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Sales Tax Commissioner and ors. Vs. Harbans Motor Stores and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtDelhi High Court
Decided On
Case NumberL.P.A. No. 34 of 1973
Judge
Reported in[1976]37STC67(Delhi)
AppellantSales Tax Commissioner and ors.
RespondentHarbans Motor Stores and ors.
Appellant Advocate Wazir Singh and ; Harish Chander, Advs
Respondent Advocate K.B. Rohtagi, Adv.
Cases ReferredUnion of India v. S.B. Gurbaksh Singh
Excerpt:
.....that the turnover of business of the dealer has escaped assessment, and (ii) that it is in consequence of definite 'information' which has come in his possession that he has reason to be so satisfied. [1969]74itr107(cal) 'still remains a rich germinating ground for forensic arguments'.different views have been expressed by the supreme court and different high courts on this point. again, the information on which the commissioner is to be satisfied that any turnover chargeable to tax has escaped assessment must be based on the information which he receives subsequent to the assessment order in order to confer upon him the jurisdiction to initiate proceedings under that section. the power under section 11a can be exercised only if the conditions mentioned therein are satisfied..........patent, on behalf of the commissioner of sales tax and three others against the judgment of the. learned single judge of this court, dated 27th september, 1972, passed in c.w. no. 285 of 1970.2. before the learned single judge a notice dated 10th march, 1970 (annexure e to the writ petition) purporting to have been issued under section 20(3) of the bengal finance (sales tax) act, 1941 (hereinafter referred to as the act), was challenged on the ground that it was barred by time.3. the learned single judge felt bound by the previous decision of this court in the case of s.b. gurbaksh singh v. commissioner of sales tax, delh civil writs nos. 388-d and 460-d of 1960 decided on 2nd april, 1969 (delhi high court), delivered by hardy, j., and accepted the writ petition and held that the.....
Judgment:

Yogeshwar Dayal, J.

1. This is an appeal filed under Clause 10 of the Letters Patent, on behalf of the Commissioner of Sales Tax and three others against the judgment of the. learned single Judge of this Court, dated 27th September, 1972, passed in C.W. No. 285 of 1970.

2. Before the learned single Judge a notice dated 10th March, 1970 (annexure E to the writ petition) purporting to have been issued under Section 20(3) of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the Act), was challenged on the ground that it was barred by time.

3. The learned single Judge felt bound by the previous decision of this Court in the case of S.B. Gurbaksh Singh v. Commissioner of Sales Tax, Delh Civil Writs Nos. 388-D and 460-D of 1960 decided on 2nd April, 1969 (Delhi High Court), delivered by Hardy, J., and accepted the writ petition and held that the aforesaid notice issued by the Assistant Commissioner, Sales Tax, has to be held invalid after 31st March, 1970. The assessment year in question was the year 1965-66 ending on 31st March, 1966, and, thereforee, four years from the end of the period of assessment would expire on 31st March, 1970. In view of the decision given in the case of S.B. Gurbaksh Singh Civil Writs Nos. 388-D and 460-D of 1960 decided on 2nd April, 1969 (Delhi High Court), the learned single Judge held that the period of limitation prescribed for assessment under Section 11(2a) of the Act was also applicable to any order of assessment being passed in the exercise of revisional jurisdiction under Section 20(3) of the Act. Since the period as prescribed under Section 11(2a) would expire on 30th March, 1970, and the assessment was not made by then, the notice had become invalid with effect from 31st March, 1970.

4. The case on which the learned single Judge had relied for his decision itself came up in appeal before Ansari and Kapur, JJ., vide Union of India v. S.B. Gurbaksh Singh [1974] 33 S.T.C. 91, and the Division Bench held that there is no time-limit for passing a revisional order under Section 20(3) of Act. The Division Bench held that the time-limit mentioned in Section 11(2a) is to be treated as only applying to the assessing authority while making assessments under Section 11(1) and/or Section 11(2). The Division Bench accordingly overruled the decision of the learned single Judge given in the case of S.B. Gurbaksh Singh Civil Writs Nos. 388-D and 460-D of 1960 decided on 2nd April, 1969 (Delhi High Court) with the result that the very basis of the order of the learned single Judge disappears and it must be held that there is no period of limitation for the purposes of exercising powers of suo moto revision by the Commissioner of Sales Tax under Sub-section (3) of Section 20 of the Act.

5. The learned Counsel appearing for the respondent conceded that the appeal will have to be accepted as the decision of this Court in the case of S.B. Gurbaksh Singh Civil Writs Nos. 388-D and 460-D of 1960 decided on 2nd April, 1969 (Delhi High Court) has been reversed by the Division Bench of this Court. The learned Counsel for the respondent however, made the following two additional submissions to support the order of the learned single Judge:

(i) that notice dated 10th March, 1970, is a notice for revision of the order of assessment and is barred by Rule 66 of the Delhi Sales Tax Rules, 1951.

(ii) that the notice amounts to a notice of assessment and reassessment of tax under Section 11A of the Act and the same having been issued beyond the period of limitation prescribed therein, it is barred by time.

6. These two points were taken in the writ petition but were not urged before the single Bench as the learned single Judge had accepted the contention based on the decision Civil Writs Nos. 388-D and 460-D of 1960 decided on 2nd April, 1969 (Delhi High Court) of Hardy, J., mentioned earlier. But since that contention has been negatived by us, in the normal course we would have remanded the matter for reconsideration by the learned single Judge on these two points, but on the facts of the case, since no question of fact is involved, we thought it fit to decide these two submissions even at this stage.

7. So far as the first submission is concerned, it may be noticed that Sub-section (3) of Section 20 of the Act contemplates revisional jurisdiction being exercised by the Commissioner either upon an application or of his own motion. The revisional jurisdiction in both the cases has been made subject to such rules as may be prescribed. The only relevant rule relied upon in the present case is Sub-rule (2) of Rule 66 of the Delhi Sales Tax Rules, 1951, which provides as under:

66. (2) No application for review...and no application for revision for an order shall be entertained unless it is presented within sixty days from the date of such communication.

Provided that....

8. It was submitted by the learned Counsel for the respondent that this period of sixty days is also applicable to a suo moto revision as contemplated by Sub-section (3) of Section 20 of the Act. We are afraid we cannot agree with this submission. As noticed by us earlier, there are two contingencies for revisional jurisdiction being exercised by the Commissioner as contemplated by Sub-section (3) of Section 20. One is on the application by either party --the assessed or the department, etc.; and the other, suo motu by the Commissioner. The limitation which has been prescribed by Sub-rule (2) of Rule 66 of the Delhi Sales Tax Rules, 1951, is only applicable where the revisional jurisdiction of the Commissioner is invoked by an application by either an assessed or the assessing authority. What is material for the applicability of Sub-rule (2) of Rule 66 is that the Commissioner does not suo motu exercise his powers. As regards suo motu exercise of powers of revision of the Commissioner, that is not subject to any rule of limitation. This contention thereforee fails.

9. So far as the second contention that notice amounts to a notice of assessment and reassessment of tax as contemplated by Section 11A of the Act is concerned, it is necessary to reproduce below the relevant part of Section 11A. '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....'

10. It will be noticed that the conditions which invest the Commissioner with jurisdiction under this section has two branches:

(i) that the Commissioner is satisfied that the turnover of business of the dealer has escaped assessment, and

(ii) that it is in consequence of definite 'information' which has come in his possession that he has reason to be so satisfied.

11. What constitutes 'information' within the meaning of Section 11A had been a vexed question and to borrow the words of Banerjee, J., in the case of Commissioner of Income-tax v. Kalyanji Mavji and Co. : [1969]74ITR107(Cal) 'still remains a rich germinating ground for forensic arguments'. Different views have been expressed by the Supreme Court and different High Courts on this point. But the question so far as it is material to us is concluded by the decision of the Supreme Court in the case of Commissioner of Income-tax v. A. Raman and Co. : [1968]67ITR11(SC) The expression 'information' in the context in which it occurs must, in our judgment, mean instruction or knowledge derived from external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. Section 11A of the Act is substantially similar to Section 34(1)(b) of the Income-tax Act, 1922, and Section 147(b) of the Income-tax Act, 1961. Dealing with Section 147(b) of the Income-tax Act, 1961, the Supreme Court speaking through Shah, J., in the case of Commissioner of Income-tax v. A. Raman and Co. : [1968]67ITR11(SC) held that the information contemplated by Sub-section (b) of Section 147 must involve an external source. Same reasoning should apply here for seeing whether Section 11A is applicable to the impugned notice. Again, the information on which the Commissioner is to be satisfied that any turnover chargeable to tax has escaped assessment must be based on the information which he receives subsequent to the assessment order in order to confer upon him the jurisdiction to initiate proceedings under that section. Where information regarding certain turnover, which was not charged to tax, was already in the records and the assessing authority and the Commissioner knew about it and there being no subsequent external information, applicability of Section 11A of the Act does not arise to reassess the dealer on that turnover. It is clear from the words of the notice that it was a case of mere difference of opinion about the chargeability of certain turnover to tax on the existing material without there being any information derived externally, and the notice is not based on any subsequent information or external information as contemplated by Section 11A. Change of opinion based on instruction or knowledge obtained by the Commissioner subsequent to the completion of original assessment regarding the correct position of law may, however, entitle the Commissioner to reopen the assessment under Section 11A of the Act in certain circumstances.

12. The impugned notice has been expressly sent by the Assistant Commissioner, Sales Tax, under Sub-section (3) of Section 20 of the Act. The grounds for suo motu revision have been stated thus in the impugned notice:

Whereas you have been assessed to sales tax under the Bengal Finance (Sales Tax) Act as extended to the Union Territory of Delhi for the year 1965-66 by Shri T.D. Sharma: vide his order dated 22nd November, 1966.

And whereas the aforesaid order is erroneous inasmuch as you have wrongly allowed exemption for the sales of tyres and tubes.

And whereas you should have been treated an importer or manufacturer within the meaning of Notification No. F. 4(33)/64 Fin. (E) dated 30th June, 1965, for the sales of tyres and tubes made by you because these tyres and tubes were obtained after dismantling vehicles purchased against local registration certificate or otherwise and had thereforee not suffered local tax.

13. It is also clear from the assessment order passed by the Sales Tax Officer that the dealer had claimed exemptions on account of sales of tyres and tubes,

14. These exemptions were apparently allowed as the respondent was not treated as importer or manufacturer by the assessing authority within the meaning of the notification mentioned in the notice. All this material was already on the record of the assessing authority. The Assistant Commissioner, who sent the notice, took the view that on that material the dealers were not entitled to claim the exemptions. The averments in the notice as to the ground for exercising suo motu powers of revision do not show any 'externality of information', as contemplated by Section 11A of the Act.

15. The power of revision conferred on the Commissioner under Sub-section (3) of Section 20 of the Act is much wider than the power of reopening assessment under Section 11A. The power under Section 11A can be exercised only if the conditions mentioned therein are satisfied whereas the power of revision suo motu or on an application is much wider and is subject only to the rules, if any.

16. Under the First Schedule of the Delhi Sales Tax Rules, 1951, the power of assessment and reassessment under Section 11 and Section 11A of the Act can be delegated to the Sales Tax Officers, whereas the power of revision of an assessment or orders passed by the Sales Tax Officers can be delegated by the Commissioner only to an officer who is not below the rank of Assistant Commissioner. By its very nature, power under Sub-section (3) of Section 20 of the Act is supervisory over the actions of subordinate officers while the power under Section 11A of reassessment can be exercised by the same officer who passed the order of assessment under Section 11 of the Act. Since the power under Section 11A is in the nature of review and can be exercised by the same officer who passed the order of assessment as per the Rules made under this Act, the legislature has rightly prescribed certain conditions precedent before the power can be exercised. The power of revision is not by way of review; it is by way of superintendence of the order of assessment and other orders passed by the assessing authority. The power has been conferred and can be delegated to the Assistant Commissioner, an authority higher than the Sales Tax Officers, the normal assessing authority.

17. The impugned notice states that the order of assessment which was sought to be revised was erroneous. Even further details why it was considered to be erroneous were also mentioned. The notice is thus in accordance with Sub-section (3) of Section 20 of the Act and does not suffer from any vice whatsoever. thereforee, this contention urged on behalf of the respondents also fails.

18. The result is that this appeal is accepted and the order of the learned single Judge, dated 27th September, 1972, is set aside and the writ petition is accordingly dismissed.

19. The parties, however, will bear their own costs.


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