1. This order will dispose of Sales Tax References Nos. 13 and 14 of 1976 as they arise out of a common order and the questions of law referred are also common. At the instance of the petitioner, the assessed, the Appellate Tribunal, Sales Tax, Delhi, has referred the following four questions of law for opinion of this Court :
'(1) Whether, on the facts and in the circumstances of the case, the Assistant Commissioner exercising the powers of the Commissioner was justified in investigating the assessments for the years 1967-68 and 1968-69 under section 20(3) of the Bengal Finance (Sales Tax) Act, 1941
(2) Whether, on the facts and in the circumstances of the case, proceedings under section 11A of the Act aforesaid and not under section 20(3) should have been taken
(3) Whether poultry feed is a tax-free item under entry No. 33 of the Second Schedule of the Act aforesaid
(4) Whether, on the facts and in the circumstances of the case, best judgment assessment can be made by the learned Assistant Commissioner under section 20(3) ?'
2. M/s. Delhi Consumers' Co-operative Wholesale Store Ltd., Karampura, New Delhi, were registered dealers under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter called 'the Act'), as extended to the Union Territory of Delhi. They have three separate establishments, namely, M/s. Co-operative Store, Connaught Place, New Delhi, M/s. Wholesale Store, Motinagar, and Poultry Feed Section, Karampura, New Delhi. They were assessed for the years 1967-68 and 1968-69 under section 11(1) of the Act, vide assessment orders dated 14th January, 1971, and 22nd January, 1973, by the assessing authority. Subsequently it was reported that they had collected tax on poultry feed and after concealing the turnover in respect of the sale of the poultry feed, they had not furnished return in respect of the four quarters of both the above assessment years. Sale of poultry feed alone in the year 1968-69 amounted to Rs. 19,07,109.20. No such figures were available for the year 1967-68. The Assistant Commissioner, Sales Tax, issued a notice for suo motel revision to the dealer and determined the total turnover of the poultry section for the years 1967-68 and 1968-69 according to the best of his judgment at Rs. 6,00,000 per quarter and taxed the same at 5 per cent. Thus, he created a demand of Rs. 1,20,000 for each of the two years in question.
3. Aggrieved by the aforesaid order of the Assistant Commissioner the dealer filed revision petitions under section 20(3) of the repealed Act, against the orders of the Assistant Commissioner, Sales Tax. It was urged before the Financial Commissioner that poultry feed was not taxable, that the same was exempted item under item 33 of the Second Schedule of the said Act. The dealer also pleaded that in any case it was a case of escaped assessment and proceedings, if any, should have been taken under section 11A of the Act and could not be taken under section 20(3) of the Act. All these contentions were rejected by the learned Financial Commissioner. He held that this was not a case of escaped assessment because the information was not available on the record at the time of framing of assessment but it was subsequently reported that the petitioner had concealed the sales of the poultry feed and as such the Assistant Commissioner had rightly revised the assessments under section 20(3) of the Act. The learned Financial Commissioner also found that poultry feed did not fall under entry 33 of the Second Schedule of the Act because that entry only mentioned 'cattle feed including fodder'.
4. The dealer filed a petition under section 21(1) of the Act for referring the aforesaid four questions of law to this Court. The Act having been repealed finally the reference was made under section 45 of the Delhi Act by the Appellate Tribunal (Sales Tax), Delhi.
5. The real question involved is regarding the scope of the revisional jurisdiction under the Sales Tax Act and whether in exercising the same it was open to the revisional authority to trench upon the power and jurisdiction of getting at the escaped turnover and bringing the same to tax or assessment. For the decision of this question the relevant provisions of the Act are sections 11A, 20(2) and 20(3) of the Act. The said provisions are as follows :
'Section 11A. Assessment and reassessment of tax. - If in consequence of definite information which has come into his possession the Commissioner is satisfied that the turnover of the business of a dealer has escaped assessment or has been under-assessed in any year, the Commissioner may, at any time within the period of three years following the close of the year for which the turnover is proposed to be assessed or reassessed, as the case may be, send a notice to the dealer, and after hearing him and making such inquiry as he considers necessary may proceed to assess or reassess, as the case may be, the tax payable on the turnover which has escaped assessment or has been under-assessed, and all the provisions of this Act and the Rules made there under shall, so far as may be, apply accordingly for the purpose of the assessment or reassessment of the tax, as the case may be.
Section 20. (2) Subject to such rules of procedure as may be prescribed, the appellate authority, in disposing of any appeal under sub-section (1), may -
(a) confirm, reduce, enhance or annul the assessment, or
(b) set aside the assessment and direct the assessing authority to make a fresh assessment after such further inquiry as may be directed.
Section 20. (3) Subject to such rules as may be prescribed and for reasons to be recorded in writing, the Commissioner upon application or of his own motion may revise any assessment made or order passed under this Act or the Rules there under by a person appointed under section 3 to assist him, and subject as aforesaid, the Chief Commissioner may, in like manner, revise any order passed by the Commissioner :
Provided that before rejecting any application for the revision of any such order the Commissioner or the Chief Commissioner, as the case may be, shall consider it and shall record reasons for such rejection;
Provided further that no application for revision shall lie to the Commissioner in respect of any assessment if an appeal lies under sub-section (1) to the Commissioner in respect of such assessment.'
6. It cannot be disputed that it is a case of escaped assessment because the findings of fact recorded by the Assistant Commissioner on suo motu revision are to the same effect. The Assistant Commissioner found that the dealer had not 1 furnished the returns at all for the poultry section and had deliberately caused loss of revenue to the Government by way of concealing sales on account of poultry feed. The concealment was detected after quite a few years while examining the accounts for the subsequent years. While determining the taxable turnover the Assistant Commissioner recorded that the escaped turnover in 1967-68 and 1968-69 according to the best of his judgment and belief was Rs. 6,00,000 per quarter. These findings were not disturbed by the Financial Commissioner. The reasoning of the Financial Commissioner for holding that it was not a case of escaped assessment was that the information was not available on record at the time of framing of assessment and it was subsequently reported that the petitioner had concealed the sales of the poultry feed. This reasoning itself leads to the conclusion that the turnover of the assessed had escaped assessment. Number of authorities were cited by the counsel for the parties at the Bar, but it is not necessary to refer to all those authorities in view of the clear pronouncements of their Lordships of the Supreme Court in two cases which we will refer to.
7. In Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Dhanalakshmi Vilas Cashew Co. : (1970)3SCC273 , the Supreme Court was concerned with the scope of the Deputy Commissioner's revisional power under section 15 of the Kerala General Sales Tax Act. The provisions relating to the revisional powers under the Kerala General Sales Tax Act and the Delhi Act are almost identical. It was observed that the power under section 15(1)(i) of the General Sales Tax Act is quite distinct and separate from the power under rule 33 to assess the escaped turnover. It was remarked following the decision in State of Kerala v. M. Appukutty : AIR1963SC796 that the Deputy Commissioner while exercising his revisional jurisdiction under section 15(1)(i) of the Act would be restricted to the examination of the record to determine whether the order of assessment was according to law. But rule 33 confers power to assess escaped turnover, which may normally be exercised in matters de hors the record of assessment proceedings. It is true that the observation regarding the revisional jurisdiction being confined to the examination of the record may not stand scrutiny any longer in the light of subsequent decisions including the decision in the case of State of Kerala v. K. M. Cheria Abdulla and Company : 1SCR601 , but the other observations mentioned above, have consistently been followed in various cases. In the case of S. B. Gurbaksh Singh v. Union of India : 3SCR247 , the Supreme Court was dealing with the same provisions, i.e., section 20(3) of the Act. It was held that the limits of the revisional power of the Commissioner are not circumscribed in section 20(3) but they will be akin to the power of the appellate authority as mentioned in section 20(2). It was further held that the revisional authority, however, should not trench upon the power expressly reserved by the Act or the Rules to other authorities and cannot ignore the limits inherent in the exercise of those powers.
8. Under section 3 of the Act, a hierarchy of officers has been constituted, namely, the Commissioner of Sales Tax, Sales Tax Officers and others to assist the Chief Commissioner. Section 11 of the Act deals with assessment of tax. The Sales Tax Officer exercising the power as an officer to assist the Commissioner under section 11(1) of the Act can proceed to assess the amount of the tax due from the registered dealer within 18 months of the expiry of the particular period. Under section 11A, if in consequence of definite information which has come into his possession the Commissioner is satisfied that the turnover of the business of the dealer has escaped assessment or has been under-assessed in any year, the Commissioner may, at any time within the period of three years following the close of the year for which the turnover is proposed to be assessed or reassessed, as the case may be, send a notice to the dealer, and after hearing him and making such inquiry as he considers necessary may proceed to assess or reassess. Section 11A read with rule 71 makes it clear that the power of assessment or reassessment lies with the appropriate assessing authority and not with the Assistant Commissioner or the Commissioner. Notice for the assessment and/or reassessment has to be issued within three years following the close of the year for which the turnover is proposed to be assessed or reassessed. Such a notice has obviously to be issued by the assessing authority.
9. In the face of the statutory provisions sketching the ambit of the respective powers, it appears as a first impression that there is no bar or inhibition against getting at escaped income in exercise of the revisional powers so long as the grounds for exercise of those powers are made out. The said grounds are that the order is vitiated by illegality, irregularity or impropriety. In the absence of those grounds the power can only be exercised under section 11A of the Act and that power lies only with the assessing authority and cannot be exercised under section 20(3) of the Act. As held in the case of Cheria Abdulla & Co. : 1SCR601 , the power to hold an inquiry to take additional evidence is a procedural power in aid of the exercise of the revisional jurisdiction but such a power cannot be exercised in the case of escaped turnover by the revising authority because the power to reassess the escaped turnover is primarily vested by rule 71 in the assessing authority and is to be exercised subject to certain limitations and the revising authority will not be competent to make an inquiry for reassessing a taxpayer. As held by their Lordships of the Supreme Court in the cases of Cheria Abdulla and Company : 1SCR601 and S. B. Gurbaksh Singh : 3SCR247 referred to above, the powers of revision are subject to certain limitations. These limitations are that the revising authority should not trench upon the powers which are expressly reserved by the Act or the Rules to other authorities and should not ignore the limitations inherent in the exercise of those powers. In the present case, the Assistant Commissioner while seeking to exercise his revisional powers has clearly encroached upon the powers reserved to the assessing authority under rule 71 and as such the power exercised is invalid.
10. For the reasons recorded above, our answer to the first question referred would be in the negative, i.e., against the department and in favor of the assessed. Similarly our answer to the second question would also be against the department and in favor of the assessed. In view of our answer to the first two questions, questions Nos. (3) and (4) do not arise and need not be answered. Considering the circumstances of the case, we leave the parties to bear their own costs.
11. Reference answered accordingly.
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