The Order of the Court was pronounced by
Satyanarayana Raju, J.
1. The petitioner, hereinafter referred to as the assessee, is a firm carrying on business at Eluru in the District of West Godavari, and has filed the present petitions under Article 226 of the Constitution for the issue of a writ of prohibition or other appropriate writ restraining the Commercial Tax Officer, Eluru, from collecting sales tax for the years 1951-52 and 1952-53.
2. The assessee was assessed to sales tax on a turnover of Rs, 1,91,985-5-1 for the assessment year 1951-52 and on a turnover of Rs. 4,37,156-7-8 for the assessment year 1952-53 on 11 th February, 1953, and 30th March, 1954, respectively. Subsequently, on 27th August, 1954, the Special Assistant Commercial Tax Officer made a surprise inspection of the business premises of the assessee and recovered two account books containing transactions in paddy and castor-cake for the year 1954-55. On 25th September, 1954, the officer made a second inspection of the premises and recovered some more private account books relating to the transactions for the years 1951-52 and1952-53and 1953-54. On a verification of the transactions found in the account books recovered from the premises of the assessee, it was found that there were discrepancies between the regular account books and the books recovered as a result of the surprise inspections. On 23rd March, 1956, the Commercial Tax Officer, to whose jurisdiction the files were transferred, gave notice to the assessee of his intention to determine the escaped assessment. The managing partner of the firm intimated the Commercial Tax Officer that they were not in a position to give any explanation and requested him 'to fix a proper tax after a just consideration and without estimating the turnover at a high figure'. Eventually on 29th March, 1955, the Commercial Tax Officer estimated the escaped turnover at Rs. 1,50,000 for the year 1951-52 and at Rs. 3,40,000 for the year 1952-53 and revised the assessment by adding the said amounts to the turnover originally determined. The assessee then filed appeals to the Deputy Commercial Tax Officer, Kakinada, but the Deputy Commissioner dismissed the appeals by his order dated 26th August, 1955, The assessee thereafter preferred appeals to the Sales Tax Appellate Tribunal. They have been stayed by this Court pending disposal of these writ petitions.
3. The main contention of the assessee is that Rule 17, which vests jurisdiction in the assessing authority to re-assess the escaped turnover, is ultra vires because. (1) the power to assess the escaped turnover is essentially a legislative function and 'cannot, be delegated to the rule-making authority, and (2) the rule which confers power on the delegated authority is inconsistent with the provisions enacted in the body of the Act and is therefore void.
4. It will be convenient at this stage to refer to the relevant provisions of the Madras General Sales Tax Act (IX of 1939). The preamble to the Act states that 'it is expedient to provide for the levy of a general tax on the sale of goods in the State of Madras.' 'Sale' is defined in Section 2 (h) as meaning 'every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration'. Section 2(i) defines 'turnover' as 'the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration.' Section 3 is the charging section and provides that every dealer shall pay for each year a tax on his total turnover for such year. The procedure to be followed by the assessing authority is laid down in Section 9 thus :-
(1) Every dealer whose turnover is ten thousand rupees or more in a year shall submit such return or returns relating to his turnover in such manner, and within such periods as may be prescribed.
(2) (a) If the assessing authority is satisfied that any return submitted under Sub-section (1) is correct and complete, he shall assess the dealer on the basis thereof.
(b) If no return is submitted by the dealer under Sub-section (1) before the date prescribed or specified in that behalf or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall assess the dealer to the best of his judgment:
Provided that before taking action under this clause, the dealer shall be given a reasonable opportunity of proving the correctness and completness of any return submitted by him.
5. Section 19 confers power on the State Government to make rules to carry out the purposes of the Act, and, in particular, to provide for all matters expressly required or allowed by the Act to be prescribed. Under Clause (f) of Sub-section (2) the State Government is empowered to make rules providing for the assessment to tax of any turnover which had escaped assessment, and the period within which such assessment may be made not exceeding three years. Under Sub-section (4) the power to make rules is subject to the condition of the rules being made after previous publication for a period of not less than four weeks. Sub-section (5) provides that all rules made under the Section shall be published in the Gazette, and upon such publication shall have effect as if enacted in the Act.
6. In exercise of the powers so conferred, the Madras Government have made two sets of Rules, (1) the Madras General Sales Tax (Turnover and Assessment) Rules, and (2) the Madras General Sales Tax Rules. The material Rule 17 (i) of the latter set of Rules ran thus :-
If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to the tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority, as the case may be, may, at any time within the year or the two years next succeeding that to which the tax or licence fee relates, assess the tax payable on the turnover which has escaped assessment or levy the licence fee, after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary.
7. The original rule prescribed a period of one year but by the amendment made in G. O. No. 283, Revenue, dated 7th February, 1948, the period of 'two years' was substituted,
8. On 14th September, 1953, Parliament enacted the Andhra State Act (XXX of 1953), whereby the State of Andhra was constituted incorporating therein the territories which had previously thereto formed part of the State of Madras, and this Act came into force on 1st October, 1953. Under Section 53 of the Andhra State Act, the laws in force in the territories in the Andhra State prior to its constitution are to continue to be in force even thereafter, and one of those laws is the Madras General Sales Tax Act. Section 54 of the Andhra State Act conferred on the Government a power to adapt laws for the purpose of facilitating the application of any law previously made, and in exercise of the power conferred by this section an adaptation order was passed on 12th November, 1953, whereby the word 'Andhra' was substituted for the word 'Madras' in the Madras Act. It is by virtue of these provisions that the Madras General Sales Tax Act and the Rules made thereunder were applicable to the territories in the Andhra State. The Andhra State became the State of Andhra Pradesh by virtue of Section 3(1) of the States Reorganisation Act (XXXVII of 1956). The Legislature of Andhra Pradesh has since enacted the Andhra Pradesh General Sales Tax Act (VI of 1957) replacing the different enactments governing the levy of tax on sales and purchases in the former Andhra State and the districts of Telangana. The present cases are, however, governed by the Madras Act and the Madras Rules which were the rules in force on the material dates.
9. Now, to take up the first contention, the impugned rule empowers the assessing authority to assess tax on the turnover which has escaped assessment within the period specified. Section 19(2)(f) specifically vests in the State Government the power to make rules with regard to the assessment to tax on any turnover which has escaped assessment, the period within which such assessment may be made not exceeding three years. Under Section 3(4) the rules were required to be placed before the Legislative Assembly and they were to come into force after they were approved by a resolution of the Assembly. In accordance with this provision, the rules were first published on 18th July, 1939, for eliciting public opinion. On 3rd August, 1939, they were laid before the Assembly and after considerable debate, were approved by the Assembly. The Rules were again published on 12th September, 1939, and actually came into force on 1st October, 1939.
10. It is argued that the power to tax is essentially a legislative function and cannot be delegated to the rule-making authority. The question was fully debated in the Delhi Laws Act case (l951) S.C.J. 527. After an exhaustive review of the authorities bearing on the limits of valid delegation of legislative power, Fazl Ali, J., summed up the conclusions as follows:-
(1) The Legislature must normally discharge its primary legislative function itself and not through others.
(2) Once it is established that it has sovereign powers within a certain sphere, it must follow as a corollary that it is free to legislate within that sphere in any way which appears to it to be the best way to give effect to its intention and policy in making a particular law, and that it may utilize any outside agency to any extent it finds necessary for doing things which it is unable to do itself or finds it inconvenient to do. In other words, it can do everything which is ancillary to and necessary for the full and effective exercise of its power of legislation.
(3) It cannot abdicate its legislative functions, and therefore while entrusting power to an outside agency, it must see that such agency acts as a subordinate authority and does not become a parallel Legislature.
(4) The doctrine of separation of powers and the judicial interpretation it has received in America ever since the American Constitution was framed, enables the American Courts to check undue and excessive delegation but the Courts of this country are not committed to that doctrine and cannot apply it in the same way as it has been applied in America. Therefore, there are only two main checks in this country on the power of the Legislature to delegate, those being its good sense and the principle that it should not cross the line beyond which delegation amounts to 'abdication' and 'self-effacement'.
11. In empowering the Government to make rules, what the Legislature has done is to merely authorise the rule-making authority to carry out the policies enunciated in the statute and to fill up the details and there is (sic.) scope for the argument that there has been delegation of a legislative function to the rule-making authority. The present case is an a fortiori case because under Section 19(2)(f) there is a specific provision within the framework and the body of the statute empowering the Government to make rules to determine and tax the turnover which has escaped assessment.
12. Section 3 of the Act provides for the levy of tax on the total turnover of a dealer. In The State of Madras v. Louis Dreyfus and Company Ltd. [l955] 6 S.T.C. 318, Rajamannar, C.J., observed :-'The 'escape' that serves as the foundation of the jurisdiction to reopen an assessment is that of 'turnover'.... 'Turnover' escapes when it is not noticed by the officer either because it is not before him by reason of an inadvertence, omission or deliberate concealment on the part of the assessee, or because of want of care on the part of the officer the turnover though in the books, has not been taken notice of. This would be the natural and normal meaning of the expression 'turnover which has escaped' in Rule 17(1).
13. The escaped turnover is part of the total turnover of a dealer, all of which is liable to tax under the charging Section. The validity of Rule 17 cannot be challenged on the ground of unconstitutional delegation of legislative power.
14. It is then contended that the rule is inconsistent with the provisions of Section 19(2) (f). The argument of the learned counsel for the petitioner that escaped turnover is not part of the total turnover involves a fallacy. Even escaped turnover will have to be determined according to the Madras General Sales Tax (Turnover and Assessment) Rules, and after addition of the escaped turnover to the disclosed turnover, the total turnover is refixed and assessed to tax. Thus there is no inconsistency between the Section and the rule.
15. It is next contended that Rule 17 vests an arbitrary power on the assessing authority inasmuch as it does not provide that a reasonable opportunity should be afforded to the assessee. Rule 17 prescribes that the determination of the escaped turnover should be made after notice to the dealer. The notice contemplated by Rule 17 is only for the purpose of enabling the asseesee to state his objections. The Madras Act which creates the liability to pay tax on sales also constitutes tribunals for determining the amount payable under the Act and such a determination is to be made after notice to the assessee and it is open to appeal and a further revision. The petitioner had ample opportunity of putting forward before the Tribunals all contentions based on the provisions of the Act or the Rules. Indeed as appears from paragraph 6 of the counter-affidavit, a notice was issued to the petitioner Tinder Rule 17(1) on 23rd March, 1955, giving details regarding the number of bags milled and found to be suppressed from the accounts and the enhancement to be proposed and calling upon the petitioner to file objections to the proposed enchancement. In reply to this notice, the managing partner of the petitioner-firm sent a letter dated 22nd May, 1955, to the Commercial Tax Officer stating therein that they were not in a position to give any explanation, and requesting him to fix a proper tax after a just consideration and without estimating the turnover at a high figure. No objection was, therefore, taken by the petitioner at the earlier stage. The petitioner, however, raised the objection in appeal before the Deputy Commissioner and it was also contended that no opportunity had been given to check the accounts. The 1st respondent (the Deputy Commissioner) thereupon gave the petitioner an opportunity for examining the accounts and disposed of the appeal after hearing the objections. Therefore, there is no substance in this contention.
16. It is then argued that while the earlier assessment was made by the Deputy Commercial Tax Officer, the assessment under Rule 17(1) was made by the Commercial Tax Officer and that therefore there was a contravention of the provisions of the statute. On the 13th July, 1954, there was a notification revising the powers of the assessing authorities and all assessments of a turnover exceeding two lakhs of rupees were transferred to Commercial Tax Officers. The reason behind this notification appears to be that larger assessments should be made by a higher authority. The petitioner has not been able to show that there is a contravention of any statutory provision.
17. Lastly it is submitted that the assessments for the years 1951-52 and 1952-53 were completed by the Deputy Commercial Tax Officer on 11th February, 1953, and 30th March, 1954, respectively and that the said assessments were revised by the Commercial Tax Officer on 29th March, 1955, and with reference to these dates it is contended that the period of limitation prescribed by Rule 17 (1), as it stood on the relevant date, had expired on 31st March, 1953, in respect of the assessment for the year 1951-52 and the period of limitation for the year 1952-53 expired on 31st March, 1954, and that therefore the two assessments were made after the expiry of the time prescribed by the Rule. It may be stated that this contention has not been raised in the original petitions filed in the year 1955. This is raised by means of a supplemental affidavit filed on 20th January, 1957. Assuming that it is open to the petitioner to raise this contention at this belated stage, it must be pointed out that Rule 17 was amended on 11th June, 1953, by G. 0. No. 1635, Revenue, prescribing a period of three years. On a construction of this amended rule, a Division Bench of the Madras High Court, consisting of Rajagopalan and Rajagopala Ayyagar, JJ., have held in Syed Mohammed Ravoother v. Deputy Commercial Tax Officer  9 S.T.C. 1 that the provisions of the amended Rule applied to cause of action which arose before the amendment and ware, as in the present case, before the right of the assessing authority was barred the period of limitation prescribed by law was enlarged, it was the amended law that determined the liability of the petitioner and consequently the assessment of the escaped turnover was not barred by limitation.
18. The learned counsel for the petitioner has relied upon the decision of this Court in Government of Andhra v. K. Kajaiah and Co.  8 S.T.C. 164. There it was held by Subba Rao, C. J., and Manohar Pershad, J., that the amendment made to Rule 17 (1) by the above-mentioned Government Order had, either expressly or by necessary implication, no retroactivity and therefore it could not affect any final assessment already made. There it was argued that any assessment which had become final before the date of the amendment could only be revised under the original rule within two years next succeeding that to which the tax or licence fee related. This decision is clearly inapplicable to the facts of the present case. Here the assessment had not become final before the date of the amendment. Therefore, the principle of the Madras decision must apply.
19. All the contentions raised by the petitioner, therefore, fail. These writ petitions are dismissed with costs. Advocate's fee in both, Rs. 250 (consolidated).