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Rajmal Multanmal and Company and anr. Vs. Commercial Tax Officer and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Appeal Nos. 437 of 1973 and Writ Petition No. 4908 of 1972
Judge
Reported in[1976]37STC252(AP)
AppellantRajmal Multanmal and Company and anr.
RespondentCommercial Tax Officer and ors.
Appellant AdvocateS. Dasaratharama Reddi, Adv.
Respondent AdvocateD.V. Sastry, the Government Pleader for Commercial Taxes
DispositionAppeal dismissed
Excerpt:
- - --(a) determine to the best of his judgment the turnover that has escaped assessment and assess the turnover so determined......the state. for that assessment year, the commercial tax officer assessed the petitioner on inter-state sales turnover of rs. 9,59,400.34. out of that turnover, sales of groundnut oil that has suffered tax under the act come to rs. 1,85,310. the petitioner claimed exemption in respect of that turnover under the provisions of the central sales tax act. its claim was negatived by the commercial tax officer and, on appeal, the assistant commissioner of commercial taxes, following the decision of the supreme court in state of mysore v. yaddalam lakshminarasimhiah setty and sons [1965] 16 s.t.c. 231 (s.c.) allowed its claim and directed refund of a sum of rs. 3,706.20 to the petitioner. after the above judgment of the supreme court, section 6(1a) was introduced by the parliament in the.....
Judgment:

S. Obul Reddi, C.J.

1. The main question raised in these two cases by Mr. Dasaratharama Reddi, the learned Counsel for the petitioner, is that the Deputy Commissioner exercised his revisional jurisdiction beyond the period specified in Section 20(3) of the Andhra Pradesh General Sales Tax Act, hereinafter referred to as the 'Act', and, as such, the assessments made by him pursuant to the revision are liable to be set aside.

2. For the purpose of determining the question it will suffice if we refer to the facts narrated in W.P. No. 4908 of 1972. The petitioner was a firm carrying on business in groundnuts and groundnut oil. Groundnut oil was taxable in 1965-66 at the point of first sale in the State. For that assessment year, the Commercial Tax Officer assessed the petitioner on inter-State sales turnover of Rs. 9,59,400.34. Out of that turnover, sales of groundnut oil that has suffered tax under the Act come to Rs. 1,85,310. The petitioner claimed exemption in respect of that turnover under the provisions of the Central Sales Tax Act. Its claim was negatived by the Commercial Tax Officer and, on appeal, the Assistant Commissioner of Commercial Taxes, following the decision of the Supreme Court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons [1965] 16 S.T.C. 231 (S.C.) allowed its claim and directed refund of a sum of Rs. 3,706.20 to the petitioner. After the above judgment of the Supreme Court, Section 6(1A) was introduced by the Parliament in the Central Sales Tax Act with retrospective effect and that nullified the decision of the Supreme Court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons [1965] 16 S.T.C. 231 (S.C.). Under this amendment inter-State sale of any goods is exigible to tax under the Central Sales Tax Act irrespective of the fact whether it is liable to tax under the local Act at purchase point or at a particular single point or not. Pursuant to the new provision, the Deputy Commissioner of Commercial Taxes, Warangal, exercised his revisional jurisdiction under Section 20 of the Act to revise the order of the Assistant Commissioner. The plea raised by the petitioner was that the Deputy Commissioner had no jurisdiction to exercise his revisional powers four years after the date of the assessment order. The assessment order was made on 7th December, 1966. The Deputy Commissioner revised the order of the Assistant Commissioner and restored that of the Commercial Tax Officer. This order of the Deputy Commissioner was served upon the petitioner on 18th April, 1972. The petitioner carried that order in appeal to the Sales Tax Appellate Tribunal contending that the order made by the Deputy Commissioner in exercise of his revisional jurisdiction was barred by limitation since it was served upon the petitioner on 18th April, 1972. In other words, the service of the order on the petitioner was beyond the period of four years fixed in Section 20(3) of the Act for exercising the revisional jurisdiction. The Tribunal repelled that contention and dismissed the appeal. It is on the ground that the petitioner did not question the revisional jurisdiction of the Deputy Commissioner before the Tribunal that the writ petition has been filed questioning the power of the Deputy Commissioner to exercise revisional jurisdiction under Section 20(3) of the Act.

3. It is not in dispute that Section 6(1A) of the Central Sales Tax Act, which has been inserted by the Amendment Act 28 of 1969, has retrospective application as if it was in the principal Act from the date of the commencement of the Act. The Supreme Court has ruled in State of Kerala v. Joseph & Co. [1970] 25 S.T.C. 483 (S.C.), that the effect of the Ordinance, which was replaced by the Amendment Act 28 of 1969, was to supersede the judgment of the Supreme Court in Yaddalam's case [1965] 16 S.T.C. 231 (S.C). It, therefore, follows that even if no tax was leviable under the general sales tax law of the State in respect of intra-State transactions of sale, tax shall be levied under the Central Sales Tax Act on sale of goods effected by a dealer in the course of inter-State trade according to the sales tax law of the State. The assessment order in this case was made on 7th December, 1966, and in a case where the whole or any part of the turnover of business of a dealer has escaped assessment to tax, the revisional jurisdiction has to be exercised by the revisional authority within four years from the date of the expiry of the year to which the assessment relates. According to Mr. Dasaratharama Reddi, it is a case of escaped assessment but not a case of any wrongful assessment made under any mistaken impression of law and therefore the Deputy Commissioner should have made reassessment within four years as provided in Section 14(4) of the Act. Mr. D.V. Sastry, the learned Government Pleader contends that it is not a case of reassessment but is a case where the Deputy Commissioner exercised his revisional jurisdiction suo motu under Section 20(2) of the Act. We have, therefore, to see whether Section 20(2) applies or Section 14(4) applies to this case.

Section 14(4) of the Act reads:

In any of the following events, namely, 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, the assessing authority may, after issuing a notice to the dealer, and after making such enquiry as he may consider necessary, by order, setting out the grounds therefor:-- (a) determine to the best of his judgment the turnover that has escaped assessment and assess the turnover so determined.

The limitation for reassessment is prescribed in Section 14(4-A)(b), which says:

An assessment or levy under Sub-section (4) shall be made within a period of four years from the expiry of the year aforesaid, if such event has occurred due to any other causes.

4. Section 14(4-C) empowers the Deputy Commissioner concerned to exercise the powers of the assessing authority under Section 14(4) of the Act. We are unable to agree with Mr. Dasaratharama Reddi that it is a case of reassessment, for no part of the turnover of the business of the dealer had escaped assessment to tax. If, on the turnover of Rs. 1,85,310 exemption was granted by the Assistant Commissioner, it was in view of the judgment of the Supreme Court in Yaddalam's case [1965] 16 S.T.C. 231 (S.C) interpreting Section 6 of the Central Sales Tax Act, as it then stood prior to the Ordinance, which was replaced by Act 28 of 1969. What constitutes 'escaped assessment' has been explained by the Supreme Court in Deputy Commissioner v. Dhanalakshmi Vilas Cashew Co. [1969] 24 S.T.C. 491 (S.C.) If the disputed turnover is exempted from sales tax it was not for the reason that there was any inadvertence on the part of the officer who made the assessment but for the reason that the assessee was entitled to exemption under the law as it then stood and stated by the Supreme Court. With the insertion of Section 6(1A) the previous law was superseded and no exemption was to be allowed on the disputed sales. A Full Bench of the Madras High Court in State of Madras v. Louis Dreyfus and Company Ltd. [1955] 6 S.T.C. 318 explained what constitutes 'escaped turnover'. To quote the learned Judges:

'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'.

5. Therefore, it is not a case where it could be said that there has been any escapement of assessment on account of any inadvertence on the part of the officer or omission or deliberate concealment on the part of the assessee. Section 20 of the Act empowers the Board of Revenue and other officers prescribed to exercise revisional jurisdiction. This provision, to the extent material, reads:

20. (1) The Board of Revenue may suo motu call for and examine the record of any order passed or proceeding recorded by any authority, officer or person subordinate to it, under the provisions of this Act, including Sub-section (2) of this section, for the purpose of satisfying itself as to the legality or propriety of such order or as to the regularity of such proceeding and may pass such order in reference thereto as it thinks fit.

(2) Powers of the nature referred to in Sub-section (1) may also be exercised by the Deputy Commissioner and the Commercial Tax Officer, in the case of orders passed or proceedings recorded by authorities, officers or persons subordinate to them....

6. It is by virtue of the powers conferred upon the Deputy Commissioner under Sub-section (2) that he issued a notice to the petitioner on 2nd November, 1971, to show cause why the order of the Assistant Commissioner granting exemption in respect of the turnover in question should not be set aside. By virtue of Section 6(1A) of the Central Sales Tax Act, which has been made retrospectively applicable, the legality of the exemption granted had to be considered by the Deputy Commissioner. Therefore, it cannot be said that the Deputy Commissioner was not justified in exercising jurisdiction under Section 20(2) of the Act.

7. The next question which relates only to W.P. No. 4908 of 1972 is whether that power has been exercised within the period prescribed in Sub-section (3) of Section 20. Sub-section (3) reads:

In relation to an order of assessment passed under this Act, the powers conferred by Sub-sections (1) and (2) shall be exercisable only within such period not exceeding four years from the date on which the order was served on the dealer, as may be prescribed.

8. The period of four years prescribed should be reckoned for the purpose of limitation from the date on which the order in revision was served upon the dealer. That order was served upon the petitioner on 21st December, 1967. Admittedly, the Deputy Commissioner issued a show cause notice to the petitioner on 2nd November, 1971, and passed the order on 1st December, 1971. What Mr. Dasaratharama Reddi contends is that it is not enough if the Deputy Commissioner issues a notice within the period of four years or passes an order within four years but that order must also be served upon the assessee within four years from the date of the communication of the assessment order. We see no force in this contention. The language in Sub-section (3) is quite clear and unambiguous. This provision speaks of the exercise of jurisdiction by the Deputy Commissioner. It does not speak of serving the order passed by him within four years from the date of the assessment order communicated to the dealer. That distinction is quite clear.

9. Mr. Dasaratharama Reddi, however, invited our attention to two decisions of the Supreme Court, viz., Bachhittar Singh v. State of Punjab A.I.R. 1963 S.C. 395 and State of Punjab v. Amar Singh' A.I.R. 1966 S.C. 1313, to show that it is not enough if the Deputy Commissioner passes an order within a period of four years and that he must also communicate the same within the period of four years. We are afraid that these two decisions have absolutely no bearing upon the construction of Sub-section (3) of Section 20. The case of Bachhittar Singh v. State of Punjab A.I.R. 1963 S.C. 395 relates to a departmental enquiry. The learned Judges were considering what amounts to communication of an order to a person concerned. It was, therefore, observed by the learned Judges:

Before something amounts to an order of the State Government two things are necessary. The order has to be expressed in the name of the Governor as required by Clause (1) of Article 166 of the Constitution and then it has to be communicated. The Constitution requires that the action must be taken by the authority concerned in the name of the Governor. It is not till this formality is observed that the action can be regarded as that of the State.

10. The learned Judges in that case were only concerned with the compliance of the requirements of Clause (1) of Article 166 of the Constitution, and they were not concerned with any period of limitation. The other decision, State of Punjab v. Amar Singh A.I.R. 1966 S.C. 1313, was also a case where a suit was filed by an officer challenging the validity of an order of dismissal passed against him. There, the question was from which date the order of dismissal was effective, whether from the date mentioned in the order or from the date of service or communication of the order to the officer concerned. It was in that connection that the learned Judges held that the order of dismissal comes into effect only from the date it was communicated to the officer. There is nothing in the language of Sub-section (3) which is susceptible of an interpretation that communication of an order passed by the Deputy Commissioner should also be within the period of four years. It only contemplates exercise of revisional jurisdiction within a period not exceeding four years. Once that jurisdiction is exercised by passing an order, the fact that it was communicated to the petitioner after the expiry of the period of four years is not at all material.

11. For the reasons recorded we find no merit either in the writ appeal or in the writ petition and they are accordingly dismissed with costs.


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