Jagannadha Das, C.J.
1. This is an application under Sub-section (3) of Section 24 of the Orissa Sales Tax Act of 1947, asking us to direct the Revenue Commissioner to state a case and make a reference to the High Court in the following circumstances. The applicant is a dealer in betel-leaves. He registered himself under Section 9 of the Act in January, 1949, and submitted his return for the quarter ending 31st March, 1949. The Sales-tax Officer accepted that return and assessed him to tax for that quarter; but simultaneously with it, that is, on 4-10-49, he also assessed him for the three quarters ending 30th June, 1948, 30th September, 1948, and 31st December, 1948, on the basis of the return of sales for the quarter ending 31st March, 1949 already filed.
It is to be noticed that the assessee had not registered himself during those quarters nor did he submit any return in respect thereof. On receiving notices of demand in respect of these three quarters, the assessee made an application on 26-11-49 to the Sales-tax Officer stating that ha started business in betel-leaves only on the 17th of April, 1948, and that he was not accordingly liable under the Act to pay tax for those three quarters. Not having received any orders in respect of his review application to the Sales-tax Officer, he applied also to the Collector of Sales-tax by way of review.
The Collector held that the review was not competent; but took up the matter in revision, 'suo motu', under Section 23(3) read with Rule 54 of the rules under the Act, but on consideration thereof rejected the application. Thereupon, the assessee went up in revision to the Revenue Commissioner, who also rejected the same. The assessee consequently made an application to the Revenue Commissioner under Section 24(1) requiring him to refer certain questions of law to the High Court for its decision. The Revenue Commissioner rejected that application also. Hence the assessee has come up to this Court for a direction to the Revenue Commissioner under Sub-section (3) of Section 24 of the Act.
2. The substantial point raised by the assessee is as follows: Admittedly he was a person who did not register himself during the year 1948. If in the opinion of the Sales-tax Officer, he was liable to pay the tax in respect of the three quarters, in 1948, and nevertheless failed to apply for registration action could have been taken against him only under Sub-section (5) of Section 12. Under that sub-section it was mandatory for the Sales-tax Officer to give the assessee a reasonable opportunity of being heard. The assessee's case is that as a fact he was not liable to assessment during the quarters in question, since he started business only on the 17th April, 1948.
Thus, the assessment made on the assumption that he was liable to assessment during the quarters above-mentioned and without giving him an opportunity of being heard against the correctness of that assumption, is illegal. It may be mentioned that if it is a fact as the assessee now states that he commenced his business as a betel-leaf-dealer only on the 17th April, 1948, he would not be liable to pay tax for the three quarters in question by virtue of Sub-section (2) of Section 4 of the Act; and if it is a fact that the assessee was doing business during the year ending 31st March, 1948, or earlier, he would be liable to pay tax for the quarters in question.
The contention that he started Ms business only on the 17th April, 1948, and that he should have been given an opportunity to prove his non-liability to tax, in respect of these three quarters were specifically raised in the petition filed before the Collector of Sales-tax and also the application for Revision made to the Revenue Commissioner dealt with the grievance of the applicant that he was given no opportunity to prove that he was not in fact liable to assessment for the three quarters in question.
The learned Collector though he did not deal with the contention as to want of opportunity, curiously enough says that there is no evidence in support of the assessee's statement that he commenced business only on the 17th April, 1948, Of course, if the assessee's contention that he was not given any opportunity is valid, it is clear that he cannot be found fault with, for not having given evidence. Both the Collector and the Revenue Commissioner however in confirming the assessment made by the Sales-Tax Officer and in rejecting the applications by the assessee in the application which he made to the authorities concerned for his registration as a dealer in the month of January, 1949, had stated categorically that he had a gross turnover of Rs. 30,000/- for the year ending 31st March, 1949.
The assessee's objection to the use of this material against him by the Collector and the Revenue Commissioner is two-fold; firstly that that was not the material on which the Sales-tax Officer proceeded to assess him for the quarters in question, because a reference to the assessment order shows that he was assessed 'as directed by the Government Order' which has not been reproduced either in the assessment order or in any of the orders of the Collector or Revenue Commissioner in these proceedings. Secondly the application for registration relied upon could not be used as evidence against him, without his being given an opportunity to show that the statements in that application were inaccurate and that in fact the truth was that he started his business only in April, 1948.
3. It is not disputed before us by learned counsel for the Sales-tax authorities that the assessee did not receive any notice under Section 12 (5) of the Act; but it is stated by him that even apart from his admission in the application for registration of a gross turnover of Rs. 30,000/- during the year ending 31st March, 1949, the very fact of his having applied for registration in January 1949, would show that his statement that he commenced business in April, 1948, must be false in view of Sub-section (2) of Section 4.
The question therefore that arises in these proceedings is whether in the absence of such a notice the assessment was legal and whether the statements contained in the application for registration or the fact of such application itself could be used as evidence against the assessee to make out his liability for assessment during the three quarters in question, when he had no opportunity given to him of showing the contrary and when that was not the material relied on by the Sales-tax Officer in his order of assessment. Learned counsel for the taxing authority contends that the question of the liability to assessment in this case depends merely on the fact whether the assessee was not carrying on business prior to April, 1948, as he now contends and that on this matter there are clear and categorical findings which bind us.
Learned counsel has also stated to us that the Government Order referred to in the. Sales-lax Officer's assessment order contains a statement to the effect that in view of certain previous history and negotiations between the Government and the betel-leaf-dealers it was agreed that though they are to register themselves and submit return for the first time only in January, 1949, i.e., in the last quarter of 1948-49 and that they should all be liable to be assessed in respect also of the 1st three quarters of the year 1948-49 on the basis of the return for the said last quarter. So far as this last contention is concerned, the necessary material does not find any mention in the orders of the sales-tax authorities, nor is it before us at this stage,
4. Indeed, if the facts in respect of this point be as the learned Advocate states, a question may well arise whether in fact this particular assessee was a party to the said agreement and whether such an agreement can deprive him of his statutory right under 3. 12 (5) of the Act. Leaving alone such a question for the present, as not arising before us, the questions that substantially arise are (i) whether the assessments in question are legal and valid, in the absence of an opportunity having been given under Sub-section (5) of Section 12, and (ii) whether in view of the absence of that opportunity, & in view of the fact that the order of assessment by the Sales-tax Officer relies merely 'on the Government order the statements made in the assessee's application for registration in January, 1949, or the fact of that application itself, could be used as legal evidence against him, in proof of the liability for assessment for the three quarters in question.
To satisfy ourselves that the questions so raised are not of a merely unsubstantial and academic nature we asked the assessee's counsel, whether apart from any substantive evidence that he might have given if he had opportunity, he has any definite case as regards the statements in the application for assessment or the fact of such application in January, 1949, having been made and if so to put it in writing. His case as regards the statements in the application has accordingly been set out in the affidavit which we have allowed him to file in this Court, and his case with reference to the argument arising from the fact that he made his application in January, 1949, is set out in para 3 of his review to the Collector of Sales-tax. We are therefore satisfied that the above-stated substantial questions of law arise for consideration in these proceedings.
5. Learned counsel for the sales-tax authorities however contends that these questions cannot be said to arise cut of the order of the Revenue Commissioner and draws our attention to the language of Sub-section (1) of Section 24, whereby the assessee's right is only to require the Revenue Commissioner to refer to the High Court any question of law 'arising out of such order'. He urges that the High Court's power under Sub-section (3) of the same section must also therefore be taken to be to require the Revenue Commissioner to state a case only with reference to any question of law 'arising out of such order.' He contends that neither of the questions above formulated can be said to arise out of the order of the Revenue Commissioner passed in Revision. That order is very brief and is as follows:
'In this case the petitioner claims that his business started in April, 1948, and that he paid his dues for the quarter ending March. 1949, because during that quarter he found that he had come to the assessable limit. This is a point of fact and has not been accepted by both the lower courts. In his application for registration, he has shown his income ending March, 1949, as Rs. 30,000/-. It cannot be said his income for three years of 1948-49 was lower than the prescribed limit. In view of this fact, I cannot disagree with the combined views of the two lower courts. Revision rejected.'
6. Now the question whether the statement in the application for registration, on which the Revenue Commissioner relied, is legal evidence against the assessee in the circumstance already mentioned, is certainly one that arises out of the order of the Revenue Commissioner himself. The question however as to whether the assessment made without any opportunity having been given under Sub-section (5) of Section 12 of the Act, is legal, is no doubt one which has not been dealt with in the Revenue Commissioner's order. But that question has been categorically raised in the grounds of revision to the Revenue Commissioner, being ground No. 2, thereof.
It may be also mentioned that the same question has been raised in the grounds of revision to the Sales-tax Collector, being ground No. 1, wherein it has been stated that the learned Sales-tax Officer should have given sufficient opportunity to the petitioner to prove his non-liability to tax in the particular circumstances. It is contended that this question though raised in the grounds, not having been_ dealt with in the order of the Revenue Commissioner, cannot be said to arise out of his order.
Learned counsel on both sides have drawn our attention to the phrase 'arising out of the order which appears in the analogous Section 65 (1) of the Indian Income-tax Act, from which this phrase appears to have been borrowed. Undoubtedly, there is good deal of conflict in the decided cases as to the proper connotation of this phrase. To illustrate that conflict, it is sufficient to refer to -- 'New Piecegoods Bazar Co. Ltd. Bombay v. Commr. of Income Tax. Bombay', 1947-15 I T R 319 (Bom) (FB); --'Madanlal Dharnidharka v. Commr. of Income Tax', AIR 1949 Bom 24; -- 'Abboy Chetty v. Commr. of Income Tax', AIR 1948 Mad 181; --'Commr. of Excess Profits Tax West Bengal v. Jeewanlal Ltd. Calcutta', 55 Cal W N 237 and. -- 'Chainpur Sampatram v. Commr. of Income Tax, West Bengal', 1951-20 I T R 484 (Cal).
It is unnecessary for us to canvass this question fully and express any opinion thereon. But even on what may be called the narrower view which is reflected in -- 'AIR 1943 Mad 181', it cannot be said that his Lordship Justice Patanjali Sastri (as he then was) has ruled that a question raised before a Tribunal, but not dealt with in the order is not one that arises out of it. There is no reason to think that, that decision lays down that it is only a question which is found referred to and discussed within the four corners of an order that can be said to arise out of it.
Undoubtedly, the actual order itself is good evidence as to what questions arise out of it but when a particular point has been categorically raised in -the petition filed before the authority concerned, and there is nothing to show that that point has been given up, I think it must be taken that it is a point raised before the Tribunal and hence arising out of the order of the Tribunal. Indeed, it arises out of it, if only because it ignores it. I am therefore satisfied that it is open to us to direct the Revenue Commissioner to refer to us the two questions above formulated, and we hereby require him to do so.
7. It may be mentioned that in the application made to the Revenue Commissioner under Section 24 (1) and in the application made to us under Section 24 (3), the questions have been formulated in somewhat different form, but that does not preclude us from directing a reference on the questions which we think really arise out of the order of the Revenue Commissioner in these proceedings.
8. It may be added that in view of the contentions raised by the learned Advocate for the sales-tax authorities, that in fact there has been an agreement to waive the procedure of the Act and that the Government order referred to in the Sales-tax Officer's order is based on that agreement, it will be open to the Revenue Commissioner if he so chooses, to go into the question raised thereby and to find the correct facts, in their relation to this individual assessee after giving him proper opportunity and if he finds that there was any such agreement waiving the procedure in the Act, he may consider whether he ought not to refer the legality of such a waiver also for the decision of this Court.
9. I agree.