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Wines International Vs. the State of Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberReview Civil Miscellaneous Petition Nos. 11488 and 11489 of 1976
Judge
Reported in[1978]41STC465(AP)
AppellantWines International
RespondentThe State of Andhra Pradesh
Appellant AdvocateT. Anantha Babu and ;B.V. Rammohan Rao, Advs.
Respondent AdvocateD.V. Sastry, Government Pleader for Commercial Taxes
DispositionPetition dismissed
Excerpt:
.....therefore, we are clearly of the opinion that under sub-section (7)(a) of section 22, the high court can review an order in revision only on the basis of facts which could have been before it, but which were not before it when it passed the order in revision. ). clause (b) of section 34(1) (after amendment in 1948), inter alia, provides that 'notwithstanding that there has been no omission or failure as mentioned in c lause (a) on the part of the assessee, if the income-tax officer has, in consequence of information in his possession, reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the act, or that..........the business of a dealer, for determining his liability to pay the sales tax. they should be basic facts, facts in issue. in appropriate cases, even evidentiary facts may be so interlinked with facts in issue that they may also fall within the purview of that sub-section : vide chandaji kubaji & co. v. state of andhra pradesh [1960] 11 s.t.c. 451 (s.c.). secondly, even assuming that judgment is a fact, as contemplated by the sub-section, still we are of the opinion that a judgment pronounced by the supreme court subsequently is not a fact within the meaning of that sub-section.12. in this connection, sri anantha babu referred to section 34(1 )(b) of the indian income-tax act, 1922 and the decisions of the supreme court in maharaj kumar kamal singh v. commissioner of income-tax [1959] 35.....
Judgment:
ORDER

Gangadhara Rao, J.

1. The question for our consideration in these review petitions is whether the High Court can review its order under Section 22(7) of the Andhra Pradesh General Sales Tax Act, 1957, because of a subsequent decision of the Supreme Court taking a contrary view.

2. Under Section 22 of the Andhra Pradesh General Sales Tax Act, 1957, hereinafter called the Act, Tax Revision Cases Nos. 40 and 41 of 1975 were filed by the two assessees in this court. On the ground that they were covered by the judgments of this court in (1) Central Wines, Hyderabad v. Deputy Commissioner (1976) 1 A.P.L.J. 71 and (2) Shaw Wallace & Co. Ltd. v. State of A.P. [1976] 37 S.T.C. 448 (T. R. C. Nos. 27 and 28 of 1974 dated 28th November, 1975), they were dismissed with costs by the then Chief Justice Obul Reddi and one of us (Mr. Justice Gangadhara Rao) on 4th February, 1976. On 25th October, 1976, the Supreme Court reversed the decision of this court in Central Wines, Hyderabad v. Deputy Commissioner (1976) 1 A.P.L.J. 71 in McDowell & Co. Ltd. v. Commercial Tax Officer [1977] 39 S.T.C. 151 (S.C.). The Supreme court held that the excise duty or the countervailing duty paid directly to the excise authorities of the State or deposited directly in the State exchequer in respect of Indian liquor by the buyers thereof before removing it from the distillery or the bonded warehouse and not included in the sale bills issued either by the manufacturer or the owner of the bonded warehouse could not form part of their turnover and were not liable to sales tax under the Andhra Pradesh General Sales Tax Act, 1957. On 17th November, 1976, these two review petitions were filed to review the orders of the High Court dated 4th February, 1976.

3. It is submitted by Sri Anantha Babu, the learned counsel for the petitioners, that under Section 22(7)(a) of the Act, the High Court can review an order passed by it under Sub-section (4) of that section on the basis of facts which were not before it when it passed the order ; that the decision of the Supreme Court is a fact, which was not before the High Court when it passed the order on 4th February, 1976; and, therefore, it can review that order in view of the decision of the Supreme Court. It is further submitted that the terms of Sub-section (7) are unqualified and the said fact need not be in existence when the High Court passed the order under Sub-section (4).

4. On the other hand, it is submitted by the learned Government Pleader for sales tax, that the facts contemplated by that Sub-section must be facts in existence when the transaction that determines the liability for payment of sales tax took place and a subsequent judgment pronounced by the Supreme Court is not a fact contemplated by that Sub-section. In any event, it was not in existence when the High Court rendered its decision.

5. In order to appreciate these contentions, it is necessary to refer to the scheme of the Act to the extent it is necessary. Under Section 5, sales tax is levied on the turnover of a dealer with respect to his sales or purchases of goods. Under Section 6, the sales or purchases of declared goods by a dealer shall be liable to tax. Under Section 7-A, in the case of an assessment made under Section 5 or Section 6, the burden of proving any sale or purchase effected by a dealer is not liable to any tax or is liable to be taxed at a reduced rate shall lie on the dealer. Section 8 provides exemption from tax in respect of certain goods. Under Section 12, a dealer should register himself under the Act. Under Section 13, every dealer who is liable to tax under the Act should submit a return relating to his turnover, in such manner, within such periods and to such authority as may be prescribed. Section 14 says that if the assessing authority is satisfied that any return submitted under Section 13 is correct and complete, he shall assess the amount of tax payable by the dealer on the basis thereof; but if any return appears to him to be incorrect or incomplete he shall, after giving the dealer a reasonable opportunity, assess to the best of his judgment, the amount of tax due from the dealer. When making an assessment to the best of his judgment, the assessing authority may also direct the dealer to pay penalty in addition to the tax. Under Sub-section (4-C), the powers conferred on the assessing authority can be exercised by any of the higher authorities including the Deputy Commissioner. Against an order of assessment under Section 14, an appeal is provided to the appellate authority under Section 19. The appellate authority can confirm, reduce, enhance or annul the assessment or the penalty or both, or set aside the assessment or penalty or both and direct the assessing authority to pass a fresh order after such further inquiry as may be directed. It can also remand the case for inquiry and report on any specified point or points. Section 20 empowers the Board of Revenue to revise an order or proceeding of a subordinate authority 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 as it thinks fit. Under Sub-section (2), the powers of revision can also be exercised by the Deputy Commissioner and the Commercial Tax Officer in case of orders passed by the authorities or officers subordinate to them. But, if an issue or question is the subject-matter of an appeal or if it was decided by the Appellate Tribunal under Section 21, the power of revision cannot be exercised. Under Section 21, a dealer objecting to an order passed or proceeding recorded under Section 19, or by a Deputy Commissioner under Sub-section (4-C) of Section 14, or under Sub-section (2) of Section 20, may appeal to the Appellate Tribunal. The appellate authority may confirm, reduce, enhance or annul the assessment or the penalty, or both of them, or set aside the assessment or the penalty, or both and direct the assessing authority to pass a fresh order after further inquiry. If the appeal involves a question of law, a decision of which is pending before the High Court or the Supreme Court, the Appellate Tribunal may defer the hearing of the appeal before it, till such proceeding is disposed of. Section 22 provides for revision by the High Court. A dealer or the authority prescribed in that behalf may prefer a petition to the High Court against the order of the Appellate Tribunal made under Section 21. It must be on the ground that the Appellate Tribunal has decided erroneously or failed to decide any question of law. If there is no sufficient ground for interfering, the High Court can dismiss the petition summarily. Under Sub-section (4), if the High Court does not dismiss the petition summarily, it shall determine the question or questions of law raised and either reverse, confirm or amend the order against which the petition was preferred or remit the matter to the Appellate Tribunal with the opinion of the High Court on the question or questions of law raised or pass such other order as it thinks fit. When the High Court remits the matter to the Appellate Tribunal with its opinion on the question of law raised, the Appellate Tribunal shall amend the order passed by it in conformity with such opinion.

6. Sub-section (7)(a) reads as follows :

The High Court may, on the application of the dealer or the prescribed authority review any order passed by it under Sub-section (4) on the basis of facts which were not before it when it passed the order.

7. Section 23 provides for appeals to the High Court against the orders relating to assessments passed by the Board of Revenue under Sub-section (1) of Section 20.

8. A reading of these provisions shows that a dealer is assessed to sales tax on his turnover. He has to submit a return relating to his turnover. The assessing authority will assess the amount of tax payable by the dealer with reference to his return or makes an assessment to the best of his judgment. Against an order of assessment, an appeal is provided to the appellate authority under Section 19 both on fact and law. Another appeal is provided to the Appellate Tribunal under Section 21. That can also be both on fact and law. Against an order of the Appellate Tribunal, a revision is provided to the High Court on questions of law. It can normally decide questions of law that properly arise out of an assessment order which has its roots in facts that were in existence when the assessment was made. Therefore, when the High Court is given power to review its order on the basis of the facts which were not before it when it passed the order, it necessarily means that the facts were in existence by the date of its order but were not before it, when it passed the order in revision. It can never mean that it can review on the basis of facts that came into existence after it had passed the order in revision. Then they will not be facts on the date of its order in revision. Fact is a thing existing. What happened yesterday is a fact today. What is going to happen tomorrow is not a fact today. According to Chambers's Twentieth Century Dictionary (New Edition 1972), 'fact' means 'a deed, act, or anything done'. Further, the review contemplated is of an order passed under Sub-section (4). Therefore, the facts that come into existence subsequent to the. passing of the order in revision will not be facts on the basis of which the High Court could review its order. This limitation is inherent in terms of the section itself.

9. If the High Court were to take into consideration facts that come into existence after it had passed the orders on revision, then it will not be really reviewing its earlier order. A 'review' means 'a second examination of a matter' (Bowivers Law Dictionary, 3rd Edition). 'To re-examine judicially ; reconsideration; second view or examination' (Black's Law Dictionary, 4th Edition). Then it would be passing a fresh decision on fresh facts. That can be done only by the original assessing authority. The High Court is not given the power to pass a fresh order of assessment under Section 22. If the interpretation of the learned counsel for the petitioners were to be accepted, then petitions for review could be filed every time a new fact or a new decision comes into existence within one year-for that is the period of limitation for review-after the revision is disposed of.

10. It also militates against the concept of revisional powers on a question of law conferred on the High Court. The High Court can entertain a revision only against the order of an Appellate Tribunal on a question of law. It necessarily presupposes that it could take into consideration facts that were available or could have been available before the lower tribunals. Therefore, we are clearly of the opinion that under Sub-section (7)(a) of Section 22, the High Court can review an order in revision only on the basis of facts which could have been before it, but which were not before it when it passed the order in revision.

11. It is submitted by the learned counsel for the petitioners that when the Supreme Court has given its decision subsequently, it was only declaring the law and it would be deemed to have been always the law and, therefore, it is a fact which the High Court can take note of. In the first instance, we doubt whether the fact contemplated by Sub-section (7) takes in a decision. In view of the scheme of the Act, which has been adverted to by us already, the facts mentioned in the section can relate only to facts concerning the turnover of the business of a dealer, for determining his liability to pay the sales tax. They should be basic facts, facts in issue. In appropriate cases, even evidentiary facts may be so interlinked with facts in issue that they may also fall within the purview of that Sub-section : vide Chandaji Kubaji & Co. v. State of Andhra Pradesh [1960] 11 S.T.C. 451 (S.C.). Secondly, even assuming that judgment is a fact, as contemplated by the Sub-section, still we are of the opinion that a judgment pronounced by the Supreme Court subsequently is not a fact within the meaning of that Sub-section.

12. In this connection, Sri Anantha Babu referred to Section 34(1 )(b) of the Indian Income-tax Act, 1922 and the decisions of the Supreme Court in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax [1959] 35 I.T.R. 1 (S.C.) and Kalyanji Mavji & Co. v. Commissioner of Income-tax [1976] 102 I.T.R. 287 (S.C.). Clause (b) of Section 34(1) (after amendment in 1948), inter alia, provides that 'notwithstanding that there has been no omission or failure as mentioned in C lause (a) on the part of the assessee, if the Income-tax Officer has, in consequence of information in his possession, reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or that excessive loss or depreciation allowance have been computed, he may, at any time within four years of the end of that year, serve on the assessee a notice containing all or any of the requirements, which may be included in a notice under Sub-section (2) of Section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section'. In the first instance, there could be no comparison between Section 22 of the Andhra Pradesh General Sales Tax Act and Section 34(1 )(b) of the Income-tax Act. While Section 22 of the Andhra Pradesh General Sales Tax Act deals with the revisional powers of the High Court against the order of the Appellate Tribunal on a question of law, Section 34(l)(b) is not in the nature of a revisional power. It empowers the original assessing authority, the Income-tax Officer, to reopen the assessment and to assess or reassess the income. In a revision, a revisional authority is Only concerned with the correctness of the order of the Appellate Tribunal, but the powers of the original assessing authority are not so circumscribed. Secondly, in consequence of information in his possession, the Income-tax Officer can reopen the assessment under Section 34(l)(b). The word 'information' has a wider meaning than the word 'fact'. 'Information' may be both of facts as well as of the state of law. Maharaj Kumar Kamal Singh v. Commissioner of Income-tax [1959] 35 I.T.R. 1 (S.C.) was a case where the Income-tax Officer reopened the assessment under Section 34(l)(b) in view of the subsequent decision of the Privy Council. The Supreme Court held 'information' contemplated in Section 34(l)(b) included information as to the true and correct state of law and so would cover information as to the relevant judicial decisions.

13. Kalyanji Mavji & Co. v. Commissioner of Income-tax [1976] 102 I.T.R. 287 (S.C.) was also a case under Section 34(l)(b) of the Indian Income-tax Act, 1922. The Supreme Court observed that the word 'information' in Section 34(l)(b) is of the widest amplitude and comprehends a variety of factors. The court held that Section 34(l)(b) would apply to the following categories of cases:

(1) where the information is as to the true and correct state of the law derived from relevant judicial decisions ;

(2) where in the original assessment the income liable to tax has escaped assessment due to oversight, inadvertence or a mistake committed by the Income-tax Officer;

(3) where the information is derived from an external source of any kind; such external source would include discovery of new and important matters or knowledge of fresh facts which were not present at the time of the original assessment; and

(4) where the information may be obtained even from the record of the original assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law.

14. As stated by us already, the wording of the two sections is different and similarly the ambit and scope of the two sections in the light of the scheme of the Act. Therefore, the decisions referred to by the learned counsel for the petitioners are of no assistance while interpreting the provisions of Section 22(7) of the Andhra Pradesh General Sales Tax Act.

15. In the result, we hold that the decision of the Supreme Court rendered subsequent to the decision of this court in the revisions is not a fact on the basis of which this court could review its earlier order under Section 22(7)(a) of the Act. Consequently, we dismiss these two review petitions, but, in the circumstances of the case, without costs. Advocate's fee Rs. 250 in both the petitions.


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