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The State of Madras Vs. M.P.V. Sundararamier and Company - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberWrit Appeals Nos. 32 to 36 of 1963
Judge
Reported in[1966]18STC516(Mad)
AppellantThe State of Madras
RespondentM.P.V. Sundararamier and Company
Appellant AdvocateV. Ramaswami, Additional Government Pleader
Respondent AdvocateM.K. Nambiar, Adv. for ;N. Srinivasan, Adv.
DispositionAppeal dismissed
Excerpt:
.....revisional power under section 12 of the act that was exercised by the board. in like manner, the deputy commissioner and the board of revenue are incompetent to exercise suo motu powers of revision beyond a period of four years from the date referred to. in the case of a revision on application by the assessee, such an application shall be preferred within 60 days from the date of communication of the order or proceeding sought to be revised, and the proviso to sub-section (5) enables the authority to admit an application after the period of 60 days, if the authority is satisfied that the applicant had sufficient cause for not preferring the application within that period. it seems to us that this argument is well-founded. the fact that the assessments in these cases were revised under..........that might be passed or a proceeding recorded by the next lower authority to the board, viz., the deputy commissioner of sales tax. lastly, it is contended that the relief granted to the respondents was purely of an ex gratia nature and that in those circumstances, the respondents are not entitled to ask for a greater relief than what the authorities purported to grant.7. the petition addressed by the dealers to the board of revenue sets out the facts and points out that by mistake certain sales and transfers of yarn from the headquarters to the branches had been included in the returns and that transactions which were not taxable had been taxed. the dealers also point out that this mistake was discovered in april, 1956, and by reason of this late discovery, the dealers were not in a.....
Judgment:

K. Srinivasan, J.

1. These appeals are directed against the judgment of Veeraswami, J., rendered in applications under Article 226. The matter arises thus. The respondent-company are dealers in cotton yarn, carrying on business with headquarters at Madras and branches in Madurai and Coimbatore. The yarn in which they deal consists of yarn purchased locally as well as imported. For five assessment years 1948-49, 1949-50, 1950-51, 1951-52 and 1953-54, they submitted returns and were assessed to sales tax on those returns. Now, it appears that at the time of the preparation of the appeal memorandum in connection with the order of assessment for 1954-55, the dealers discovered that their returns for the years in question were erroneous, in that in the categories of sales that were brought to tax, the sales of yarn purchased by them locally as well as the transfer of cotton yarn from headquarters to the branches were included. It is not in dispute that sale of cotton yarn is taxable at a single point at the stage of the first sale. The first category of local purchases were accordingly second sales. The transfers of cotton yarn from the headquarters to the branches involved no sale transaction at all. The dealers had, nevertheless, been charged to tax in respect of these two categories of transactions, no doubt, based on their own erroneous returns. On the discover)' of this fact, the respondents made an application to the Board of Revenue. They pointed out that the inclusion of these transactions was an accidental error, that this inclusion was discovered only in April, 1956, and that, since the payment of the tax in this regard was the result of a mistake and the dealers were not. in a position to claim refund by way of appeal or otherwise, they sought the exercise of the powers of the Board of Revenue to examine the matter and direct a refund of the tax paid in excess. In the annexures to the petition, the full details were furnished. The Board examined the petition and accepted the validity of the contention of the petitioners, but, nevertheless, thought that the refund of excess tax should be limited to a period of three years prior to the date of the petition. That was in respect of transfers of yarn from headquarters to the branches. With regard to the sales of yarn purchased locally, the Board took the vie that the accounts of the respondents-dealers did not disclose full details, so that the turnover which related to the second or subsequent sales could be arrived at. The refund of tax in this regard was refused. Actually the Board made recommendations with regard to the refund of tax to the Government, which accepted the views of the Board. The Board directed the Commercial Tax Officer to revise the assessments for the relevant years suitably to these conclusions.

2. The respondents filed a further petition before the Board of Revenue. The result was that the respondents succeeded with regard to the local purchases in respect of the years 1952-53 and 1953-54.

3. The writ petitions were filed seeking a direction of this Court to the State Government to grant a refund in respect of the claim which had been disallowed by the Board and the Government.

4. Before the learned Judge, the State of Madras contested the petitions and claimed that the orders made in this connection were not orders made in the exercise of the revisional jurisdiction of the Board under Section 12 of the Madras General Sales Tax Act, 1939. It was urged that such a petition would not lie at all and that, in fact, the application made by the respondents was not treated as a revision application corning under Section 12 of the Act. It was claimed on behalf of the State that it was more in the nature of ex gratia relief that was granted by the concerned authorities and in such an event an application under Article 226 could not be maintained. Veeraswami, J., examined the scope and content of Section 12 of the Madras General Sales Tax Act and came to the conclusion that the revisional jurisdiction of the Board of Revenue was very wide and could be exercised against the orders and proceedings of any of its subordinate officers and that though the Board and the Government did not purport to act under any particular provision of law, it was clearly the revisional power under Section 12 of the Act that was exercised by the Board. It was patent from the fact that the Board gave partial relief to the respondents that the Board excused the delay caused in the making of the application under Section 12. Rejecting the contention of the State that the matter was not one which came within the scope of Section 12 of the Act, the learned Judge allowed the petitions.

5. The State appeals.

6. Before us also, the same argument has been advanced. Firstly, it is claimed that it was not an application under Section 12 of the Act that the respondent-dealer filed. It is even urged that under Section 12(3) of the Act, which confers a power of revision upon the Board, the power is not exercisable against the order of the assessing authority but only against any order that might be passed or a proceeding recorded by the next lower authority to the Board, viz., the Deputy Commissioner of Sales Tax. Lastly, it is contended that the relief granted to the respondents was purely of an ex gratia nature and that in those circumstances, the respondents are not entitled to ask for a greater relief than what the authorities purported to grant.

7. The petition addressed by the dealers to the Board of Revenue sets out the facts and points out that by mistake certain sales and transfers of yarn from the headquarters to the branches had been included in the returns and that transactions which were not taxable had been taxed. The dealers also point out that this mistake was discovered in April, 1956, and by reason of this late discovery, the dealers were not in a position to claim refund by way of appeal or otherwise. The petition concluded thus :

It is necessary in the interests of justice that the authorities may be pleased to look into the matter and direct a refund of such tax overpaid.

8. It seems to us clear that though the petition was not so worded, it was an application intended to invoke the revisional jurisdiction of the Board, and sufficient material had been furnished to induce the Board to excuse the delay caused in making the petition. Section 12 of the Madras General Sales Tax Act confers revisional powers upon the Commercial Tax Officer, the Deputy Commissioner and the Board of Revenue. The power of each of these authorities is exercisable either suo motu or on application. There are certain limitations imposed by Sub-section (4) in the case of suo motu exercise of the power. The Commercial Tax Officer cannot exercise suo motu power of revision beyond a period of three years from the date on which the order sought to be revised was communicated to the assessee. In like manner, the Deputy Commissioner and the Board of Revenue are incompetent to exercise suo motu powers of revision beyond a period of four years from the date referred to. In the case of a revision on application by the assessee, such an application shall be preferred within 60 days from the date of communication of the order or proceeding sought to be revised, and the proviso to Sub-section (5) enables the authority to admit an application after the period of 60 days, if the authority is satisfied that the applicant had sufficient cause for not preferring the application within that period. In contrast with the limitation on the exercise of a suo motu power of revision, no period within which an order can be revised on application is set down in the section. The learned Additional Government Pleader concedes that on an application for revision being admitted, the relevant authority has the power to revise the order without any limit of time. From the facts that have been set out, it is, therefore, clear that the Board of Revenue if it otherwise had the power to revise the order, could grant the prayer of the dealer in respect of any previous year and that the limitation imposed by Sub-section (4) in regard to the suo motu exercise of the power does not affect the exercise of the power of revision on an application by the assessee.

9. The contention of Mr. Ramaswami, learned Additional Government Pleader, is however, that the Board of Revenue has no power to revise the order of the assessing authority. That argument is supported by the following reasoning. Section 12 (1) empowers the Commercial Tax Officer to call for and examine the record of any order passed or proceeding recorded under the provisions of this Act by any officer subordinate to him either suo motu or on application, and pass such order with respect thereto as he thinks fit. In a case where the assessee makes an application in this regard, such an application is maintainable only in a case where an appeal does not lie to the Commercial Tax Officer from the order of such subordinate authority. Likewise, the Deputy Commissioner and the Board of Revenue are conferred suo motu powers of revision. In the case of an application made by an assessee to revise an order, the Deputy Commissioner can pass such order

in respect of any order passed or proceeding recorded by the Commercial Tax Officer under Sub-section (1) or any other provision of this Act and against which no appeal has been preferred to the Appellate Tribunal under Section 12-A.

10. In the case of similar applications, the Board of Revenue is conferred the power in respect of any order passed or proceeding recorded by the Deputy Commissioner under Sub-section (2) or any other provision of this Act and against which no appeal has been preferred to the Appellate Tribunal under Section 12-A. The Board in such a case may

call for and examine the record of any order passed or proceeding recorded under the provisions of the Act by any officer subordinate to it for the purpose of satisfying itself as to the legality or propriety of such order or as to the regularity of such proceeding and may pass such order with respect thereto as it thinks fit.

11. The learned Additional Government Pleader contends that an application can under Section 12(3)(ii) be only in respect of any order or proceeding recorded by the Deputy Commissioner under Sub-section (2) or any other provisions of the Act, and in dealing with such an application it is open to the Board to call for and examine the record of any order passed or proceeding recorded by any officer subordinate to it. It is urged that the order of any officer subordinate to the Board is generally speaking immune from the revisional jurisdiction of the Board by way of application from the assessee, except where it is called for and examined on an application made against the order passed by the Deputy Commissioner; that is to say, where a party has moved the Deputy Commissioner under Sub-section (2) of Section 12, or the Deputy Commissioner has passed an order or recorded a proceeding under any other provisions of the Act, the party may on application under Section 12(3)(ii) invoke the jurisdiction of the Revenue Board for revision thereof, and unless an application is in respect of the order of the Deputy Commissioner the Board cannot call for and examine the record of any officer subordinate to it. It is stated on this reasoning that the Board derives its jurisdiction to interfere with an order passed by any officer subordinate to it only through the avenue of an order passed by the Deputy Commissioner under certain circumstances. It is also pointed out that while the suo motu powers of the Board are unlimited, that is to say, the Board of Revenue may suo motu call for and examine the record of any order, etc., of any officer subordinate to it, when it seeks to exercise its powers of revision on application, it can do so only in respect of any order passed or proceeding recorded by the Deputy Commissioner and in doing so, it is enabled to call for and examine the record of any order passed by any officer subordinate to it. This contention did not, however, find favour with the learned Judge. The learned Judge observed that the ambit and content of the power of revision contained in the latter part of Sub-section (3) is common to both cases of suo motu revision and revision on application. While the scheme of Sub-sections (1) to (3) appears to suggest a revision from the order of one authority to the next superior authority, that is to say, from the Deputy Commercial Tax Officer to the Commercial Tax Officer, from the Commercial Tax Officer to the Deputy Commissioner and from the Deputy Commissioner to the Board of Revenue, this feature did not, in the opinion of the learned Judge, limit the wide ambit of the revisional power of the highest authority, the Board of Revenue, against the orders or proceedings of any of its subordinate officers. In effect, the learned Judge read this part of the relevant provision in this manner:

The Board of Revenue may (i) in respect of any order passed or proceeding recorded by the Deputy Commissioner under Sub-section (2) and against which no appeal has been preferred to the Appellate Tribunal under Section 12-A, on application, call for and examine the record of any order passed or proceeding recorded under the provisions of this Act by any officer subordinate to it for the purpose of satisfying itself as to the legality or propriety of such order or as to the regularity of such proceeding and may pass such order with respect thereto as it thinks fit.

The Board of Revenue may...(ii) in respect of any order passed or proceeding recorded under any other provisions of this Act and against which no appeal has been preferred to the Appellate Tribunal under Section 12-A, on application, call for and examine....

12. This method of reading the provision disjunctively has been attacked as incorrect by the learned Additional Government Pleader. On the other hand, Mr. M.K. Nambiar, appearing for the respondents, points out that nowhere is there any provision in the Act which enables the Deputy Commissioner to pass any order or record any proceeding except under Sub-section (2) of Section 12, so that if the reference to any other provision in this Act is to an order passed or proceeding recorded by the Deputy Commissioner, then that reference has no meaning. According to the learned counsel, reading this provision, disjunctively is the only way of giving any sense to the provision, and if it is so read, there is no dispute that the Board would be enabled to deal in revision with an order made by any officer subordinate to it. It seems to us that this argument is well-founded. It also seems to us that if the Board has the suo motu power of revision of any order passed by any officer subordinate to it, it cannot be rationally explained why that power should be taken away only in cases where the matter comes before the Board by way of an application from the party.

13. We are accordingly of the vie that though the language employed in Section 12(3) (ii) of the Act is somewhat infelicitous, the real intention underlying the provision is that the Board of Revenue, as the highest authority in the hierarchy of the Tribunals constituted under the Act, is undoubtedly conferred the power of revising the order passed or proceeding recorded by any officer subordinate to it. The entire argument of the learned Additional Government Pleader is based upon this contention that the Board has no power under Section 12(3) (ii) to deal directly with the order of the assessing authority, and if that contention fails, there is no doubt that the Board could examine and revise the order of the assessing authority.

14. Some argument was advanced on the basis of Section 12-A which deals with the appellate jurisdiction of the Appellate Tribunal. Broadly stated, an order relating to assessment passed by the Commercial Tax Officer, whether on appeal under Section 11 or suo motu under Section 12(1), can be taken in appeal to the Appellate Tribunal, but that is subject to the condition that the assessee had not preferred an application for the revision of the order under Section 12(2) to the Deputy Commissioner. Likewise, an order passed by the Deputy Commissioner suo motu under Section 12(2) can be appealed from before the Appellate Tribunal if the assessee had not sought to have that order revised by moving the Board under Section 12(3). This provision only emphasises the fact that an assessee has one of two alternative remedies open to him, one by way of revision to the appropriate authority or by way of appeal to the Appellate Tribunal, and seeks to prevent him from resorting to both. We can dra no assistance from this provision to enable us to interpret the proper scope of the revisional jurisdiction of the Board of Revenue under Section 12(3) of the Act.

15. We entirely agree with Veeraswami, J., that there seems to be no doubt that the Board itself looked upon the application as, one under Section 12(3) of the Act, and when once it is granted that the Board has the necessary power to deal with the petition under Section 12(3), it would be unreasonable to say that the petition is not one under that provision. We have also pointed out that it is not denied by the learned Additional Government Pleader that if once the Board excuses the delay in the filing of the application, there is no limitation upon its power to grant the relief. The power of revision exercised on application is not limited in the same manner as the suo motu power, and the Board is competent to grant the relief for any number of years, not only within a limit of four years prescribed in respect of the suo motu power.

16. The argument that is an ex gratia relief that was granted to the petitioners cannot for a moment be accepted. If the Government granted the ex gratia relief, they were certainly acting outside the ambit of the Act. It was not, therefore, necessary that the assessment itself should be revised. On the other hand, the order of the Government, which is virtually the recommendation made by the Board directed the revision of the assessment. A revision of the assessment by the assessing authority under the directions of the statutory authority is necessitated as a consequence of an order made in the exercise of the appellate or revisional power. The fact that the assessments in these cases were revised under the directions of the Board of Revenue clearly emphasises the position that it was not the grant of an ex gratia relief but a relief within the four corners of the Act.

17. As we agree with the learned Judge in his interpretation of Section 12(3) of the Act, these appeals fail and are dismissed with costs.


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