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Sree Ramachandra Ginning and Oil Mills and ors. Vs. the State of Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberSpecial Appeal Nos. 1, 2, 7 to 11, 17, 18, 21 to 25, 27, 28 and 30 to 33 of 1963
Judge
Reported in[1967]19STC354(AP)
AppellantSree Ramachandra Ginning and Oil Mills and ors.
RespondentThe State of Andhra Pradesh
Appellant Advocate D. Venkatappayya Sastry, Adv. in Special Appeal No. 1 of 1963, ;P. Kameswara Rao, Adv. in Special Appeal Nos. 2, 21 to 25, 32 and 33 of 1963, ;T. Anantha Babu and ; K. Satyanarayana Murthy, Advs. in
Respondent AdvocatePrincipal Government Pleader
DispositionAppeal dismissed
Excerpt:
.....are illegal and constitute a failure to exercise jurisdiction. (2) whether the orders of the board of revenue are vitiated by (a) failure to afford a reasonable opportunity to the appellants to present and prove their cases and/or (b) failure to consider the contentions of the appellants and/or (c) failure to assign any reasons to reject the revision petitions; in rejecting the applications summarily and without giving any reasons, the board failed to exercise the jurisdiction vested in it and it should, therefore, be directed to consider the same. so, when this revisional jurisdiction has been conferred upon the board of revenue under section 12 (of the madras general sales tax act) and when extensive rule-making powers have been granted to the government under section 19 and when..........deputy registrar, co-operative societies, bombay. the society filed an application before the state government for revision purporting to be under section 154 of the act. that application was rejected. the society was intimated of this result by the under secretary to the government of maharashtra (agriculture and co-operative department) and the communication was as follows :-sir,i are directed t(c) state that following the hearing to you by the deputy secretary of this department on 10th march, 1965, in connection with the subject noted above, a note was received in this department from shri m. g. mani, advocate, wherein it was claimed that though an order was final under section 23(3) of the maharashtra cooperative societies act, 1960, government had inherent revisionary powers.....
Judgment:

Jaganmohan Reddy, C.J.

1. These batch of special appeals primarily involve the following questions, namely: -

(1) Whether the orders of the Board of Revenue in rejecting the revisions under Section 20 of the Andhra Pradesh General Sales Tax Act (6 of 1957) (hereinafter called 'the Act') filed against the orders of the Deputy Commercial Tax Officer, are illegal and constitute a failure to exercise jurisdiction.

(2) Whether the orders of the Board of Revenue are vitiated by (a) failure to afford a reasonable opportunity to the appellants to present and prove their cases and/or (b) failure to consider the contentions of the appellants and/or (c) failure to assign any reasons to reject the revision petitions; and

(3) Whether in the facts and circumstances of the cases the assessment to tax on turnover is illegal and invalid.

2. We will state the facts in Special Appeal No. 2 of 1963, which are typical of the facts of the other cases in which the above questions arise.

3. The appellant, who has a shop in the market at Anakapalle, carries on business in jaggery and other commodities. Various growers of sugar-cane convert sugar-cane grown by them into jaggery and then bring the jaggery to the shop of the appellant. The appellant takes the jaggery, grades it into different qualities and sells the same in its sole discretion to various parties. The appellant collects from the purchaser the price of the goods sold, kolagaram at Rs. 1.50 per 100 maunds, dharmam at one anna per 15 maunds, valtar at 1/2 per cent, and sales tax at Rs. 3 per cent, on the total, and where the buyer is not a member of the Anakapalle Merchants' Association, a cess of one anna for every 15 maunds of jaggery is also collected. To the ryot, the appellant pays the price after deducting therefrom its commission which varies between Rs. 3.12 to Rs. 6.25 per cent, including gumastha rusum at 2 annas per cent, and kolagaram at Rs. 3 or 3.50 per cent. Once the goods are delivered to the appellant, the appellant assumes responsibility therefor. The goods of the several growers are mixed up and sold according to quality. In the bills issued to the purchasers the goods are shown as the appellant's own. Although the jaggery sold to anyone purchaser may have been brought to the appellant by more than one grower, the identity is not preserved. The appellant does not account to the ryot grower for all the sums received by the appellant from the purchaser of jaggery.

4. On these facts, the precise legal implications in the context of Explanation III to Section 2(n) of the Act eluded the appellant and the authorities. As such, no claim for exemption of the turnover of Rs. 2,33,000.61 on the basis that the appellant was the second seller of jaggery, was put forward. The appellant is not liable to pay tax in any of the two capacities, (i) as buyer and (ii) as seller's agent inasmuch as jaggery was taxable during the relevant period only at the point of first sale. The jaggery belongs to the agriculturist and he sells it, utilising the appellant's services as commission agent, and in some cases the appellant purchases the jaggery and in respect of these sales the appellant is a buyer and not the agent of the seller. The turnover of jaggery thus purchased by the appellant is Rs. 2,33,000.61. But there is no provision in the Act for collecting the tax from the seller's agent as was the case under the Madras General Sales Tax Act. As such the appellant was not liable to pay the tax. This position was also recognised by the Government in G.O. Ms. No. 619 of the Revenue Department, dated 21st. March, 1960. In view of this G.O. the Government had also decided to waive the tax liable to be collected from the agriculturists. The appellant has actually paid the tax in respect of transactions for which the agriculturist as the first seller was liable to pay tax, and since the Government have granted tax exemption for such transactions, the appellant is entitled to a refund of the tax paid. He is prepared if necessary to lead evidence to substantiate the above contentions. In order to rectify this legal error and obtain refund the appellant filed a revision petition under Section 20 of the Act before the Board of Revenue, which, in a laconic order, stated : 'The Board sees no reason to interfere on behalf of the petitioners. The petition is rejected.

5. Sri Anantha Babu and Sri Venkatappayya Sastry, who appear in all these cases, contend that Section 20 confers a power coupled with a duty and is designed for the benefit of the public; as such, the appellants had a right to move the Board of Revenue to rectify the error of law. In rejecting the applications summarily and without giving any reasons, the Board failed to exercise the jurisdiction vested in it and it should, therefore, be directed to consider the same. The proceedings before the Board of Revenue, it is contended, are quasi-judicial proceedings and, therefore, the appellants should have been afforded an opportunity to be heard.

6. Inasmuch as these contentions depend upon the content of the revisional power under Section 20, we read that section as below:

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 proceedings 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.

(2-A) The power under Sub-section (1) or Sub-section (2) shall not be exercised by the authority specified therein in respect of any issue or question which is the subject-matter of an appeal before, or which was decided on appeal by, the Appellate Tribunal under Section 21.

(3) 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.

(4) No order shall be passed under Sub-section (1) or Sub-section (2) enhancing any assessment unless an opportunity has been given to the assessee to show cause against the proposed enhancement.

(5) Where an order passed under this section has been set aside by the Appellate Tribunal, or the High Court or the Supreme Court for any reason, the period between the date of such order and the date on which it has been so set aside shall be excluded in computing the period of four years specified in Sub-section (3) for the purpose of making a fresh revision, if any, under this section.

7. The learned Government Pleader, Mr. Ramachandra Reddy contends that from the above provision it is evident that the power of revision has been conferred on the Board of Revenue to suo motu initiate proceedings and has not prima facie conferred a right upon the assessee to move the Board to exercise its powers under that section. No doubt any person aggrieved can move the Board and if the Board chooses to act under it, it can only be said to act suo motu. It is further contended that inasmuch as the provisions of Section 23 of the Act confer a right on a dealer objecting to an order relating to an assessment passed by the Board of Revenue suo motu under Sub-section (1) of Section 20 to appeal to the High Court, these appeals are not maintainable, as no orders have been passed by the Board suo motu.

8. The question therefore is whether any aggrieved person has a right to move the Board under Section 20. If he has a right, then certainly he would be entitled to require consideration of his application, the non-consideration of which gives him a right of appeal to the High Court.

9. Mr. Venkatappayya Sastry has, by reference to a decision in East Asiatic Company (India) Ltd. v. State of Madras [1956] 7 S.T.C. 299 cited a passage in the judgment of Ramaswami, J., as to what suo motu jurisdiction implied. At page 315, the learned Judge observed :

The jurisdiction of suo motu revision is not cribbed and cabined or confined by conditions and qualifications. The purpose of such an amplitude being given to suo motu revisions appears to be as much to safeguard the interests of the exchequer as the interests of the assessee. The State can never be the appellant and if there is an order against the State to its prejudice, and naturally the assessee in whose favour the order is passed does not prefer an appeal, the State would suffer unless its interests are safeguarded by the exercise of such supervisory jurisdiction as the one given to the authorities above-mentioned. So, when this revisional jurisdiction has been conferred upon the Board of Revenue under Section 12 (of the Madras General Sales Tax Act) and when extensive rule-making powers have been granted to the Government under Section 19 and when as a result of the practical working of the Act the Government have found that to safeguard the interests of the exchequer as well as the interests of the assessee, Rule 14(2) should be enacted in order to make good the want of sufficient provision in the Act for giving effect to the purpose of this Act, it cannot be said that this is not intra vires of the rule-making powers conferred by Section 19 of the Act.

10. These observations are relied upon for the purpose of supporting the contention that the revisional jurisdiction under Section 20 of the Act should be exercised in the interests of both the State as well as the assessee. Once this position is admitted, the assessee also has a right to move the Board for the exercise of jurisdiction conferred under this section.

11. In our view the matter is concluded by a decision of a Bench of this Court consisting of Satyanarayana Raju, O.C.J. (as he then was) and Anantanarayana Ayyar, J., in Kalluri Bheemalingam, In re, (1964) 2 An. W.R. 9 on the very points that are now urged before us. In that case, the Board of Revenue had rejected the revision petitions filed by the assessees as not maintainable and when special appeals were filed before this Court, the office took objection to their maintainability, based on the terms of Section 23 of the Act. Sri Anantha Babu there also contended that the revision to the Board of Revenue may be irregular or incompetent but still as the Board of Revenue exercises quasi-judicial functions, its orders must ex facie indicate that the Board has applied its mind to the various aspects of the case ; that in exercising its revisional jurisdiction, the Board must consider the questions raised before it and also give reasons for its decision ; and that, therefore, the orders of the Board of Revenue rejecting the revision petitions filed by the assessees fall within the ambit of Section 23 of the Act and appeals against such orders would lie to the High Court. The Government Pleader contended that an appeal lies to the High Court under Section 23(1) only where the Board of Revenue has acted suo motu under Section 20(1) and not in cases where its revisional jurisdiction was invoked by an application preferred to it by a party and since an appeal lies from that order to the Sales Tax Appellate Tribunal the assessee could have filed an appeal and then apply to the High Court in revision. The Bench considered the analogous provisions of the Madras General Sales Tax Act under Section 12(3). Sub-clause (ii) of Section 12(3) of the Madras Act contained another mode in which the revisional jurisdiction could be brought into operation and that was by an application by a party while Sub-clause (i) enabled the Board by itself without reference to a party to take cognizance of orders passed by subordinate authorities and to exercise revisional jurisdiction over them. It was pointed out by the Bench that the Andhra Act has made a departure from the Madras Act by omitting Clause (ii) of Section 12(3) with the result that the power of the Board of Revenue to entertain revision petitions at the instance of the aggrieved parties is omitted, and an appeal to the High Court is only provided against an order passed suo motu. It was also pointed out that as the provision now stands the revisional jurisdiction vested in the Board of Revenue can be exercised suo motu only and not on application by a party and the right of appeal vested in the High Court is confined only to the orders of the Board passed suo motu. It may be pointed out that under Section 19 of the Act a right of appeal to the prescribed authority within thirty days from the date on which the order or proceeding was served on the assessee, has been provided for, and Rule 33 of the Andhra Pradesh General Sales Tax Rules, 1957, prescribes the authorities to which appeals may be preferred. Section 21 provides that any dealer objecting to an order passed or proceeding recorded (a) by any prescribed authority on appeal under Section 19, or (b) by a Deputy Commissioner suo motu under Sub-section (4-C) of Section 14 or under Sub-section (2) of Section 20 may appeal to the Appellate Tribunal within sixty days from the the date on which the order or proceeding was served on him. Section 22 provides that any dealer or the authority prescribed in this behalf may prefer a revision to the High Court against the order of the Appellate Tribunal on the ground that it has either decided erroneously or failed to decide any question of law. Satyanarayana, Raju, O.C.J. (as he then was) dealing with these provisions said :

From the scheme of the Act it is plain that Section 20 empowers the Board of Revenue, with a view to safeguard the interests of the revenue, to entertain a revision suo motu. It is, therefore, that Section 23 provides that any dealer objecting to an order relating to assessment passed by the Board of Revenue suo motu may appeal to the High Court.

12. The two decisions cited before the Bench by Sri Anantha Babu, viz., Mela Ram & Sons v. Commissioner of Income-tax, Punjab [1956] 29 I.T.R. 607 and Commissioner of Income-tax v. Shahzadi Begum [1952] 21 I.T.R. 1 in support of the contention urged by him, were distinguished and held inapplicable nor was the principle in Burmah Shell Co. Ltd. v. Board of Revenue [1963] 14 S.T.C. 13 held applicable. The decision of a Division Bench of the Madras High Court in Kandaswami Gounder &- Brothers v. State of Madras [1957] 8 S.T.C. 603 which was decided on a consideration of the provisions of Section 12(3) of the Madras Act, which are in pari materia with the provisions of Section 23 of the Andhra Act, was followed with approval.

13. Mr. Anantha Babu and Mr. Venkatappayya Sastry have strenuously contended that the Bench in the above case did not consider the point now urged before us, namely, that the power conferred under Section 20 is a power coupled with a duty and partakes of a quasi-judicial nature, which confers a right upon the aggrieved party to move the authority to revise illegal orders. In support of this contention they have cited Chief Controlling Revenue Authority v. Maharashtra Sugar Mills Ltd. [1950] S.C.R. 536 Kania, C.J., at page 544 on a reference to the observations of Lord Cairns in the case of Julius v. Bishop of Oxford (1880) 5 App. Gas. 214, 222 said that those observations are entitled to great, respect. In the case before the Supreme Court the question was whether the power conferred on the Chief Controlling Revenue Authority by Section 57 of the Stamp Act to make a reference to the High Court is intended for the benefit of the Revenue Authority alone or whether it enures also for the benefit of the party affected by the assessment. It was held on the language of that section that the power was coupled with a duty to make a reference when the authority is called upon to do so by the party affected and that if he declines to do so it is within the power of the Court to direct him to discharge that duty and make a reference to the Court. Section 57(1) of the Stamp Act is in the following terms :

The Chief Controlling Revenue Authority may state any case referred to it under Section 56, Sub-section (2), or otherwise coming to its notice, and refer such case, with its own opinion thereon...

14. The decision turned upon the provisions of the Stamp Act and as such it is not applicable to the facts of this case.

15. The contention advanced by the learned Advocates in our view is contrary to a recent unreported judgment of the Supreme Court in Everest Apartments Co-operative Housing Society Ltd., Bombay v. The State of Maharashtra and Ors. Civil Appeal No. 1/66 decided on 18-1-1966; A.I.R. 1966 S.C. 1449. That was a case under the Maharashtra Co-operative Housing Societies Act, 1960, under which the appellant-society was registered. One Shivdasani claimed to have paid the entrance fee, share money and other demands and complained that his membership was wrongly rejected by the society. The society denied the claim. Their Lordships stated they were not concerned with the details of the dispute, but what their Lordships were concerned with is this ; on being informed of the rejection of his application for membership, Shivdasani filed an appeal under Section 23(2) of the above Act, which was heard and decided in his favour by the District Deputy Registrar, Co-operative Societies, Bombay. The society filed an application before the State Government for revision purporting to be under Section 154 of the Act. That application was rejected. The society was intimated of this result by the Under Secretary to the Government of Maharashtra (Agriculture and Co-operative Department) and the communication was as follows :-

Sir,

I are directed t(c) state that following the hearing to you by the Deputy Secretary of this department on 10th March, 1965, in connection with the subject noted above, a note was received in this department from Shri M. G. Mani, Advocate, wherein it was claimed that though an order was final under Section 23(3) of the Maharashtra Cooperative Societies Act, 1960, Government had inherent revisionary powers under Section 154 of the said Act to entertain such representations against such an order. I am to inform you that the matter has been examined by Government and to state that in such cases orders given under Section 23(3) are final and Government has no revisional jurisdiction in such a matter.

Yours faithfully,

Sd./- D. A. Ekbote,

Under Secretary to Government.

16. The society filed a petition under Articles 226 and 227 of the Constitution in the High Court of Bombay against that order which was rejected by a short and laconic order which reads as follows :-

Government right in declaring no jurisdiction. It is wrong to say that respondent had withdrawn the application voluntarily. Attitude of the society unjust. Admittedly the promoters were members of Everest Co., and they wanted Rs. 3,000 from each one for themselves. Societies are not meant for self aggrandizement. No ground to interfere. Rejected.

17. Their Lordships considered the question whether the Government was right in law in declining to interfere because it has no revisional jurisdiction in such a matter, the answer to which depended upon the construction of Section 154 of the Maharashtra Co-operative Societies Act. After examining the other relevant provisions of the Act, Section 154 was extracted, which is as follows :-

Section 154. Power of State Government and Registrar to call for proceedings of subordinate officers and to pass orders thereon. The State Government and the Registrar may call for and examine the record of any inquiry or the proceedings of any other matter of any officer subordinate to them, except those referred to in Sub-section (9) of Section 149, for the purpose of satisfying themselves as to the legality or propriety of any decision or order passed, and as to the regularity of the proceedings of such officer. If in any case it appears to the State Government or the Registrar, that any decision or order or proceedings so called for should be modified, annulled or reversed, the State Government or the Registrar, as the case may be, may after giving persons affected thereby an opportunity of being heard pass such order thereon as to it or him may seem just.

18. The two questions considered by their Lordships under that Act are : (i) Is the finality under Section 23(3) (i.e., the appellate order of the Registrar) subject to Section 154?; and (ii) Has a party a right to move the State Government under Section 154? It was observed that the Act has provided for appeals in other sections and the decision on appeals is stated to be final; that yet the power of superintendence is given to the State Government in general terms in respect of any inquiry or proceeding with only one exception, namely, the proceedings of the Maharashtra State Tribunal when the Tribunal calls for and examines the record of any proceeding in which an appeal lies to it for the purpose of satisfying itself as to the legality or propriety of any decision or order passed and that by mentioning one specific exception to the general power, the Act has indicated an intention to include every other inquiry or proceeding within the action by Government as contemplated by Section 154. In so far as the submission that the power under this specific provision under the Act to which we have referred was not coupled with duty and as such the Government need not exercise the power even if moved to take action, unless the Government feels inclined, Hidayatullah, J., speaking for the Court observed :

There is no doubt that Section 154 is potential but not compulsive. Power is reposed in Government to intervene to do justice when occasion demands it and of the occasion for its exercise. Government is made the sole judge. This power can be exercised in all cases except in a case in which a similar power has already been exercised by the Tribunal under Section 149(9) of the Act. The exception was considered necessary because the legality or the propriety of an order having once been considered, it would be an act of supererogation to consider the matter twice. It follows, therefore, that Government can exercise its powers under Section 154 in all cases with one exception only and that the finality of the order under Section 23(3) does not restrict the exercise of the power. The word 'final' in this context means that the order is not subject to an ordinary appeal or revision but it does not touch the special power legislatively conferred on Government.

19. After distinguishing the case of Commissioner of Income-tax, West Punjab v. The Tribune Trust, Lahore [1948] 16 I.T.R. 214, it was held that the words of the two enactments are not materially equal. Hidayatullah, J., proceeded to state :

As Government is not compelled to take action, unless it thinks fit, the party who moves Government cannot claim that he has a right of appeal or revision. On the other hand, Government should welcome such applications because they draw the attention of Government to cases in some of which Government may be interested to intervene. In many statutes, as for example the two major procedural Codes, such language has not only not inhibited the making of applications to the High Court, but has been considered to give a right to obtain intervention, although the mere making of the application has not clothed a party with any rights beyond bringing a matter to the notice of the Court. After this is done, it is for the Court to consider whether to act or not. The extreme position does not obtain here because there is no right to interference in the same way as in a judicial proceeding. Government may act or may not act; the choice is of Government. There is no right to relief as in an appeal or revision under the two Codes. But to say that Government has no jurisdiction at all in the matter is to err, and that is what Government did in this case.

20. In the Tribune Trust case, [1948] 16 I.T.R. 214 the question was whether Section 33 of the Indian Income-tax Act, 1922, which conferred revisional jurisdiction on the Commissioner, established a right to relief on the application of an assessee. Dealing with the contention of the assessees that the relief claimed by them under Section 33 was wrongly denied to them, Lord Simonds (later Viscount) at page 225 said :

The fallacy implicit in this question has been made clear in the discussion of the first two questions. It assumes that Section 33 creates a right in the assessee. In their Lordships' opinion it creates no such right. On behalf of the respondent the well-known principle which was discussed in Julius v. Bishop of Oxford (1880) 5 App. Cas. 214 was invoked and it was urged that the section which opens with the words 'the Commissioner may of his own motion' imposed upon him a duty which he was bound to perform upon the application of an assessee. It is possible that there might be a context in which words so inapt for that purpose would create a duty. But in the present case there is no such context. On the contrary, Section 33 follows upon a number of sections which determine the rights of the assessee and is itself, as its language clearly indicates, intended to provide administrative machinery by which a higher executive officer may review the acts of his subordinates and take the necessary action upon such review. It appears that as a matter of convenience a practice has grown up under which the Commissioner has been invited to act 'of his own motion' under the section and where this occurs a certain degree of formality has been adopted. But the language of the section does not support the contention, which lies at the root of the third question and is vital to the respondent's case, that it affords a claim to relief. As has been already pointed out, appropriate relief is specifically given by other sections ; it is not possible to interpret Section 33 as conferring a general relief.

21. It is probably as a consequence of this decision that Section 33-A was added in the Income-tax Act, 1922, giving the assessee also aright to move the Commissioner to exercise revisional powers. The decision of the Supreme Court in Dwarka Nath v. Income-tax Officer [1965] 57 I.T.R. 349 is on Section 33-A and could therefore afford little assistance.

22. The unreported decision of the Supreme Court, to which we have referred, as well as the observations of their Lordships of the Privy Council, though no doubt on provisions in different Acts which are pari materia, sets at rest even a lurking doubt as to the ambit of the powers conferred under Section 20 of the Act. It is unnecessary in this view to decide the other questions namely whether the assessee has a right to have personal hearing.

23. In the view we have taken, the revisions before the Board are not maintainable and the appeals are also not maintainable and are accordingly dismissed with costs. Advocate's fee Rs. 25 in each case except Special Appeal 1 of 1963 in which no costs are allowed.


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