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Union of India (Uoi) and ors. Vs. S.B. Gurbaksh Singh - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtDelhi High Court
Decided On
Case NumberL.P.A. No. 65 of 1969
Judge
Reported in[1974]33STC91(Delhi)
AppellantUnion of India (Uoi) and ors.
RespondentS.B. Gurbaksh Singh
Appellant Advocate L.N. Sinha, Solicitor-General, S.S. Chadha; and P.N. Sethi, Advs
Respondent Advocate Amir Chand Chawla and Randhir Chawla ; and Geeta Arora, Advs.
DispositionAppeal allowed
Cases ReferredState of Kerala v. K.M. Cheria Abdulla and Company
Excerpt:
.....for passing an assessment order. that provision visualises an appeal under section 20(1) to the appellate authority and further revision under sub-section (3). clearly, such an appeal may be heard after the period of four years prescribed in section 11 (2a) has expired. the first contention urged on behalf of the state of orissa is that the high court is wrong in holding that an order of assessment of the revising authority is necessarily one made under section 12(7). the power of revision granted by section 23(3) is clearly a distinct and separate power from the power to assess after calling for a return in case of under-assessment or escaped assessment. 460-d of 1960. that being so, both the revisional order dated 24th september, 1960, as well as the fresh assessment order were..........11 (2a) has expired. for instance, if the final assessment is made towards the end of the four years' period mentioned in section 11(2a), the appeal is likely to be heard after that period has expired. if the restriction of four years applies also to the appellate authority, it would not be able to exercise jurisdiction at all. subsection (2) of section 20 sets out the power of the appellate authority. it may confirm, reduce, enhance or annul the assessment or set aside the assessment and direct a fresh assessment. any order passed by the appellate authority will necessarily result in a fresh assessment order. there is nothing in the section to restrict the time to be taken by the appellate authority in disposing of the appeal. if the respondent's contention is correct, then no.....
Judgment:

D.K. Kapur, J.

1. M/s. S.B. Gurbaksh Singh, the respondent in this appeal, is a building contractor who is also a registered dealer under the provisions of the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi. The respondent was assessed for the assessment year 1955-56, per assessment order dated 23rd November, 1959, passed by the Sales Tax Officer. The respondent appealed to challenge a part of the assessment on the ground that the assessment order was barred by time in respect of the first two quarters of the year. The Assistant Commissioner accepted this contention in appeal and remanded the case to the Sales Tax Officer to make a fresh assessment only with respect to the third and fourth quarters of the year in question. In exercise of his revisional powers, the Commissioner of Sales Tax suo molu set aside the Assistant Commissioner's order on 29th July, 1960, after notice to the respondent. Acting on this order, the Sales Tax Officer framed a fresh assessment against the respondent on 24th September, 1960, and on that basis made a demand for Rs. 3,202.47 as sales tax. This led the respondent to challenge the proceedings by way of two writ petitions in the Circuit Bench of the Punjab High Court at Delhi.

2. By way of Civil Writ Petition No. 388-D of 1960 the revisional order of the Commissioner of Sales Tax was challenged and by way of Civil Writ Petition No. 460-D of 1960, the consequential assessment made by the Sales Tax Officer and the demand created thereby was challenged. These two writ petitions were eventually accepted by a learned single Judge (Hardy, J., as he then was) on 2nd April, 1969. The order of the Commissioner of Sales Tax exercising revisional powers was quashed on the ground that he could not exercise those powers beyond four years of the end of the assessment year in question, i. e., the last date for passing the revisional order was held to be 31st March, 1960. Consequently, the other writ petition was also accepted and the consequential assessment made by the Sales Tax Officer was quashed. The Union of India being aggrieved has now come before us in appeal under clause 10 of the Letters Patent read with Section 10 of the Delhi High Court Act, 1966. The only question which requires our decision in this appeal is, whether there is in fact a time-limit for passing a revisional order under Section 20(3) of the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi.

3. The only provision of the Act which imposes any time-limit on assessments is Sub-section (2a) of Section 11 of the Act. That Sub-section, amended in 1959, reads as follows:

No assessment under Sub-section (1) shall be made after the expiry of four years and no assessment under Sub-section (2) shall be made after the expiry of six years from the end of the year in respect of which or part of which the assessment is made:

Provided that where such assessment is made in consequence of or to give effect to any order of an appellate or revisional authority or of a court, the period of four years or six years, as the case may be, shall be reckoned from the date of such order.

4. The proviso to this sub-section did not exist in 1959.

5. In Sir Sobha Singh and Company v. Commissioner of Sales Tax, Delhi [1966] 18 S.T.C. 416., S.K. Kapur, J., while sitting as a Judge of the Punjab High Court, held that the time-limit prescribed by this sub-section governed even orders passed in revision under Section 20(3) of the Act. However, he did say that he was reading the section without the proviso because, in that case, the revisional power had been exercised before the proviso had been introduced. He relied particularly on State of Orissa v. Debaki Debi : [1964]5SCR253 , decided by the Supreme Court. Both these judgments were relied upon by the learned single Judge in support of the judgment under appeal. It was held that the proviso, which had been introduced in 1959, only allowed a further period for the assessing authority to pass an order, but did not affect the period during which the revisional power itself had to be exercised. In other words, it was held that the revisional order had to be passed within the period of four years from the end of the assessment year, as held by S.K. Kapur, J., but on remand, the assessing authority could utilise the time allowed in the proviso to make, its consequential order of assessment. Thus, if the revisional order had been passed in the present case on or before 31st March, 1960, the Sales Tax Officer could have taken advantage of the proviso to make the order of assessment. Thus, the only question we have now to deal with is, whether there is in fact a time-limit for passing a revisional order under Section 20(3) of the Act.

6. Mr. Lal Narain Sinha, Solicitor-General, has urged that the decision of the Supreme Court in State of Orissa, v. Debaki Debi : [1964]5SCR253 , must be restricted in its operation to the special circumstances of that case. The provisions, which were in question there, were those of the Orissa Sales Tax Act, 1947. The main provision of that Act, which was the subject-matter of the decision, was the second proviso to Section 12(6) of the Act. That sub-section can conveniently be reproduced here:

(6) Any assessment made under this section shall be without prejudice to any prosecution instituted for an offence under this Act:

Provided that when the Collector has imposed a penalty in addition to the amount assessed under this section, no further proceedings either revenue or criminal shall be taken against the dealer:

Provided further that no order assessing the amount of tax due from a dealer in respect of any period shall be passed later than thirty-six months from the expiry of such period.

7. It is noticeable that the second proviso does specify that there is a time-limit for making an assessment, and that that time-limit is 36 months from the expiry of the period. It was held by the court (Sarkar, J., dissenting) that this proviso was of general application and should be read as a separate restriction on the right to make an assessment, which applied to every state of the proceedings. Thus, not only was the assessing authority bound to make the assessment within 36 months, but the appellate and revisional authorities were also obliged to pass orders within that period. On this reasoning, the court held that the revisional authority was also bound to pass its order within the period of 36 months.

8. Subsequently, in the same judgment, the court dealt with the State's contention that this restriction of 36 months only applied to the assessing authority and not to the appellate or revisional authority and concluded that even if this were so, the power of the appellate and revisional courts to assess, was also to be found on the same provision, namely, Section 12 of the Act and, hence the period specified governed those authorities also. It is convenient to reproduce the language of the court:

The result would thus be that the appellate authority could pass an order setting aside the assessment at any time, but the assessing authority cannot give effect to the order to make a fresh assessment if by that date three-year period is past.... In other words, if the construction suggested by the appellant were accepted, we would have the anomalous situation that if the appellate authority set aside the assessment and remanded it for fresh orders, no fresh assessment can be done, but that if instead of so doing, he himself effected the same reassessment, there would be no bar of limitation.

9. This position the court could not accept and thus, the court virtually decided the case on the ground that the original assessing authority could not pass an assessment order after 36 months in the case of a remand, and so it followed that the revisional authority, which had the power of making that remand, could also not pass its revisional order altering the assessment after the period of 36 months was over.

10. It is stressed by the learned counsel for the appellant that the language of Section 11 (2a) is very different from the language of Section 12(6). It is particularly mentioned that no order under Section 11(1) can be passed after the prescribed period of 4 years. Thus, the limit of period being specified and for specific purposes, cannot be transported and attached to some other provisions of the Act like Section 20, which deals with the appellate and revisional powers. It is pointed out that it is not essential that there should be a period of limitation. It is for the statute to fix a limitation or leave it open to the officer concerned to exercise the revisional power whenever it likes. On the other hand, counsel for the respondent stresses that the power to assess which is exercised by the appellate and revisional authorities is also exercised under Section 11(1) of the Act, and not under Section 20. For this purpose reliance is placed on the aforementioned decision in Debaki Debi's case : [1964]5SCR253 .

11. We have also been referred to Swastik Oil Mills Ltd. v. H.B. Munshi, Deputy Commissioner of Sales Tax, Bombay : [1968]2SCR492 , which was a judgment delivered by the Supreme Court in respect of the revisional powers under the Bombay Sales Tax Act. On a construction of the Bombay Act, it was found that there was no provision in that Act limiting the period in which revisional powers had to be exercised. The aforementioned decision in Debaki Debi's case : [1964]5SCR253 , was distinguished on the ground that in the Orissa Sales Tax Act, there was a proviso in general terms laying down a time-limit for assessments which applied even to revisional orders. The court referred to the earlier decision of the Supreme Court in State of Kerala v. K.M. Cheria Abdulla and Company : [1965]1SCR601 , which was a decision in respect of the revisional powers under the Madras General Sales Tax Act, 1939. In that case, the court had held that the revisional powers had to be exercised consistently with the powers granted by the Act to other authorities, and the revisional authority could not encroach upon the authority granted to others.

12. In our view, the three decisions of the Supreme Court referred to were really concerned with the express language of the Sales Tax Acts in question. In each one of these Acts, the revisional power was of the same type as is exercisable in the present case under the provisions of Section 20(3) of the Bengal Finance (Sales Tax) Act, 1941, as in force in Delhi. The power of revision is the same, but the provisions regarding limitation, particularly regarding revisional power, are different in the four Acts. In the Orissa case, the provisions of Section 12 contained a time-limit for passing an order of assessment. It was held in Debaki Debi's case : [1964]5SCR253 , aforementioned, that that limitation of time extended also to the appellate as well as revisional authorities. There was no such time-limit in the other two Acts. In the Sales Tax Act now in question, no general provision of the type to be found in the Orissa Act exists. The proviso to Section 11 (2a) clearly shows that after remand, there is a fresh period of limitation for passing an assessment order. The starting point of that period is the date of the order of remand. It is inherent in this provision that a fresh assessment made consequent to an appellate or revisional order has almost necessarily to be passed on some date after the four-year period allowed for the initial order has expired. To illustrate the case, the original assessment can be made within a period of four years from the end of the year in question, i. e., the original assessment in the present case could be made up to 31st March, 1960. An appeal or revision against such an order would have to be instituted under Section 20 of the Act. That provision visualises an appeal under Section 20(1) to the appellate authority and further revision under Sub-section (3). Clearly, such an appeal may be heard after the period of four years prescribed in Section 11 (2a) has expired. For instance, if the final assessment is made towards the end of the four years' period mentioned in Section 11(2a), the appeal is likely to be heard after that period has expired. If the restriction of four years applies also to the appellate authority, it would not be able to exercise jurisdiction at all. Subsection (2) of Section 20 sets out the power of the appellate authority. It may confirm, reduce, enhance or annul the assessment or set aside the assessment and direct a fresh assessment. Any order passed by the appellate authority will necessarily result in a fresh assessment order. There is nothing in the section to restrict the time to be taken by the appellate authority in disposing of the appeal. If the respondent's contention is correct, then no appeal can be heard after four years; as no effective order modifying the assessment can be passed after four years. If that is so, the assessing authority, i. e., the Sales Tax Officer acting under Section 11 can nullify the right of appeal by merely delaying the assessment to the end of the four-year period allowed to him. This is a consequence which has to be avoided if possible. The only way to do so is to treat the time-limit mentioned in Section 11 (2a) as only applying to the assessing authority. This also appears to be the clear intention of the statute from the language appearing in the sub-section and its proviso.

13. Against the appellate order, there is a further revision to the Commissioner of Sales Tax and a still further reference to the Chief Commissioner (now Financial Commissioner), i. e., the Act visualises two further revisions. After the final revisional order, the Act visualises a reference to the High Court, under Section 21 of the Act, similar in nature to a reference to the High Court under the Income-tax Act. Section 21(7) of the Act states that the amount of tax payable in accordance with the order of the Chief Commissioner will not be stayed pending the disposal of a reference, but if the tax is reduced as a result of the reference, the excess tax shall be refunded. Similarly, Section 12 of the Act visualises a refund of the excess tax, if the quantum of tax is reduced in appeal or revision. thereforee, the result of a reference may also be a. fresh assessment. All this cannot take place within four years of the end of the year in question.

14. In Debaki Debi's case : [1964]5SCR253 , there is an observation that the appellate and revisional authorities also exercise the same power of assessment that is exercisable by the original authority and no other power is to be found in the Act. This remark must be restricted in application to the special circumstances of the Orissa Act; otherwise, the appellate and revisional powers under Section 20 will become illusory and dependent on the date on which the original assessment is made which is a result which could not have been contemplated by the Legislature.

15. There is another passage in Debaki Debi's case : [1964]5SCR253 , which seems to help the appellant, which reads:

The first contention urged on behalf of the State of Orissa is that the High Court is wrong in holding that an order of assessment of the revising authority is necessarily one made under Section 12(7). The power of revision granted by Section 23(3) is clearly a distinct and separate power from the power to assess after calling for a return in case of under-assessment or escaped assessment. The mere fact that in a particular case the revising authority has by a fresh order of assessment made the dealer liable for tax in respect of which he can be said to have been under-assessed or to have escaped assessment does not make the two powers one and the same. We thereforee find it difficult to agree with the High Court that Section 12(7) includes also the reassessment made by the revising authority under Section 23(3).

16. Even if the rule laid down in Debaki Debi's case : [1964]5SCR253 , is applied to the present facts, there does not seem to be a time-limit of four years for passing the order actually passed in this case. Let me assume that the four-year limitation to make an assessment applied even to the revisional authority. In the present case, the Commissioner of Sales Tax has not passed an order of assessment. He has merely directed a fresh assessment. The provisions of Sub-section (2a) of Section 11 do not say that an order of remand cannot be passed after four years. As far as a fresh assessment by the original authority is concerned, the proviso to Section 11 (2a) brings in a fresh period of four years starting from the date of the order of remand. That period had admittedly not expired when the Sales Tax Officer passed the fresh order of assessment which is the subject-matter of Civil Writ Petition No. 460-D of 1960. That being so, both the revisional order dated 24th September, 1960, as well as the fresh assessment order were passed within the time allowed by law. Consequently, this appeal has to succeed and the judgment of the learned single Judge granting these two writ petitions reversed. The said writ petitions are consequently dismissed. The parties are left to bear their own costs.


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