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The State of Tamil Nadu Vs. Thakorebhai and Brothers - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberT.C. Nos. 1271 of 1979 and 333 of 1980 (Revision Nos. 416 of 1979 and 114 of 1980 respectively) and
Judge
Reported in[1983]52STC104(Mad)
ActsTamil Nadu General Sales Tax Act, 1959 - Sections 36(6) and 55
AppellantThe State of Tamil Nadu
RespondentThakorebhai and Brothers
Appellant AdvocateK.S. Bakthavatsalam, Additional Government Pleader
Respondent AdvocateC. Venkataraman, Adv.
Cases ReferredIndia Tyre & Rubber Co. (India) P. Ltd. v. Commercial Tax Officer
Excerpt:
.....of review - sections 36 and 55 of tamil nadu general sales tax act, 1959 - whether tribunal had inherent power to review earlier order passed by it - under section 36 (6) (a) review not permissible on ground of mistake apparent on face of record - special enactment confers power of review on tribunal in restricted terms - power cannot be enlarged or extended beyond statutory restrictions in guise of inherent power - orders passed by tribunal allowing review applications set aside. - - on the other hand, the tribunal has clearly stated that there is nothing in the act analogous to order 47, c. so far as the invocation of the inherent powers of court is concerned, it has been held repeatedly and has now become well-settled law that the power to review is not an inherent power of a..........review is not permissible on that ground. however, the tribunal came to the conclusion that it had inherent powers to review an earlier order passed by it. in this view, the tribunal set aside the order dated 1st november, 1976. 5. before us mr. c. venkataraman, the learned counsel for the dealer, did not rely upon any specific provision in the act which enabled the tribunal to review its earlier order. the learned counsel however asserted that, in view of the fact that the tribunal came to the conclusion that the observation in the order dated 1st november, 1976, that the counsel for the assessee had made a concession was wrong, the tribunal had inherent power to review its earlier order. we have to examine how far this contention is valid. it is now settled law that no court or.....
Judgment:

Padmanabhan, J.

1. The tax cases and writ petitions are being disposed of by this common judgment. The Deputy Commissioner of Commercial Taxes, Madurai, is the petitioner in the tax revision cases and also in the writ petitions. The cases arise under the Tamil Nadu General Sales Tax Act, 1959 (referred to as the Act in this judgment). The relevant assessment years are 1972-73 and 1973-74.

2. M/s. Thakorebhai and Brothers, referred to in this judgment as the dealer, carries on business in Karaikudi in diamonds. On the basis of the recovery of certain anamath accounts from the dealer, the petitioner revised the assessment for the year 1972-73 and 1973-74. For the year 1972-73, the total and taxable turnover was determined at Rs. 87,19,045. The assessee was asked to pay a tax of Rs. 7,84,714 and a penalty of Rs. 7,84,714, . For the year 1973-74, the total and taxable turnover was determined at Rs. 23,32,761. The assessee was asked to pay a tax of Rs. 2,09,949 and a penalty of Rs. 2,24,316. Against the said order the dealer preferred appeals before the Appellate Assistant Commissioner (CT), Virudhunagar. The appellate authority set aside the order of the Joint Commercial Tax Officer and remanded the matter for fresh disposal. Against the orders of remand passed by the appellate authority, the dealer preferred appeals before the Tamil Nadu Sales Tax Appellate Tribunal, Madurai. The Appellate Tribunal, Madurai, by its order dated 1st November, 1976, redetermined the total and taxable turnover for the year 1972-73 at Rs. 13,95,525.10. The tax payable was fixed at Rs. 1,25,506. The Tribunal also levied a penalty of Rs. 75,000. For the assessment year 1973-74, the total and taxable turnover was determined at Rs. 13,40,380 and the tax payable at Rs. 1,20,525. The Tribunal also levied a Penalty of Rs. 70,000.

3. Thereafter the dealer preferred two applications, T.R.A. Nos. 2 and 3 of 1978, to review the order of the Tribunal passed on 1st November, 1976, and T.M.P. Nos. 140 and 141 of 1978 for rectification of the said order for the two years in question. These petitions were transferred to and disposed of by the Sales Tax Appellate Tribunal, Main Bench, at Madras, by its order dated 16th August, 1978. The Tribunal dismissed the rectification petitions as not maintainable. However, the Tribunal allowed the review applications and set aside the order of the Tribunal dated 1st November, 1976, and restored the appeals to file for being disposed of according to law. The writ petitions have been filed against the order of the Tribunal allowing T.R.A. Nos. 2 and 3 of 1978 for review of the order dated 1st November, 1976, and the tax revision cases have been filed against the order made by the Tribunal in Appeals Nos. 1331 and 1332 of 1978, dated 30th November, 1978, subsequent to the order dated 16th August, 1978, restoring the appeals to file.

4. We may at the very outset observe that in this case the Tribunal in reviewing its order dated 1st November, 1976, has not relied upon any particular provision in the Act which confers power on it to review an earlier order on any ground. On the other hand, the Tribunal has clearly stated that there is nothing in the Act analogous to Order 47, C.P.C., and that while under Order 47, C.P.C., a decree can be reviewed if there is a mistake apparent on the face of the record, under section 36(6)(a) of the Act a review is not permissible on that ground. However, the Tribunal came to the conclusion that it had inherent powers to review an earlier order passed by it. In this view, the Tribunal set aside the order dated 1st November, 1976.

5. Before us Mr. C. Venkataraman, the learned counsel for the dealer, did not rely upon any specific provision in the Act which enabled the Tribunal to review its earlier order. The learned counsel however asserted that, in view of the fact that the Tribunal came to the conclusion that the observation in the order dated 1st November, 1976, that the counsel for the assessee had made a concession was wrong, the Tribunal had inherent power to review its earlier order. We have to examine how far this contention is valid. It is now settled law that no court or Tribunal created under a statute has an inherent power to review its earlier order. This is based upon the principle of law that prima facie a party who has obtained a decision has to keep it unassailed unless the legislature has indicated the mode by which it can be set aside. In Fernandes v. Ranganayakulu : AIR1953Mad236 , Ramaswami, J., has to consider the question whether this Court has jurisdiction to review an order passed in a civil revision petition which arose under the provisions of the Madras Buildings (Lease and Rent Control) Act. The learned Judge observed as follows :

'Inasmuch as the Act contains no explicit provision for review the petitioner has supported his claim to one with reference to (a) the inherent powers of court and (c) the Code of Civil Procedure.

So far as the invocation of the inherent powers of court is concerned, it has been held repeatedly and has now become well-settled law that the power to review is not an inherent power of a judicial officer but such a right must be conferred by statute. This is based upon the common sense principle that prima facie a party who has obtained a decision is entitled to keep it unassailed unless the legislature has indicated the mode by which it can be set aside. A review is practically the hearing of an appeal by the same officer who decided the case. Therefore, the course of decisions in this country has been to the effect that a right to review is not an inherent power : See David Nadar v. Manicka Vachaka Desika Gnana Sambanda Pandara Sannathi ILR (1910) Mad 65, Lala Prayag Lal v. Jai Narayan Singh ILR (1895) Cal 419, Baijnath Ram Goenka v. Nand Kumar Singh ILR (1907) Cal 677 and Anantharaju Shetty v. Appu Hegade : (1919)37MLJ162 .'

6. A Bench of this Court in C.B.B. Thandava Rao v. State of Madras [1964] 15 STC 22 had to consider whether the Sales Tax Appellate Tribunal had an inherent power to review an order passed by it under section 36(6)(a) of the Act. The dealer had filed an application purporting to be under section 36(6)(a) of the Act and sought a relief to have an order of the Tribunal dismissing an appeal reviewed on the ground that the counsel, who withdrew the appeal resulting in its dismissal by the Tribunal, was then under a bona fide mistake in thinking that all the grounds which could be urged in the appeal were really covered by a decision of the High Court and overlooked to raise a question for relief in terms of a Government Memorandum. After rejecting the contention of the dealer that the case fell within the scope of section 55 or 36(6)(a) of the Act, Jagadisan, J., speaking for the Bench, observed as follows :

'It has next contended that there was something in the nature of an inherent power in the Tribunal to grant relief to the petitioner. Reference is made to the decision of this Court in S. V. R. Natarajan Chettiar v. State of Madras ILR 1960 Mad 449. The following observation from that case is relied upon :

'As we have already stressed, there can be no doubt that an inherent power to review should be presumed in all such cases, as it cannot be just and expedient that such Tribunals rendering judicial decisions should be unable to rectify an error apparent on the face of the record, or to exercise powers of review for similar adequate causes.' It is settled rule of law that Tribunals created by special statutes do not have larger power than what the statute chooses to confer upon them. It is very difficult to conceive of any inherent jurisdiction in a Tribunal analogous to that of an inherent power of a civil court. Whatever that may be, where the special enactment confers a power of review to the Tribunal of its creation in restricted terms, it is implicit that the power cannot be enlarged or extended beyond the statutory restrictions, in the guise of an inherent power. The case in Natarajan Chettiar v. State of Madras ILR 1960 Mad 449 was a case in which there was no specific or special power by way of review under the particular statute. In these circumstances, we are of opinion that the petitioner cannot obtain any relief once it is found that neither section 36(6)(a) nor section 55 would be applicable.'

7. In P. N. Thakershi v. Pradyumansinghji : AIR1970SC1273 the Supreme Court had to consider whether the Commissioner had inherent power to review an earlier order passed under the provisions of the Saurashtra Land Reforms Act (25 of 1951). In that context, the Supreme Court observed as follows :

'The first question that we have to consider is whether Mr. Mankodi had competence to quash the order made by the Saurashtra Government on 22nd October, 1956. It must be remembered that Mr. Mankodi was functioning as the delegate of the State Government. The order passed by Mr. Mankodi, in law amounted to a review of the order made by Saurashtra Government. It is well-settled that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. No provision in the Act was brought to our notice from which it could be gathered that the Government had power to review its own order. If the Government had no power to review its own order, it is obvious that its delegate could not have reviewed its order.'

8. In a decision of this Court in W.P. Nos. 682 of 1977 and 1449 of 1451 of 1978 which was confirmed in appeal by a Bench of this Court in India Tyre & Rubber Co. (India) P. Ltd. v. Commercial Tax Officer [1981] 47 STC 273 cited by the learned Additional Government Pleader, it has been held that no statutory authority has unlimited inherent powers and that they have only such implied or incidental powers as are necessary for an effective exercise of the power granted to them under the statute.

9. The various decisions cited the Tribunal to invoke the inherent power to review its earlier order do not directly relate to the question whether a statutory authority has got inherent powers to review its earlier order even though the statute does not expressly or by necessary implication confer such power on it. We have therefore no hesitation in holding that the Tribunal had no inherent power to review the order dated 1st November, 1976, and set aside the same.

10. Section 36(6)(a) of the Act confers restricted power of review on the Appellate Tribunal. Section 36(6)(a) of the Act reads as follows :

'The appellant or the respondent may apply for the review of any order passed by the Appellate Tribunal under sub-section (3) on the basis of the discovery of new and important facts which after the exercise of due diligence were not within his knowledge or could not be produced by him when the order was made : Provided that no such application shall be preferred more than once in respect of the same order.'

11. In this case it is not alleged that the dealer discovered any new and important facts which were not within his knowledge at the time when the appeal was disposed of and that therefore a valid ground is available under this provision. What is pleaded is that the Tribunal made a mistake in thinking that the counsel had made certain concessions. In these circumstances, the Appellate Tribunal was perfectly justified in holding that section 36(6)(a) of the Act was not attracted to the facts of this case. Mr. Venkataraman also very rightly did not seek to sustain the order of the Appellate Tribunal under section 36(6)(a) of the Act.

12. We therefore hold that the Sales Tax Appellate Tribunal committed an error in reviewing and setting aside the order dated 1st November, 1976, under a supposed inherent power available with it.

13. Mr. Venkataraman then submitted that this Court might treat T.R.A. Nos. 2 and 3 of 1978 as applications filed by the dealer for rectification of mistake under section 55 of the Act. Section 55 of the Act reads as follows :

'An assessing authority or an appellate or revising authority (including the Appellate Tribunal) may, at any time within three years from the date of any order passed by it, rectify any error apparent on the face of the record : Provided that no such rectification which has the effect of enhancing an assessment or any penalty shall be made unless such authority has given notice to the dealer and has allowed him a reasonable opportunity of being heard.'

14. On the facts of the present case, it is not possible to assume that the dealer had quoted a wrong provision of law or did not state the correct provision of law in the applications filed by him for review of the earlier order dated 1st November, 1976. On the other hand, the dealer filed two sets of applications, one set of applications for rectifying an error apparent on the face of the record under section 55 of the Act and another set of applications for review of the earlier order which is the subject-matter of revision now before us. The Tribunal categorically held that the applications filed under section 55 of the Act for rectification of error apparent on the face of the record were not maintainable. That order has become final inasmuch as the dealer has not challenged the correctness of the order. Further, it has to be stated that the order dated 1st November, 1976, is not merely based on any concession by the counsel for the dealer. The revised assessment for 1972-73 and assessment for 1973-74 were based on the recovery of 221 carats and 43 cents of diamonds, 19 slips of paper and one pocket note book from the Devabhai M. Patel on an inspection made by the Special Officers of the Commercial Taxes Department on 20th August, 1973. Besides, a stock of 51 carats and 42 cents of diamonds was found in a box kept in the room in the front portion wherein the business was carried on. As against the actual stock of 272.85 carats of diamonds, the stock book revealed a stock of only 51.42 carats. Admittedly, Devabhai M. Patel was one of the partners of the dealer. A contention was raised before the Tribunal in the first instance that the excess stock of 221 carats and 43 cents of diamonds recovered from Devabhai Mr. Patel had been received by him for valuation in his individual capacity and had nothing to do with the firm. The Appellate Tribunal after referring to the evidence and circumstances of the case held that they were unable to agree with the learned counsel for the dealer that the excess stock of 221 carats and 43 cents of diamonds related to the individual, Devabhai M. Patel, and it had nothing to do with the dealer. Apart from the statement given by Devabhai M. Patel himself, the Appellate Tribunal also referred to the recorded statement of Thakorebhai, managing partner, that there was an excess stock of 221.43 carats of diamond, which was not supported by any purchase bills or valid records and that during the course of inspection, 19 slips of paper and one pocket note book had been recovered by the Inspecting Officers. The Tribunal also referred to the fact that there was no mention in the statement of Thakorebhai that 221.43 carats of diamonds related to the individual, viz., Devabhai M. Patel. The Tribunal has stated : 'When the partner Thakorebhai has admitted the excess stock of diamonds, he never raised the point that the diamonds in question related only to the other partner, Devabhai M. Patel, and not to the business of the appellants.' The Tribunal also stated : 'On the whole, we find, that there is no nexus between the excess stock of diamonds and Thiru Devabhai M. Patel in his individual capacity. The appellants are not able to prove on the basis of any records that the alleged diamonds in question were received either for valuation or for purpose of sale to customers in and around Karaikudi. There is nothing in the statement of Thiru Thakorebhai, managing partner, deposed at the time of inspection that the slips and pocket note book related to the partner, Thiru Devabhai M. Patel, in his individual capacity and not to the partnership business.' In these circumstances, it cannot be said that the order dated 1st November, 1976, was passed by the Tribunal on ny assumption that the counsel for the dealer had conceded that the dealer was liable. On the other hand, a perusal of order dated 1st November, 1976, particularly the passage extracted above, would clearly show that the Tribunal's order was based on the statement made by Devabhai M. Patel and Thakorebhai and on the finding arrived at by the Tribunal that the recovery of 221.43 carats of diamonds, 19 slips of paper and a pocket note book from Devabhai M. Patel related only to the dealer and not to devabhai M. Patel in his individual capacity. Therefore, in any event, on the facts and circumstances of the case, section 55 of the Act is not attracted at all. In the circumstances, the order dated 16th August, 1978, passed by the Tribunal allowing the Review Applications Nos. 2 and 3 of 1978 has to be and is set aside. The result is that the subsequent order passed by the Tribunal on 30th November, 1978, disposing of Appeals Nos. 1331 and 1332 of 1978 setting aside the orders of the Appellate Assistant Commissioner and remanding the matter for fresh disposal have also to be set aside and are set aside.

15. In the result, both the tax revision cases and the writ petitions are allowed, but in the circumstances of the case without costs.


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