelligence, and, Assistant Commissioners, Intelligence, by G.O.Ms. No. 1091 as amended by G.O. No. 434 dated 30th March, 1982, read with the Commissioner's notification dated 24th December, 1981, published in the Andhra Pradesh Gazette dated 4th February, 1982, are arbitrary and discriminatory and violative of the rights of the petitioners under article 14 of the Constitution.

47. In Suraj Mall Mohta & Co. v. Visvanatha Sastri : [1954]26ITR1(SC) the constitutional validity of section 5(4) of the Taxation on Income (Investigation Commission) Act (30 of 1947) fell for consideration. Their Lordships held that some of the assessees can be dealt with under the provisions of Act 30 of 1947 at the choice of the Commission, though they could also be proceeded with under the provisions of section 34 of the Indian Income-tax Act, and that all the assessees had common characteristics and therefore required equal treatment, and that both section 34 of the Indian Income-tax Act and section 5(4) of Act 30 of 1947 dealt with all persons who had similar characteristics, namely, that they were persons who had not truly disclosed their income and had evaded payment of taxation on income. The learned Judges further considered the question whether the procedure prescribed by Act 30 of 1947 in regard to persons similarly situated with those who were proceeded with under section 34, was substantially different than under the Act and operated to the prejudice of those persons, and held that under section 5(4) the Commission itself was empowered to find and gather reasons to believe that the assessees had evaded income-tax and on its report, the Government was bound to refer their cases to the same Commission who had already arrived at a prima facie conclusion that they had evaded payment of income-tax. Thus the investigator and the Judge were rolled into one. The learned Judges further found that the assessees against whom proceedings were taken under section 5(4) were deprived of the rights of appeal, second appeal and revision conferred by sections 31, 32 and 33 of the Income-tax Act on assessees whose cases were dealt with under section 34 of the Act, and that the assessees dealt with under section 34 had a right to inspect the records and all documents, whereas assessees proceeded under the Investigation Commission Act were not entitled to inspect, call for or obtain copies of the documents, and thus there was material substantial difference between the procedure prescribed by Act 30 of 1947, and that prescribed by the Income-tax Act, and that the procedure prescribed by Act 30 of 1947 was substantially prejudicial to the assessee than the procedure prescribed under the Indian Income-tax Act and thus there was substantial discrimination in the two procedures as would bring the case under article 14, and accordingly held that the provisions of section 5(4), infringed the rights conferred by article 14 and were, therefore, void and unenforceable.

48. Similarly, it was held in Meenakshi Mills v. Visvanatha Sastri : [1954]26ITR713(SC) that the procedures prescribed by section 34 of the Income-tax Act as amended by Act 33 of 1954, and the provisions of section 5(1) of Act 30 of 1947, laid down substantially different laws of procedure, one being more prejudicial to the assessee than the other, and that they could not be allowed to operate on the same field in view of the guarantee under article 14 of the Constitution, and in that view, the provisions of section 5(1) of Act 30 of 1947 were held to be void and unenforceable.

49. In Bidi Supply Co. v. Union of India : [1956]29ITR717(SC) it was held by a majority that the order of transfer of the case of an assessee from the Income-tax Officer, Calcutta, to the Income-tax Officer, Special Circle, Ranchi, passed under sub-section (7A) of section 5 of the Income-tax Act,

'was calculated to inflict considerable inconvenience and harassment to the petitioner : the books of account would have to be produced hundreds of miles away from Calcutta, the partners or principal officer would have to be away from the head office to comply with the order, and extra expenditure would have to be incurred by way of railway fare, etc.; that 'the State' which included the Income-tax department had by an illegal order denied to the petitioner, as compared with other bidi merchants who were similarly situate, equality before the law and the assessee had the right to complain of an infraction of its fundamental rights under article 14 of the Constitution.'

50. His Lordship Vivian Bose, J., went further and struck down the provisions of section 5(7A) on the following grounds :

'Section 5(7A) of the Income-tax Act is ultra vires article 14 of the Constitution and so is section 64(5)(b) in so far as it makes an order under section 5(7A), as it now exists, inviolate. The power of transfer can only be conferred if it is hedged round with reasonable restrictions, the absence or existence of which can in the last instance be determined by the courts; and the exercise of the power must be in conformity with rules of natural justice : the parties affected must be heard when that is reasonably possible, and the reasons for the order must be reduced, however briefly, to writing, so that men may know that the powers conferred on these quasi-judicial bodies are being justly and properly exercised.'

51. In Pannalal Binjraj v. Union of India : [1957]31ITR565(SC) their Lordships of the Supreme Court held that section 5(7A) of the Income-tax Act did not offend the right conferred by article 14, but the power conferred by the said sub-section should not be exercised in a discriminatory manner and further observed that it would be prudent if principles of natural justice were followed where the circumstances permitted, before an order of transfer under section 5(7A) was made by the Commissioner of Income-tax or by the Central Board of Revenue.

52. In the instant case, the assessees against whom proceedings for assessment are taken by the Assistant Commissioner, Intelligence, and Commercial Tax Officer, Intelligence, will result in prejudice and hardship and will be dealt with in a different and discriminatory manner than those dealers who are assessed by the local Commercial Tax Officer or Special Commercial Tax Officer (Evasions), and therefore, the provisions of the second proviso to G.O. No. 1091 as amended by G.O. No. 434 dated 30th March, 1982, and the Commissioner's notification dated 24th December, 1981, published in the Andhra Pradesh Gazette dated 4th February, 1982, are void and unenforceable, as offending article 14 of the Constitution.

53. Point No. (3) : The next point for consideration is, whether the order in G.O. No. 434 dated 30th March, 1982, published in the Andhra Pradesh Gazette dated 1st April, 1982, amending the second proviso to G.O. No. 1091 and which was further amended by G.O.Ms. No. 1059 dated 27th July, 1982, published in the Andhra Pradesh Gazette dated 28th July, 1982, can be given retrospective effect. The contention of the learned counsel for the petitioners is that the said officers mentioned in the second proviso to G.O. No. 1091 as amended by G.O. No. 434 and G.O. No. 1059 had no jurisdiction to exercise the powers of the assessing authority in respect of the period prior to the coming into force of G.O. No. 434 and G.O. No. 1059. It has to be noted that G.O. No. 434 dated 30th March, 1982, was published in the Andhra Pradesh Gazette dated 1st April, 1982, and G.O. No. 1059 dated 27th July, 1982, giving retrospective effect to G.O. No. 434 was published in the Andhra Pradesh Gazette dated 28th July, 1982; and therefore, the Assistant Commissioner, Intelligence, and Commercial Tax Officers, Intelligence, could only exercise the powers of an assessing authority with effect from 1st April, 1982, and that the Government has no power under section 2(1)(b) of the Act to authorise the officers mentioned in the second proviso as amended by G.O. No. 434 to exercise the powers of an assessing authority with retrospective effect.

54. In Income-tax Officer v. Ponnoose : [1970]75ITR174(SC) , the definition of 'Tax Recovery Officer' in section 2(44) of the Income-tax Act, 1961, was amended by section 4 of the Finance Act, 1963, which further provided that the new definition shall be deemed always to have been substituted. Clause (ii) of section 2(44), as so amended, empowers the State Government to authorise by notification certain land revenue officers to exercise the powers of a Tax Recovery Officer. A notification was issued by the Kerala Government under section 2(44)(ii) on 14th August, 1963, which was published in the Gazette dated 20th August, 1963, authorising various revenue officials mentioned therein including the Taluk Tahsildar to exercise the powers of a Tax Recovery Officer. In the notification, it was further stated that it shall be deemed to have come into force on the 1st day of April, 1962. The Tahsildar had effected attachment towards recovery of arrears of income-tax subsequent to 1st April, 1962, i.e., on the date on which he had effected attachment, he was not a Tax Recovery Officer, but he got the powers of the Tax Recovery Officer by virtue of the notification dated 14th August, 1963. The question for determination was, whether the State Government could invest the Tahsildar with the powers of the Tax Recovery Officer under the provisions of the Act with effect from the date prior to the date of notification either retroactively or retrospectively. Their Lordships held that :

'It is open to a sovereign legislature to enact laws which have retrospective operation.'; and that,

'The courts will not, therefore, ascribe retrospectivity to new laws affecting rights unless by express words or necessary implication it appears that such was the intention of the legislature. Parliament can delegate its legislative power within the recognised limits. Where any rule or regulation is made by any person or authority to whom such powers have been delegated by the legislature it may or may not be possible to make the same so as to give retrospective operation. It will depend on the language employed in the statutory provision which may in express terms or by necessary implication empower the authority concerned to make a rule or regulation with retrospective effect. But where no such language is to be found it has been held by the courts that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with retrospective effect.'

55. In that view, their Lordships held that the notification impugned did not promulgate any rule, regulation or bye-law all of which had a definite significance, and that exercise of the power under section 2(44)(ii) was more of an executive than a legislative act. In that view, their Lordships held as follows :

'Under section 2(44)(ii) the State Government could not invest the Tahsildar with the powers of a Tax Recovery Officer with effect from a date prior to the date of the notification and the action taken by the Tahsildar was not sustainable. The legal fiction that the new definition shall be and shall be deemed always to have been substituted could not be extended beyond its legitimate field and could not be construed as conferring power for a retrospective authorisation by the State in the absence of any express provision in section 2(44) of the Act itself. The exercise of the power under section 2(44)(ii) is more an executive than a legislative act.'

56. In Yemmiganur Spinning Mills Ltd. v. State of A.P. [1976] 37 STC 314 it has been held that unless empowered expressly or by necessary implication a delegate cannot make a rule or issue a notification with retrospective effect. In that case, under section 9 of the Andhra Pradesh General Sales Tax Act, the Government granted exemption in the case of sales of hank yarn from the levy of tax with effect from 9th February, 1971. Subsequently, the Government issued another notification on 18th May, 1971, rescinding the earlier notification granting exemption with effect from 19th April, 1971, and the same was published in the Gazette on 1st July, 1971. The petitioners claimed exemption of the turnover relating to hank yarn during the period 19th April, 1971, to 30th June, 1971, but the same was refused by the department. The learned Judges held that the notification withdrawing the exemption became effective and enforceable only on and from 1st July, 1971, the date of its publication in the Andhra Pradesh Gazette and not with effect from any earlier date.

57. Applying the principle laid down in the aforesaid rulings, it must be held that G.O. No. 1059 dated 27th July, 1982, conferring powers with retrospective effect on the Assistant Commissioners, Intelligence, and Commercial Tax Officers, Intelligence, by G.O. No. 434 dated 30th March, 1982, is ultra vires the powers of the State Government, and therefore, the said officers cannot exercise the powers of assessment retrospectively.

58. In W.P. No. 5864 of 1982, inspection was made by the Commercial Tax Officer, Intelligence-III, Hyderabad, on 3rd October, 1981, and an assessment was also made by him on 5th March, 1982, even prior to the conferment of powers on him by G.O. No. 434 dated 30th March, 1982, published in the Andhra Pradesh Gazette dated 1st April, 1982. By the date of the assessment order dated 5th March, 1982, the Commercial Tax Officer, Intelligence, Hyderabad, was not invested with powers of assessment. Therefore, the said assessment order made by him is clearly illegal and without jurisdiction.

59. Point No. 4 : It is next contended by Sri Dasaratharama Reddi that the powers of assessment conferred by the second proviso to G.O. No. 1091 as amended by G.O. No. 434 on the Assistant Commissioner, Intelligence, and Commercial Tax Officer, Intelligence, could only be exercised in case of dealers in respect of whose transactions any suppression or omission, whether or not fraudulent or wilful, is detected by such officer or brought to his notice in any manner whatsoever, and such a power cannot extend to cases where the turnovers are disclosed and exemptions are claimed but disallowed by assessing authority. But, the question whether there was suppression or omission, whether or not fraudulent or wilful or whether it was a case of disallowance of the exemption claimed, is a matter to be decided on the particular facts of each case, and therefore, we are not inclined to express any final opinion on this question. We also consider it not necessary to express any opinion on this question in the view we have taken that the Commissioner has no power to assign jurisdiction of the Assistant Commissioners, Intelligence, and Commercial Tax Officers, Intelligence, over the entire State of Andhra Pradesh, and that they have no jurisdiction to exercise the powers of the assessing authority, and that the impugned proceedings taken by the said officers against each of the petitioners in these writ petitions are illegal and devoid of jurisdiction.

60. Now, we shall consider certain additional points raised in W.P. Nos. 5864 of 1982 and 8739 of 1982.

61. W.P. No. 5864 of 1982 : In this writ petition, firstly it is contended that the assessment order was made by the Commercial Tax Officer, Intelligence-III, Hyderabad, on 5th March, 1982, even before the conferment of powers on the said authority by G.O. No. 434 dated 30th March, 1982. We have held that the Commercial Tax Officer, Intelligence, cannot be conferred powers to assess with retrospective effect. Therefore, the order of assessment made by the Commercial Tax Officer, Intelligence-III, Hyderabad, is clearly illegal and without jurisdiction.

62. The petitioner in the said writ petition preferred an appeal to the Appellate Deputy Commissioner, Hyderabad I Division, pursuant to the foot-note contained in the assessment order of the Commercial Tax Officer, Intelligence. The appeal was filed on 30th March, 1982, and was dismissed and a second appeal preferred to the Sales Tax Appellate Tribunal is pending. But, by the date of filing of the appeal on 30th March, 1982, the Appellate Deputy Commissioner, Hyderabad No. I Division, was not specified as an appellate authority by the Commissioner. He was specified as an appellate authority only on 18th September, 1982, by the Commissioner in exercise of the powers conferred by rule 33(1)(c)(iii). Therefore, the filing of the appeal and the dismissal of the said appeal or the pendency of the second appeal before the Sales Tax Appellate Tribunal would not preclude the petitioner from challenging the order of assessment of the Commercial Tax Officer, Intelligence-III, Hyderabad, as it was totally devoid of jurisdiction.

63. It is next contended by Sri Dasaratharama Reddi that the garnishee order passed by the Commercial Tax Officer on 6th October, 1981, is illegal and devoid of jurisdiction. Under section 17(1) of the Act, the assessing authority can pass a garnishee order only when an assessment is made and the dealers are in arrears of tax, penalty or fee. In the instant case, by the date of the garnishee order, the petitioner was not in arrears of tax or penalty or any fee. The assessment order itself was made on 5th March, 1982. Therefore, the petitioner was not in arrears of any tax or penalty for the assessment year 1981-82. Hence, the garnishee order was wholly illegal and without jurisdiction.

64. W.P. No. 8739 of 1982 : In this writ petition, the assessment for the year 1981-82 was made by the local Commercial Tax Officer, Guntakal on 26th June, 1982. But, the Assistant Commissioner, Intelligence, Kurnool, issued a show cause notice on 9th November, 1982, proposing to make a provisional assessment on the ground that purchase vouchers relating to groundnut oil were not genuine and proposed to disallow exemption under section 14. He also gave a penalty notice on 12th November, 1982, under section 7-A(2). Further, the Assistant Commercial Tax Officer, Intelligence, Kurnool, collected compounding fee of Rs. 3,000 under section 32 on 14th June, 1992, from the petitioner for not maintaining the account books correctly under section 25. The learned counsel for the petitioner submits that the proposal to make a provisional assessment by the Assistant Commissioner, Intelligence, Kurnool, by the show cause notice dated 9th November, 1982, is clearly illegal, when a final assessment has already been made by the local Commercial Tax Officer on 26th June, 1982. We think this submission is well-founded. The question of the Assistant Commissioner making provisional assessment does not arise when a regular order of assessment was made by the concerned local Commercial Tax Officer. Therefore, the show cause notice proposing to make a provisional assessment and the notice issued by him for levying penalty are clearly illegal and unsustainable.

65. Another point to be noticed is, that in the instant case, the Assistant Commissioner, Intelligence, is proposing to make an assessment. Admittedly, no appeal lies under rule 33(1)(c)(iii) thus, depriving the petitioner of the right of appeal, which would be available to him if the assessment is made by the local Commercial Tax Officer. Therefore, the action taken by the Assistant Commissioner, Intelligence, will be clearly illegal and arbitrary and discriminatory and violative of the rights of the petitioner under article 14 of the Constitution.

66. The action of the Assistant Commercial Tax Officer, Kurnool, is clearly without jurisdiction as he cannot collect the compounding fee from the dealer outside his territorial jurisdiction. Under section 32, the compounding fee can only be collected by the prescribed authority. Under rule 59, all officers not below the rank of an Assistant Commercial Tax Officer are empowered to compound and collect the compounding fee. But this power has to be exercised by the Assistant Commercial Tax Officer only within his territorial jurisdiction and not outside. No provision has been brought to our notice under which an Assistant Commercial Tax Officer can collect compounding fee from a dealer who is outside his territorial jurisdiction. Further, the action of the Assistant Commercial Tax Officer in collecting compounding fee of Rs. 3,000 is also illegal, as the case is not covered by section 32(1)(a) but by section 32(1)(b).

67. In the result, all the writ petitions are allowed as prayed for with costs, Advocate's fee Rs. 250 in each.


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