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The Yercaud Coffee Curing Works Ltd. Vs. the State of Madras - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case No. 226 of 1968 (Appeal No. 7)
Judge
Reported in[1974]33STC170(Mad)
AppellantThe Yercaud Coffee Curing Works Ltd.
RespondentThe State of Madras
Appellant AdvocateT.V. Balakrishnan ;and S. Mathrubutheswaran, Advs.
Respondent AdvocateK. Venkataswami, Assistant Government Pleader
DispositionAppeal allowed
Cases ReferredMadura Mills Co. Ltd. v. State of Madras
Excerpt:
- .....general sales tax act on a taxable turnover of rs. 6,17,187.24 for the year 1961-62. before the assessing authority, the appellant claimed exemption on a turnover of rs. 6,29,382.69 on the ground that the said sum represented second sales of fertilisers. the assessing authority, however, accepted the appellant's claim for exemption only in respect of a turnover of rs. 5,58,479 and rejected the claim for exemption in respect of a turnover of rs. 70,903.69 on the ground that the said turnover has not been shown to be second sales of fertilisers. the appellant aggrieved against the said order of assessment so far as it related to the rejection of its claim for exemption on the said sum of rs. 70,000 and odd, filed an appeal before the appellate authority. the appellate authority.....
Judgment:

Ramanujam, J.

1. The appellant herein was assessed under the Madras General Sales Tax Act on a taxable turnover of Rs. 6,17,187.24 for the year 1961-62. Before the assessing authority, the appellant claimed exemption on a turnover of Rs. 6,29,382.69 on the ground that the said sum represented second sales of fertilisers. The assessing authority, however, accepted the appellant's claim for exemption only in respect of a turnover of Rs. 5,58,479 and rejected the claim for exemption in respect of a turnover of Rs. 70,903.69 on the ground that the said turnover has not been shown to be second sales of fertilisers. The appellant aggrieved against the said order of assessment so far as it related to the rejection of its claim for exemption on the said sum of Rs. 70,000 and odd, filed an appeal before the appellate authority. The appellate authority considered the question of exemption as regards the said sum of Rs. 70,903.69 and held that though the appellant has not maintained separate accounts for its dealing in second sales of fertilisers, it is entitled to get the benefit of the exemption as a result of the decision of this court in Rathinaswamy Chettiar's case [1962] 13 S.T.C. 419. Thereafter, the Board of Revenue in exercise of its suo motu powers under Section 34 of the Act purported to revise the order of the Appellate Assistant Commissioner. In so doing, it set aside the exemption granted to the appellant on the entire turnover of Rs. 6,29,382.69. Aggrieved against that order, the appellant has come up before us.

2. The contention advanced on behalf of the appellant is that though the Board of Revenue has got the power to revise the order of the Commercial Tax Officer or that of the Appellate Assistant Commissioner or both, it should exercise the power of revision within a period of four years, and that in this case, the Board in effect has set aside the order of the assessing authority giving exemption on a turnover of Rs. 5,58,479, which it cannot do in view of the four years' time having lapsed. According to the learned counsel, the Board of Revenue could revise the order of the Appellate Assistant Commissioner alone in the circumstances of this case. It is not disputed by the revenue that if the Board of Revenue had directly revised the order of the assessing authority itself, it will be invalid for the reason that the four years' period fixed under Section 34(2)(c) has lapsed. But what the learned counsel for the revenue contends is that as soon as the Appellate Assistant Commissioner passed his order in appeal, the order of the assessing authority has merged with the order of the appellate authority and, therefore, the Board of revenue while revising the order of the Appellate Assistant Commissioner could interfere with the order of the assessing authority. The contention of the revenue is that the appellate authority has the power to enhance the assessment while disposing of the appeal filed by the assessee and, therefore, the order of the appellate authority should be deemed to cover the entirety of the assessment and that if the order of the appellate authority is construed in that light, it could be taken that the entire assessment order is before the Board of Revenue in the suo motu revision initiated against the order of the Appellate Assistant Commissioner.

3. But we are not in a position to accept the stand taken by the revenue in this case. It is not the case of the revenue that before the Appellate Assistant Commissioner any dispute was raised on the question of exemption on the turnover of Rs. 5,58,479 which was allowed by the assessing authority. The appeal before the assessing authority admittedly related only to the exemption of the turnover of Rs. 70,903.69 and the Appellate Assistant Commissioner was asked to consider only that question. If the revenue had disputed the correctness of the assessing authority's order granting exemption on Rs. 5,58,479 before the Appellate Assistant Commissioner it could be said that the disputed turnover before the appellate authority was the entirety of the turnover on second sales of fertilisers, in respect of which exemption was claimed by the appellant before the assessing authority. A perusal of the order of the Appellate Assistant Commissioner shows that the dispute before him was only in relation to the exemption of the turnover of Rs. 70,903.69 and not the entirety of the turnover of Rs. 6,29,382.69. If the entirety of the turnover was not before the Appellate Assistant Commissioner, we are not able to see how the Board of Revenue can treat the order of the Appellate Assistant Commissioner as covering the entirety of the turnover in fertilisers.

4. The learned counsel for the revenue brings to our notice the decision in Haji Abdul Shukoor v. State of Madras [1965] 16 S.T.C. 808, where the theory of merger was in a way accepted. But we find that in that case, the order of the appellate authority covered the entirety of the assessment and, therefore, it was held that the original order of assessment got merged in the order passed on appeal and that thereafter the original assessing authority had no jurisdiction to interfere with the operation of the order as confirmed on appeal. That case is clearly distinguishable from the facts of this case where the subject-matter of the appeal before the Appellate Assistant Commissioner was very much limited and did not cover the entirety of the turnover which was before the assessing authority.

5. A question similar to the one arising here came up for consideration before this court for the first time in Madura Mills Co. Ltd. v. State of Madras [1962] 13 S.T.C. 124. In that case also, the scope of suo motu revision by the Board of Revenue came up for consideration with reference to the limitation of time prescribed in Section 12(4)(b) of the Madras General Sales Tax Act, 1939. There also, the assessing authority's order was sought to be interfered with by the Board of Revenue in the guise of revising the order of the Deputy Commissioner, and the revisional order of the Board of Revenue was sought to be justified on the merger theory. In rejecting that contention, the Bench expressed the view that the general rule that an order of an inferior tribunal appealed against and confirmed by a superior tribunal gets merged in the final order on appeal is not of universal application, and that it cannot be said that wherever there are two orders, one by an inferior tribunal and the other by a superior tribunal, passed on appeal or revision, there is a fusion or a merger of the two orders irrespective of the subject-matter of the appellate or revisional order. In the decision in State of Madras v. Guruviah Naidu [1966] 17 S.T.C. 272 also a question similar to the one arising here came up for consideration. In that case the court expressed the view that the theory of merger was inapplicable on the facts of that case and the basis of that decision was that the Commercial Tax Officer exercising his appellate powers could not have interfered with the assessment in entirety, that to permit the revising authority to enhance the assessment which the appellate authority could not have done, is not in consonance with the scheme of the Act and that, therefore, the power of revision conferred under Section 12 should be exercised by the revisional authority for satisfying itself of the legality or propriety of the order of the inferior tribunal and while purporting to satisfy itself about the legality or propriety of the order, the revising authority cannot pass an order which the appellate authority could not have legally passed. Later, the Supreme Court in State of Madras v. Madura Mills Co. Ltd. [1967] 19 S.T.C. 144 has confirmed the view taken by this court in the decision in Madura Mills Co. Ltd. v. State of Madras [1962] 13 S.T.C. 124.

6. In view of the above decisions, it is not possible for us to uphold the order of the Board of Revenue, in so far as it seeks to interfere with the order of the assessing authority, beyond the period referred to in Section 34(2)(c) of the Act.

7. The order of the Board of Revenue in so far as it cancelled the exemption given by the assessing authority on a turnover of Rs. 5,58,479 is set aside. The rest of the order will stand. There will be no order as to costs.


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