H.L. Anand, J.
(1) By this petition under Article 226 of theConstitution of India, the petitioner, M/s. Newfields Advertising Private Ltd., carrying on the business of advertising consultants, claims adeclaration that it is not a 'dealer' within the meaning of The BengalFinance (Sales-tax) Act, 1941, as extended to the Union Territoryof Delhi, hereinafter to be referred as 'the Local Act' or the CentralSales-tax Act, 1956, hereinafter to be referred as 'the Central Act',and seeks to quash the assessment order in respect of the year 1969-70,to restrain the respondents, the sales-tax authorities, from making anyassessment under the Local Act in respect of the assessment years1962-63 to 1968-69 or 'under the Central Act in respect of the assessment years 1963-64 to 1968-69, to quash the notices issued in respectof the assessment years 1962-63 to 1968-69 under the Local Act aswell as in respect of assessment years 1963-64 to 1968-69 under theCentral Act, to quash notices in respect of assessment years 1970-71to 1973-74 and to prohibit the respondents from passing any assessment orders in respect thereto.
(2) According to the petitioner, it has been carrying on the businessof advertising consultants which consists of rendering various servicesto the advertisers in the form of advice, assistance and guidance foreffectively advertising and publicising their products, wares, merchandiseand service with the view to promote their sales and to propogatetheir ideas through suitable advertisement media like newspapers, periodicals, magazines, calendars, posters, hoardings, brochures, slides etc.The expert assistance which the petitioner claims to render to the advertiser is said to consist of suggesting suitable advertisements andpublicity material, designs, write-ups and literature and by reservingadvertisements space in the newspapers, periodicals etc. The petitionerclaims that for the service so rendered, the petitioner charges theadvertisers a fee for designing the material or advertisements whichcovers the services of staff as well expenditure in relation to photo-graphs, drawings etc. Besides this, the advertisers entrust to the petitioner the task of procuring advertisement or printing material on theapproval of the advertiser and the various printers, engravers, newspapers etc. through whom the material is procured, allow to the petitioner, in the usual course of their business, commission. Where,however, the various advertising media or those from whom the materialis procured, do not pay any commission to the petitioner, the petitionercharges the advertisers 15 per cent on the gross amount. In the courseof the business of the petitioner, the petitioner makes arrangementswith newspapers and other news media on behalf of the advertisers,prepares lay-outs and designs and also gets blocks prepared throughblock-makers and engravers by placing order on their behalf and afterthe approval of the advertisers. It is claimed that in rendering thevarious services to the advertisers, including the procurement for themof material, as well as completion of arrangements for their fabrication, the petitioner does not either sell or buy any material or goods onits own account and merely places order on behalf of the advertisers,who are solely responsible for payment. According to the petitioner,it is thus, in relation to the material and services other than the advertiser's services of its own, merely in the position of a buying agent ofthe advertisers and does not involve itself either in the purchase or saleof any material or article on its own so as to be a 'dealer' withinthe meaning either of the Central Act or of the Local Act. It isclaimed that at no stage does any property in the finished material orarticles either vest in the petitioner nor such property at any stage istransferred by the petitioner to the advertisers. It is claimed that forthis reason even though the petitioner has been carrying on the businessit did not get itself registered as a 'dealer' under section 7 of theLocal Act and was never called upon earlier by the sal-tax authorities either to pay any sales-tax or to seek registration.
(3) According to the petitioner, for the first time, the petitionerreceived a memorandum of 12/09/1967 (Annexure B) fromAssistant Sales-tax Officer, Ward No. 14 (respondent No. 1) askingthe petitioner to appear before him on 16/09/1967. When the petitioner appeared pursuant to the aforesaid notice, the said respondent claimed that the petitioner was a 'dealer' and as such was liabfeto register and 'to pay sales-tax under the Sales-tax Law on its turnover.The petitioner filed an affidavit of Shri S. R. Gupta, its ManagingDirector (Annexure A), inter alia, contending that for the reasonsset out above, the petitioner could not be regarded as a dealer withinthe meaning of the Local or the Central Acts. Along with the affidavit,the petitioner also enclosed the form in which the petitioner preparedthe bills for the advertisers and the vouchers issued by the varioussuppliers in respect of the material and services procured by the peti-tioner from them from time to time on account of the advertisers. On 6/05/1968, the petitioner received notice dated 30/04/1968 inform No. S.T. Xiv in respect of the assessment years 1962-63 to1967-68 (Annexure C) from the assessing authority under the LocalAct. Subsequently, the proceedings continued until January, 1969when the petitioner started received notices from Sales-Tax Officer(SIB) in form S. T. Xiv dated 22/02/1969 in respect of theperiod 1st April, 196 8/02/1969. On 6/08/1969,the said Sales-Tax Officer issued a further notice in the aforesaid formin respect of the assessment years 1963-64 to 1968-69. Furthernotices were issued in respect of the assessment years 1965-66 to1967-68 and for the period from April, 196 8/02/1969under the Central Act. On 16/08/1969, notices were also issued in respect of the assessment years 1963-64, 1964-65 and 1968-69 underthe Central Act (Annexure D). By an assessment order of 17/12/1969, the Sales-Tax Officer (SIB) imposed on the petitioner salestax including penalty to the extent of Rs. 2,42,750 under the Local Actfor the assessment years 1962-63 to 1968-69 and Rs. 1,44,000on account of the tax and penalty in respect of the assessment years1963-64 to 1968-69 under the Central Act. The details of the statement of demand created by virtue of the said order are set out inAnnexure E to the petition. On appeal, the Assistant Commissioner,Sales-tax, by an order made on 30/05/1971 (Annexure F) upheldthe conclusion of the Sales-Tax Officer that the petitioner was a dealerbut remanded the cases back to the assessing authority for re-examination and for fresh orders with a direction that the assessing authorityof the appellate company with a view to decide as to the quantum andvalue of business that would be liable to tax, having regard to the factthat it has already been held that the appellate company is a dealer asdefined under the Local Act'. On revision before the revisional authority, the petitioner raised the further contention that the assessmentorder passed by the Sales-Tax Officer (SIB) was without jurisdiction.The revisional autority by an order made on 17/05/1972 (Annexure G), held that in the absence of a proper order for transfer of thecases of the peitioner from the Sales-Tax Officer, Ward No. 14 to SalesTax Officer (SIB) under Rule 88 of the Delhi Sales-tax Rule, 1951,the assessments were without jurisdiction. The assessment order was,therefore, set aside and the cases were remanded to Sales-Tax Officer,Ward No. 14 'to pass fresh orders in accordance with law'. Onreceipt of the record, the Sales-tax Officer, Ward No. 14 (respondent No. 1) issued fresh notices to the petitioner for the assessment oftax in respect of the various assessment years both under the Localand the Central Act. In response to the notices, the petitioner bytheir communication of 7/02/1975 (Annexure H), inter alia,contended that the notices under form S.T. Xiv in respect of theassessment years 1962-63 to 1964-65 under the Local Act and 1963-64and 1964-65 under the Central Act were beyond time inasmuch asthe original assessment orders passed by the Sales-Tax Officer (SIB)were void, ab initio and without jurisdiction. No orders in respectof any of the aforesaid assessment orders except the year 1968-69could be validly passed as the assessments have not been completedwithin the statutory period of six years. It was furher contended 'that allnotices issued under the Central Act by the Sales-Tax Officer (SIB) hadbeen issued without jurisdiction and as such no assessment for anyof these years could be made. The contention that the petitioner wasnot a dealer was reiterated. By his letter No. 6130 of 21/03/1975 (Annexure J), respondent No. 1 informed the petitioner thatthe objections raised by the petitioner have been considered and'rejected'. The petitioner was accordingly required to produce thebooks of acedunt. The communication does not recount either thecontentions raised or the reasons by they were 'not found tenable'.By their communication of 20/02/1975, the petitioner alsoraised various objections (Annexure K) in respect of the proposedassessment for assessment year 1969-70 and by an order of 21/02/1975 (Annexure LI), respondent No. 1 made the assessmentorder in respect of the assessment year 1969-70 holding that the petitioner was a dealer within the Act. The order does not deal withany of the contentions raised by the petitioner nor does it containany express finding on the question if the petitioner was a dealer ornot and as to the reasons for which the petitioner was a dealer within themeaning of the said Acts. By the impugned order, the assessing authority has raised a demand of Rs. 23,117.40 on account of sales-tax andpenalty for the assessment year 1969-70.
(4) Apprehending that the liability of the petitioner to sales-taxwould be assessed by the assessing authority in respect of the variousother assessment years .referred to above and in respect of assessmentyears subsequent to 1969-70 as well on the basis of the order of 21/02/1975 and the implied conclusion that the petitionerwas a dealer, the petitioner filed the present petition in March,1975 praying that the aforesaid assessment order, as indeed, thevarious notices in respect of the various assessment years referred toabove be quashed and the respondents be restrained from treating.the petitioner as a dealer under the Act.
(5) The petitioner contends that having regard to the nature andthe pattern of the business of the petitioner as advertising consultants,it merely renders services to the advertisers and the purchase by the petitioner in the course and for the purpose of rendering effectiveservices on account of and with the approval of the advertisers ofvarious articles and material, do not constitute any transaction ofpurchase by the petitioner on its own account nor does the supply ofthe finished advertising material to the advertisers constitute any transfer of property in the goods by the petitioner to the advertisers or besaid to constitute any transaction of sale in respect of goods so asto bring the operations of the petitioner within the Sales-tax Law.The petitioner, thereforee, contends that the petitioner could not belegitimately treated as a dealer or be required to pay any sales-tax.It is further contended by the petitioner that various notices in respect of the assessment years 1962-63 to 1964-65 under the LocalAct and 1963-64 and 1964-65 under the Central Act were barredby time. It is further urged that the original assessment orders passed by the Sales-Tax Officer (SIB) being without jurisdiction ab.initio and, thereforee, ab initio void, no assessment orders in respectof any of the assessment year, except the assessment year 1968-69,could have been made under Section ll(2a) of the Local Actas the assessments have not been completed within the statutory periodof six years. It is further claimed that all notices issued under theCentral Act for the assessment years 1963-64 to 1968-69 and underthe Local Act for the assessment years 1963-64 to 1968-69 by theSales-Tax Officer (SIB) having been issued without jurisdiction, theycould not form basis of any valid assessment order. With regardto the assessment order for the assessment year 1969-70, it is urgedthat it is bad in law in as much as it does not deal with any of thecontentions raised by the petitioner and does not set out the conclusion of the authority on any of the questions raised by the petitionerand gives no reasons for its conclusion. In particular, it is urgedthat it does not contain any finding, expressed or implied, that the petitioner was a dealer within the meaning of the Act or the reasonswhy the petitioner could be treated as such.
(6) The petition is opposed. In the course of an affidavit of theAssistant Sales-tax Officer, Ward No. 14, filed by way of return ofthe Rule by the respondents, it is, inter alia, urged, by way ofpreliminary objections, that the petition raises disputed questions offact which could not be determined in the present proceedings andthat the question as to whether, having regard to the nature andpattern of the business of the petitioner, it was a dealer or not wasprimarily a question of fact which could be and has been determinedon the basis of the material on record by competent assessing authority and upheld on appeal by the appellate authority and that the petitioner had another equally efficacious remedy by appeal or revision or review, under Sections 20 and 21 of the local Act whichthe petitioner has failed to invoke thereby disentitling the petitionerto seek relief in the present proceedings. On the merits, it is con-tended that the petitioner has been carrying on the business of selling goods during the last many years without registration as a dealerand was detected only on a surprise visit in 1967 where on a scrutinyof the record of the petitioner, it was found that it was prima faciea dealer. It is further alleged that the enquiry was consistently obstructed by the petitioner by its persistent refusal to produce its records. It is contended that the Sales-Tax Officer concerned hadconsidered all the relevant material on the record and the various contentions urged by the petitioner and had passed a detailed order ofassessment for the assessment years 1962-63, 1963-64, 1964-65, 196566, 1966-67, 1967-68 and 1968-69 under the Local Act and from 196364 to 1968-69 under the Central Act (Annexure X to the affidavit) andhad raised the demand, details of which are set out in the statementof demand (Annexure E to the petition). It is contended that theaforesaid order is based on an .-elaborate examination of the natureand pattern of the business of the petitioner and the assessing authorityhad come to the conclusion on the basis of the record that the petitioner had been carrying on the business of selling goods such asnovelties, diaries, calendars, hoardings, invitation cards, keyrings, folders, cinema slides etc. and that the aforesaid finding offact was upheld by the Assistant Commissioner, Sales-Tax by hisappellate order (Annexure F). It is claimed that on remand, theassessing authority was entitled by virtue of the provision of Sub-section (2a) of Section 11 of the Local Act to complete the assessmentwithin a period of six years from the date of the revisional order andthat the proceedings on remand including the assessment order arecompetent. It is denied that any of the assessment proceedings arebarred by time. It is contended that by virtue of the proviso to Section 11 (2a) of the the Local Act, in case the assessment is to bemade in consequence of or to give effect to an order of the appellateor revisional authority, the assessment has to be completed withina period of six years from the date of the aforesaid order. Thevalidity of the impugned assessment order (Annexure L) was defended on the ground that although the order did not give reasons, suchan exercise was unnecessary because the question whether the petitionerwas a dealer or not had already been 'considered in detail and rejected by the proceeding Assessing (Notified Authorities) and thefinding that the petitioner is a dealer liable to pay tax under the Localand Central Acts was also upheld by the appellate authority'. It was,therefore, urged that it was unnecessary for respondent No. 1 'toreiterate the same in the assessment order'. It was further contendedthat the assessment had been made on the basis of figures stated atitems 7, 8, 9 and 10 of Annexure Y to the affidavit which had beensubmitted by the petitioner itself setting out the different types oftransactions undertaken by the petitioner. It was alleged that notax was levied on transactions not involving sale such as the other itemsin the annexure but the demand has been raised on the basis ofpublicity production jobs, procuring of blocks, procuring of remembrance advertising material and procuring of cinema slides whichclearly involves sale of goods. It is denied that the Sales-Tax Officer(SIB) had no jurisdiction to issue notices or that the proceedingsbased on the aforesaid notices are without jurisdiction. It was notdisputed that no notices were issued by respondent No. 1 under theCentral Act for the years 1962-63 to 1968-69 and the same were issuedby the Sales-Tax Officer (SIB). It is claimed that the assessmentproceedings were initiated by the ward office and the same were pending 'when the Sales-Tax Officer (SIB) Shri H. D. Birdi was specifically vested with jurisdiction to frame the assessment by the Asstt.Commissioner, Sales-tax vide his order dated 22/02/1969'.A copy of the letter was enclosed as Annexure Z to the affidavit.At the hearing, a copy of the order made by the Commissioner of Salestax dated 17/07/1968 was placed on record whereby four sales taxofficers including Shri H. D. Birdi were appointed 'as assessingauthorities in respect of the entire Union Territory of Delhi (WardNo. 1 to XXIX)'.
(7) The first contention that Mr. G. C. Sharma, learned counsel for the petitioner urges is that the Assistant Sales-tax Officer, Ward No. 14 (respondent No. 1) was the proper authority to initiate proceedings and the said officer having initiated proceedings and dealtwith the same until January, 1969 the subsequent assumption ofjurisdiction and seizen of the proceedings by the Sales-Tax Officer(SIB) and the issue of notices in respect of the various assessmentyears by him was without jurisdiction and ab initio, void and havingbeen held to be so by the revisional authority, the resumption of proceedings on the basis of the aforesaid notices by respondent No. 1on remand was without jurisdiction. Mr. Sharma urges that therecould be no duplicity of Sales-Tax Officers in relation to any territtory and that the Sales-Tax Officer (SIB) could not have taken seizenof proceedings or to have issued fresh notices unless the cases hadbeen transferred by a competent authority to the said Sales-TaxOfficer. He further urges that it is the initial notice that gives jurisdiction to the Sales-Tax Officer and if there was no jurisdiction to issuea notice such as an officer was not competent to take seizen of thematter and if the proceedings were without jurisdiction and noticeshad been issued by an incompetent authority, the order of the revisionalauthority remanding the proceedings to respondent No. 1 could notlegitimise the same or be capable of conferring jurisdiction whichcould otherwise be not conferred on the basis of the aforesaid notices.On the other hand, Shri Wazir Singh, who appears for the Revenue,contends that the Sales-Tax Officer (SIB) had been duly appointed aan authority under the Local Act in relation to the entire area comprising the Union Territory of Delhi irrespective of the various sub-divisionof it and was, thereforee, competent to take seizen of the proceedingspending before respondent No.1 and to initiate further proceedingswithout any order of transfer. It was urged that the power to takeproceedings was inherent in the appointment of the officer as a SalesTax Officer without the limitation of any area and a notice to theassessed was neither a condition precedent to the assumption of jurisdiction nor dependent on it. It was argued that notices to the assesseds did not precede but followed the assumption of jurisdiction andwas, thereforee, a part of the exercise of jurisdiction. It was urgedthat the revisional authority being fully seized of the revision petitionfiled by the petitioner himself was competent to remand the case forfurther examination and that even without the remand order, theSales-Tax Officer, Ward No. 14 (respondent No. 1) was competent,on remand, to resume the proceedings and complete the assessmentin accordance with law. The learned counsel admitted that there wasno order transferring the proceedings from Sales-Tax Officer, WardNo. 14 to the Sales-Tax Officer (SIB) but relied on an order of 17/07/1968 made by the Commissioner of Sales-tax, Delhi appointingfour Sales-Tax Officers including Shri H. D. Birdi as assessing authorities 'in respect of the entire Union Territory of Delhi (Ward No. 1 toXXIX)'.
(8) After hearing learrned counsel for the parties, it appears to methat this contention of the petitioner cannot be sustained. Under Section 3(1) of the Local Act, for carrying out the purposes of thisAct, the Chief Commissioner may appoint a person to be Commissionerof Sales Tax, together with such other persons to 'assist him'as the Chief Commissioner thinks fit. Rule 2(f) of the Delhi Sales-Tax Rules, 1951, defines the expression 'Sales-Tax Officer' as theperson appointed by that designation by the Chief Commissioner under Section 3 of the Act to assist the Commissioner. Under Rule 88 ofthe said Rules, the power of superintendence over the administrationand the collection of the sales-tax livable under the Act is vested inthe Chief Commissioner and subject to his general control and superintendence 'the Commissioner shall control all officers empowered underthe Act'. The appointment, thereforee, of any officer as Sales-TaxOfficer by the Chief Commissioner under Section 3 of the Act doesnot confer by its own force jurisdiction on such an officer to initiateor conduct proceedings under the Act because the appointment by theChief Commissioner has to be in terms 'to assist the Commissioner'.It merely enables such an officer to exercise jurisdictiion in relation tothe Act either with reference to the territory or with reference tothe class of work which may be specifically entrusted to him by theCommissioner both by virtue of fact that he had been appointed toassist him and also because subject to the general control and superintendence of the Chief Commissioner, the area within or in relationto which the Sales-Tax Officer has to exercise jurisdiction must, thereforee, depend on the direction that may be made by the Commissionerfrom time to time. It is true that for the purpose of administrationof the Act the Union Territory of Delhi has been divided into variouswards and ordinarily there is one Sales-Tax Officer, who is empoweredto exercise jurisdiction by the Commissioner pursuant to his appointment by the Chief Commissioner to exercise jurisdiction in relationto it or to a class of cases that may either be entrusted to him. It isalso true that by virtue of the power of control and superintendenceexercised by the Commissioner any Sales-Tax Officer could be empowered to take cognizance and deal with cases relating to areas otherthan their own or of class of cases other than those being dealt withby him Such a power is implicit in the power of control and superintendence of the Commissioner. There is, however, nothing in the Actor the Rules which may derrogate from the authority of the Commissioner to empower any Sales-Tax Officer to exercise jurisdiction eitherin relation to the whole or in part of the Union Territory of Delhior in relation to the various or some of the classes of dealers. Suchan, object may be achieved by the Commissioner by transferring a caseor class of cases from one Sales-Tax Officer to another but there isnothing to prevent the Commissioner from empowering any Sales-TaxOfficer, duly appointed as such by the Chief Commissioner, to exercisejurisdiction in respect of the entire Union Territory of Delhi or in res-pect of a particular class of dealers or particular class of cases'. the order of the Commissioner of Sales-Tax made on, 17/07/1968 bywhich certain Sales-Tax Officers, including Shri H. D. Birdi, wereappointed as assessing authority in respect of the entire Union Territoryof Delhi, was made in exercise of undoubted authority of the Commissioner and, thereforee, conferred ample power on him to take seizenof any case or class of cases in respect of any ward or wards in whichthe Union Territory has been divided for giving effect to the provisionof the Act. In this view of the matter, neither an order of transfernor any order of delegation was necessary to enable Shri H. D. Birdito take seizen of the matters, which were previously being dealt with bythe Sales-Tax Officer, Ward No. 14. It is true that by an order of 17/05/1972 (Anpexure G), the revisional authority set aside thevarious assessment orders made by Shri H. D. Birdi and remanded thecases to the assessing authority, Ward No. 14 on the ground that noproper order for the transfer of the cases from the file of the Sales-TaxOfficer, Ward No. 14 to the file of the Sales-Tax Officer(SIB) for taking up proceedings under both the Acts wasissued by the Commissioner under Rule 88 of the saidRules. It is equally true that the revisional authority waspursuaded to hold that for that reason, the various assessment orderswere without jurisdiction. It is not denied that on remand the proceedings were taken by assessing authority. Ward No. 14, and the order of the revisional authority holding that Sales-Tax Officer (SIB)had no jurisdiction to deal with these cases for want of an order oftransfer from the Commissioner, was never challenged bythe Revenues and has, thereforee, become final. However, the contention that in the face of this, the respondents are not entitled to urgethat Shri H. D. Birdi had neverflieless been duly appointed by theCommissioner of Sales-tax as a Sales-Tax Officer for the entire UnionTerritory of Delhi cannot be accepted. The Revenue is not challenging the correctness of the aforesaid order nor is it seeking to have itset aside. A question has been raised by the petitioner that the proceedings taken by the Sales-Tax Officer (SIB) and the notice issued byhim were without jurisdiction. The assumption of jurisdiction by theofficer is, however, sought to be justified on the ground that the officerhad been duly empowered by a specific order to exercise jurisdictionin relation to the entire Union Territory of Delhi. No question of aproper transfer of proceedings has been raised nor is the assuming ofjurisdiction sought to be justified on the ground that there was an orderof transfer of proceedings. There is, thereforee, no conflict betweenthe contention of the respondents and the decision of the revisionalauthority. Unfortunately, however, the revisional authority did notdevote any attention to the question if there was an authorisation whichentitled the Sales-Tax Officer (SIB) to take seizen of cases irrespectiveof the ward to which they pertained, probably because the questionwas never raised. The approach of the revisional authority is clearlyerroneous in that it assumes without any legal justification as if anorder of transfer alone was capable of empowering Sales-Tax Officer(SIB) to take seizen of cases relating to Ward No 14. I am, thereforee,entitled to examine the legal position with a view to determine if thesubsequent proceedings were vitiated because the notices have beenissued by Sales-Tax Officer (SIB). There is no substance in the othercontention that assumption of jurisdiction is dependent on issue of avalid notice although in the way, I have looked at the competence ofthe Sales-Tax Officer (SIB), such a contention does not really survive.It must be pointed out that there is no statutory requirement of a noticenor is the assumption of jurisdiction dependent on the notice. Theassumption of jurisdiction clearly precedes and does not follow theissue of a notice. Issue of notices is a part of the proceedings andis a necessary condition for making a valid order of assessment. Thiscontention must, thereforee, be rejected.
(9) It is next urged that the proceedings for the assessment ofsales-tax in respect of assessment years 1962-63 to 1967-68 havingbecome barred by time by virtue of the provisions of Section 11-Aof the Local Act the notices initiating these proceedings and the proceedings threatened to be taken pursuant to these must be quashed.According to the petitioner Section 11-A of the Local Act empowersthe assessing authorities to initiate assessments and/or reassessmentproceedings, if satisfied that the turnover of the business of a dealerhad escaped assessment but such initiation can take place only If the assessing officer sends a notice 'within the period of three yearsfollowing the close of the year for which the turnover is proposedto be assessed or reassessed'. It is, thereforee, urged that when theproceedings were resumed by the Sales-Tax Officer, Ward No. 14,pursuant to the revisional order which was made on 17/05/1972,the statutory period of three years for sending notice for fresh proceedings in respect of the assessment years 1962-63 to 1967-68 hadalready expired. It was further contended that even otherwise under section ll(2a) of the Local Act, no order in respect of any of theaforesaid assessment years, except the assessment year 1968-69, couldhave been passed as the said provision lays down that even if properlyinitiated the proceedings for assessment must be completed within thestatutory period of six years from the end of the year in respect ofwhich or part of which the assessment is made. On the other hand,it was urged on behalf of the Revenues that the various proceedingshad been initiated within the time allowed by law and the same couldbe legitimately completed within six years from the end of the yearin respect of which or part of which the assessment is made and thatas the assessments were to be made in consequence of or to givean effect to an order of the revisional authority the period of sixyears has to be computed from the date of the said order as providedin the proviso to sub-section (2a) of Section 11 of the Local Actand that construed in this way the proceedings could be legitimatelycompleted within the said period as the revisional order, as a consequence of which the proceedings were resumed, was made on 17/05/1972.
(10) Section 11 of the Local Act provides for assessment of tax.Sub-section (2) of this Section provides that if, on information, theauthority is satisfied that any dealer, who is 'liable to pay tax' has'failed to get himself registered' the authority may proceed againstsuch a person. Sub-section (2a) of this Section provides for theperiod of limitation turn completing the assessment. Proviso to Subsection (2a), which was added in 1959, extends the period in casethe assessment has to be made in consequence of or to give effect toany order of an appellate or revisional order. The proviso to theSub-section runs thus :-
'PROVIDED that where such assessment is made in consequenceof or to give effect to any order of an appellate or revisional authority or of a court, the period of four yearsor six years, a,s the case may be, shall be reckoned from the date of such order.'
Section 11-A deals with assessment and re-assessment of tax andprovides that if, from information, the authority is satisfied that the'turnover of the business of a dealer has escaped assessment or hasbeen undcr-asessed in any year', the authority may 'at any timewithin the period of three years following the close of the year forwhich the turnover is proposed to be assessed or reassessed', send anotice to the dealer and make the assessment according to law. Ona plain reading of these provision it is obvious that no assessmentunder Sub-section (2a) of Section Ii can be made 'after the expiryof six years from the end of the year in respect of which or partof which' the assessment is made. Thus far there is no difficultyand if the benefit of the proviso is not available to the Revenuesin present case it necessarily follows that except the assessment in respect of the assessment year 1969-70 none of the earlier assessmentscould have been made at the material time because in all these sixyears from the end of the year in respect of which the assessmentswere to be made had admittedly expired. If, however, the benefit ofthe proviso was to be available to the Revenues in this case thenobviously the period is considerably extended because then the periodof six years has to be computed in terms of the proviso not from the end of the year in respect of which the assessment is to be madebut 'from the date of the appellate or revisional order' and the condition for the application of the proviso is that 'such assessmeht ismade in consequence of or to give effect to any order of an appellateor revisional authority or of a Court'. It is also obvious that Section 11-A of the Local Act does not apply to a case which isspecifically provided for in sub-section 2 of the Section 11, i.e. wherea dealer, who is liable to pay taxes, 'has failed to get himselfregistered'. The provision of Section 11-A is apparently applicable tocases of registered dealers in respect of whom assessment has eitherescaped notice or whose turnover has been under assessed in respectof a particular assessment year. The position that, thereforee, emergesis that if the benefit of the proviso is not available to the Revenuesin the present case assessments in respect of the period before 1968-69are barred by time and obviously could not proceed. If, however, thebenefit of the proviso is available then obviously, subject to the decision on the other questions, there would be no legal infirmity in theassessment proceedings being completed so long as they can be completed within six years from the date of the order of the revisionalauthority, which was made in 1972. The real question in controversyis, thereforee, as to the correct meaning and true scope of the provisoand in particular whether, on the facts and circumstances of this case,it could be said that the assessment sought to be made in respect ofthe relevant years would be 'in consequence of or to give effect toany order of an appellate or revisional authority or of a court'.
(11) In order to determine the true meaning and the scope of theaforesaid expressions it is necessary to examine the powers of the appellate and the revisional authority under the Local Act. Section 20 provides for appeal, revision and review and runs thus :-
'20. Any dealer may in the prescribed manner appeal to theprescribed authority against any assessment within sixtydays or such further period as may be allowed by theCommissioner for cause shown to his satisfaction from the receipt of a notice issued under sub-section (3) ofSection Ii in respect thereof:'
* * * * * (2) Subject to such rules of procedure as may be prescribed,the appellate authority in disposing of any appeal undersub-section ( I ), may -(a) confirm, reduce, enhance or annual the assessment, or ;(b) set aside the assessment and direct the assessing authority to make a fresh assessment after such furtherinquiry as may be directed.'
(3) Subject to such rules as may be prescribed and for reasonto be recorded in writing, the Commissioner upon application or of his own motion may revise any assessmentmade or order passed under this Act or the rules there under by a person appointed under section 3 to assisthim, and subject as aforesaid, the Chief Commissionermay, in like manner, revise any order passed by the Commissioner ...'
According to sub-section (2b) of the Section the appellate authoritymay set aside the assessment and direct the assessing authority 'tomake a fresh assessment after such further enquiry as may be directed'.According to sub-section 3 of the Section the Commissioner hasthe power to 'revise any assessment made or order passed underthis Act. The specific power conferred on the appellate authorityto direct the assessing authority to make a fresh assessment afterfurther enquiry has apparently not been expressly conferred on therevisional authority by the Act. This raises two questions, namely,(1) whether the revisional authority has an implied power to direct freshassessment after further enquiry, a power that is expressly conferredon the appellate authority by Section 20(2b) of the Act and (2) ifso, whether any proceedings taken by the assessing authority pursuantto the direction of the revisional authority for fresh assessment couldbe said to be 'in consequence of or to give effect to any order' of therevisional authority within the meaning of the proviso to sub-section(2a) of Section 11.
(12) As far as the power of the revisional authority under Section20(3) it is fairly well settled that a revising authority would necessarilyhave the power to make such orders as in its opinion the case callsfor once it is satisfied that it is an appropriate case for interferencein revision and the absence of some expressed provision authorisingthe authority to pass such order, as it thinks fit, would not in anymanner limit such powers. This is so because on principle whenevera power is conferred on an authority to revise an order the authoritywould be entitled to examine the correctness, legality and proprietyof an order and to pass such suitable order as the authority maythink fit in the circumstances of a particular case including an ordersetting aside the order and remanding the proceedings for fresh decision according to law. The only limitation on the power of the revisingauthority would be that it 'should not trench upon the powers whichare expressly reserved by the Act or the Rules to other authoritiesand should not ignore the limitation inherent in the exercise of thosepowers'. Reference may be made to the decision of the SupremeCourt in the cases The Swastik Oil Mills Ltd., 1968 (21) S.T.C. 383(1)and The State of Kerala, 1965 (16) S.T.C. 875. The case reliedupon on behalf of the petitioner does not appear to me to supporttheir contention. The observations of the High Court of Kerala inthe case of 0. Kassim Kaimu, 1970 (26) S.T.C. 530, which wererelied upon on behalf of the petitioner, for the proposition that thepower of the revisional authority was limited, do not appear to meto be relevant. In that case a nil assessment was sought to berevised to which the petitioner objected. The objection was over-ruled.The assessment was set aside and the Sales-Tax Officer concerned was directed to make further investigation with a viewto assess the escaped turnover. The contention was that thepower of the revisional authority could not be used to direct theassessment of escaped turnover for which a specific power is conferredon the assessing authority under a different provision under the KeralaAct and that the revisional power cannot be used to achieve The result contemplated by the use of the specific provision. The observations were made in that comtext and must be understood in the context in which they were made. There is nothing in this authority whichmay justify the conclusion that once a revisional authority is dulyseized of a matter it cannot remand a case for fresh enquiry andproper order in accordance with law. I have, thereforee, no hesitationin holding that the revisional authority had the power not only toset aside the assessment but to direct the assessing authority to makea fresh assessment after such further enquiry as may be directedby it.
(13) Whether the resumption of proceedings after the revisionalorder could be said to be in 'consequence of' or 'to give effect'to the order of the revisional authority, so as to ditract the benefitof the proviso to Sub-section (2a) of Section 11, is thenext question that must be examined. After hearing learnedcounsel for the parties, it appears to me to be obvious that the resumption of proceedings and the assessment that is to be made on thebasis thereof would be in consequence of or to give effect to the order of the revisional authority, which while setting aside the assessment, remanded the cases 'back to the appropriate assessing/notifiedauthority of ward No. 14 with the direction that he will pass freshorders in accordance with law.' The assessing authority was, thereforee,clearly under a legal obligation to comply with the direction of therevisional authority. The proceedings resumed by it are obviouslyin consequence of, as indeed, to give effect to the directon made bythe assessing authority, learned counsel for the petitioner is quitejustified in his contention that even if the revisional authority hadmerely set aside the assessment order and had refrained from makinga remand order or a direction that the assessing authority would makefresh order in accordance with law, the assessing authority wouldnevertheless be entitled, as indeed, bound, subject to the question oflimitation, to resume the assessment proceedings because what wasset aside by the revising authority was the assessment order i.e. theadjudication by the assessing authority of the liability of the petitionerand the proceedings of which cognizance had been taken by the assessing authority had been left untouched. That, to my mind, would notmake any difference because even if the revising authority had merelyset aside thassessment order, the resumed proceedings for completingassessment would still be a consequence of the revisional order. Couldthere be a fresh assessment order if the revising authority had notset aside the earlier one. The question must obviously be answeredin the negative. The fresh proceedings are, thereforee, a direct resultof the order by the revising authority and in fact any fresh proceedingsfor assessment of tax liability in respect of the assessmentorder would have been incompetent if the earlier assessment order in respect of that year had subsisted in law.It is the revisional order which caused a vacuum thatnecessitated that the assessment proceedings, which had been left untouched,should be taken to their logical conclusion by a proper assessment order in accordance with law. To hold to the contrary wouldbe to permit an assessed to challenge an assessment in successive proceedings by way of appeal, revision or review involving the revenuesin litigation, get the stay of recovery meanwhile and when the proceedings prove abortive to turn round and say that the fresh proceedings have nothing whatever to do with the appellate, revisionalor other proceedings in Court and had, thereforee, become barred bytime. This would clearly frustrate the object of the proviso and enablethe assessed to take undue advantage of raising shallow controversiesat different levels. This contention must, thereforee, fail and it mustbe held that the resumption of proceedings in the present case naturallyflowed from the order of the revisional authority setting aside theassessment.
(14) It is next contended that the assessment order made by theassessing authority on 21/02/1975 in respect of the assessmentyear 1969-70 must be set aside in that it neither deals with thevarious contentions raised by the petitioner nor gives reasons forwhich the petitioner has been held to be a dealer and be liable, tobe registered as such and to pay sales-tax on the turnover. It wasnot disputed that before the assessing authority the petitioner hadraised various contentions with regard to limitation, jurisdiction asalso on the merits whether, haying regard to the nature of the petitioner's business, it could be said that it was carrying on the businessof selling goods or that the various transactions entered into betweenthe petitioner and the advertisers could be said to be transactions ofsale so as to render the petitioner liable to be registered and to paysales-tax. It was also not disputed that the impugned order doesnot mention, much less discuss) any of these contentions save an observation that he had 'considered' that reply and 'reject the contentionthat he is not a dealer carrying on the business'. It was, thereforee.not disputed that in any event no expressed reasons had been givenin the order on the basis of which the petitioner was held to be a,dealer and it is difficult to imply any reason from the terms of thatorder. A faint attempt was, however, made on behalf of the Revenuesto justify the order on two grounds. In the first instance, it was contended that the assessing authority had been discharged from the obligation to give reasons because detailed reasons for the finding thatthe petitioner was a dealer had been set out by Shri H. D. Birdi,Sales-Tax Officer (SIB) in his order of 17/12/1969, a copyof which was enclosed Annexure X to the return, filed on behalf ofthe respondents. Now, there is no doubt that this is an elaborate order,and deals with the questions if the petitioner could be legitimatelytreated as a dealer, having regard to the nature of its business, butthere is, however, a fallacy in the argument, and the learned counselfor the respondent was not unaware of it, in that this order had eventually been set aside in revision on the ground that the assessingauthority had no jurisdiction to make the assessment. That being so,there is nothing in this order which survived for the respondent torely upon. Of course, it was open to the assessing authority, whichmade the order of 21/02/1965, to have either incorporatedthe reasons on which the order of Birdi was based in its own or tohave at least stated that the contention that the petitioner was not adealer was rejected on the ground on which he was held to be adealer in an earlier order even though it ceased to exist, assuming thatsuch an exercise could save the present order. But there is nothingin the order which may indicate the reasons on which the conclusionpurports to be based. The requirement that a judicial or quasi-judicialorder must give re'asons is not a requirement of .a, form of an orderbut is based on the principle that the incorporation of reasons for aconclusion in such proceedings would not only indicate that the authority called upon to decide a list had applied its mind to it and disclosesthe reasons which impelled it to look at the matter in the way itdid so that a further judicial review of such orders can be a meaningfulexercise. Secondly, an attempt was made to justify the impugned orderon the ground that in the absence of reasons the order did not sufferfrom any statutory infirmity which may be capable of vitiating it byits own force inasmuch as Rule 37 of the Delhi Sales Tax Rules, 1951saves an order if it suffers only from the infirmity that it fails tostate the reasons. This argument, to my mind, is based on a completemisapprehension as to the true meaning and scope of Rule 37. Rule 37reads thus:-
'EVERY order of assessment shall be recorded in writing andwhere the Assessing Authority determines the turnoverof a dealer at a figure different from that shown in thereturn submitted under the provisions of these rules, the order shall state briefly the reasons thereforee, but a failureto state reasons shall not affect the validity of the assessment order. A copy of such order shall be supplied tothe dealer free of costs.'
It enjoins the assessing authority to record the order of assessmentin writing and to state briefly the reasons thereforee if the assessingauthority determines the turnover 'at a figure different from thatshown in the return'. It contains a saving provision to the effectthat 'a failure to state reasons shall not affect thevalidity of the assessment order'. It is true that the Rule postulates that the order should be 'in writing' and the mandatory requirement to give reasons has relation to a quantification of the turnoverif it differs from the turnover claimed by the dealer and the failureto state reasons does not affect the validity of the assessment order.The Rule is, however, confined to the treatment of the question ofquantum and cannot be read as discharging the assessing authorityfrom the obligation of recording reasons for the various conclusionsthat it arrives at with regard to the various questions raised beforeit particularly those that have reference to the very jurisdiction of theauthority to make an asessment, as for example the question if aparticular person was a dealer or not. A case may involve otherquestions such as the territorial jurisdiction of the authority of thebar of limitation. In all such cases the assessing authority is boundto draw up a speaking order dealing with such contentions and incorporate in the order the reasons on which it may be based. There is,therefore, no escape from the conclusion that the impugned orderdoes not conform to the legal requirement of a quasi-judicial order,which renders it liable to be quashed.
(15) That brings me to the last contention on which there wasconsiderable controversy between the parties. According to the petitioner, it was carrying on the business as advertising consultant andin that capacity, thereforee, rendering certain expert services to theadvertisers as to the mode, form and pattern of publicity and prqjection. It is the case of the petitioner that in the course of that businessthe petitioner has to and does procure various articles and material,as indeed, other services from outside such as block making, printing,preparation of slides, hoarding, manufacturing of calendars, diariesetc. on account of and on behalf of the advertisers. The petitionercontends that the petitioner gets its commission from the variouspersons from whom such material and articles are procured or whoconstitute the media of publicity such as newspapers, cinema housesetc. and that the petitioner charges from the advertisers only for thescrvices that the petitioner renders to them in preparing designs etc.or in drawing up right-ups and if commission is not allowed to the petitioner by the various suppliers of articles and materials. It is,therefore, the contention of the petitioner that it is merely selling itsexpert services and merely because as a result of those services newproducts are procured for the advertisers through various sources, itcould not be said that the petitioner is selling those articles or materialor the finished goods, out of which they are made, to the advertisereven though the petitioner admittedly buys the articles and materialof which the finished goods are ultimately composed of but only as anagent of the advertisers. The petitioner further contends that theproperty in the finished goods or article at no stage passes either tothe petitioner or is passed from the petitioner to the advertiser becausethe payments for the material and articles, as indeed, the servicesprocured for the advertiser through the petitioner are paid for bythe advertiser and the petitioner does not charge any margin of hisown besides the charges for its services. The petitioner, thereforee,contends that it could not be said that the petitioner was selling anygoods or was carrying on the business of selling of goods within themeaning of the Local and the Central Acts so as to attract liabilityto registration as a dealer or to sales-tax on any part of its turnover.On these allegations, the petitioner invites this Court to examine the-nature of the petitioner's business, the pattern in which it is carriedon, the normal practice obtaining in that behalf in the advertisingagency profession, the system of maintenance of accountsindicating that the material and articles are purchasedby the petitioner on behalf of the advertiser and paid for on theirbehalf and to hold that the petitioner could not be said to be carryingon any business of selling goods for even buying goods on his ownaccount and that the petitioner would, thereforee, not be liable to beregistered as a dealer in relation to the turnover of the petitioner inits advertising consultant business. On the other hand, the learnedcounsel for the Revenues contends that the question whether the petitioner was carrying on the business of selling goods or had duripgthe assessment year concerned in fact produced and sold goodsand articles to the advertisers even while selling their services tothe advertisers was not and could not be of abstract question of lawwich could be decided by this Court without proper material. IT is further contended that such a question could not be decided in theabstract in relation to the practice that may be prevailing in theadvertising consultancy profession generally as it was to involve essential questions of facts to be decided in each case with reference toeach year on the material being placed by the petitioner even thoughin the context of the overall practice followed in the profession ofpublicity consultancy. It is, thereforee, urged on behalf of theRevenues that the broad proposition as to when was a person liableto be registered as a dealer and what constitutes the business of sellinggoods are fairly well settled and the decision in individual cases, onan application of establisher principles, is best left to the statutoryauthorities under the Act, who are both competent and fully equippedto decide these questions. Learned counsel for the parties marshelledprinciples as well as a large number of precedents in support of theirrival contentions as to the test to be applied in such cases to determineif a particular profession or business was a business of selling ofgoods and the way various courts have looked at the questions, interalia, in the context of advertising consultancy business.
(16) After hearing the learned counsel for the parties it appears tome that in view of my conclusion that the proceedings for the assessment of the petitioner including the determination of the question If the petitioner was a dealer or not are not barred by time and areotherwise competent and in view of further of my conclusion thatthe assessment order of 21/02/1975 is liable to be quashed,both the questions of law as well as of fact which would be involvedin the determination of the question if the petitioner could be saidto be a dealer and be liable to be registered and to be dealt withon that basis could be more appropriately dealt with in the first instance by the special authorities constituted under the Act particularlybecause the only order in which the question was considered anddecided was held to be honest by the revisional authority, eventhough, to my mind, quite erroneously and there is, thereforee, noreasoned order in relation to any of the assessment year in questionsin which the question may have been considered and decided. Sucha question could also be more appropriately dealt with by the authorities under the Act because it involves not only a question of lawin the abstract but also an investigation into the true nature of thetransactions on the basis of the material that would be placed beforethe authorities, an exercise which obviously would not be possiblewithin the limited compass of the present proceedings. Having regardto the fact that elaborate arguments were addressed on the questionas to the practice prevalent in the profession of publicity consultantand as to the true construction and scope of the expression 'dealer'and of 'sale of goods' I was tempted to examine abstract questionlaying down the broad test to be applied in determining the liabilityto registration or to assessment of a turnover in a particular case.I am, however, inclined to resist the temptation because even on thequestions of law the authorities under the Act are entitled, as indeed,competent to hear both sides and arrive at their own conclusion inthe light of a large number of decision of various courts in Indiatouching the question and any observation that may be made by meis likely to prejudice a fair trial of the question by the authorities.
(17) For all these reasons I would quash the order of the assessingauthority dated 21/02/1975, in respect of the assessment year1969-70, and direct that the assessing authority would resume proceedings in respect of the various assessment years and decide thevarious questions in controversy after hearing the petitioner and considering the material that may be placed on the record, by an appropriate speaking order, which may facilities further judicial scrutiny.In the way I have dealt with the assessment order for the assessmentyear 1969-70, the appeal filed against it subsequent to the rule, wouldbecome infructuous and would be dealt with accordingly.The petitioner would also have his costs. Counsel's fee is assessedat Rs. 750.