SWASTIK OIL MILLS LTD. versus H. B. MUNSHI, DEPUTY COMMISSIONER OF SALES TAX, BOMBAY

SWASTIK OIL MILLS LTD.

v.

II. H. Ml_;!\SHI. l>F:PliT\' COMMISSIO~ER OF SALES TAX _,/'

BOMBA\'

'

November 29, 1967

[J. C. SHAH, V. RAMASWAMI 11:>0 V. 8HARGAVA, JJ.J

. Revisional power~-suo motu exercise of-limitntivns-if further in

quiry 10 gather add1tionol maleria/ permiisib/e.

Bombay Salt.! Tax Act, 5 of 1946, Act 3 of 1953, s. 31, Ac1 51of1959,

ss. 57, 77(l)(a), 71(3)-Scope o/.

The appellant was registered as a <l"'1ler under the ,·arious Sales Tax Acts in force in Bombay fro. · time to time i.e. Bombay Acts 5 of 1946. 3 of 1953 and 51 of 1959. ln the course of us assessment' to sale<; ia, for the periods from !st April, 1948 to 31st March, 1950, and from 1st April 1950 to 31st March, 1951, the appellant claimed c'cmption from tax. inter n/ia, in respect of certain despatches of ~ooJs from ils -head office in Bombay to its branches in other States. The Sales Tax Officer rejected thec;c claims but, in appeal, the Assistant Collector accepted the claim in re..,pect of the despatches 10 various branches though he rcjl~ted lie also directed a rcfuncl of rhe excc~s '1II other Claims for exemption. rax collected from the appellants. While revision petitions tiled hy the appellant a~ainst these orders were pending, a notice was issued ttl him on January 7. 1963 by the Deputy Commissioner of Sale' Ta' in Form XXJV under s. 31 of the Bombay Sales Ta. Act, 1953. intimatin~ the appellant that he proposed to revise suo motu the orders passed hy the Assistant CoUcctor in so far as he had allowed deduction in re<,,pcct of 1he entire goods despatched to the appellants' branches outside Maha rashtra hecause, in so doing, he had overlooked certain provision!\ of Jaw \Vhich \\'ere specified in the notic.e. The appellant filed a petition under Art. 226 of the Constitution seeking to quash the notice dated 7th Janu ary, 1963 but his petition was dismissed by tho High Court.

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In the appeal to this Court it was contended on behalf of the oppellant. inter alia (i) that in exercise of ~I! revisional powers, the Deputy Com miS<ioner, whether acting under the Sales Ta< Act of 1946. or oi 1953. or of 1959 could onlv proceed to take action on the basis of the m:ucrial alreadv pre sent on thC: record and \\'a~ not entitled to act on conjrcrurr or 10 in~!itute any enquiry so as to include additional material nor to jud!le the correctness of the order sou~ht to be re\ised; (ii) that the notice:- in 4 u\!'\tio:1 \Ycts issued on 7th January. 1963. \\'hC'Tl the Act of 1959 h;1d al ready come into force and the Act of 1953 had heen rercalecl: '\O 1hat any revisional jurisdiction could only be exercised by the Deput\' Com missioner under the Act of 1959 and not under the Act of 1953: as the power ender s. 57 of the Act of 1959 could only be exercised within five vears from the date of the order sought to be revised; the notice i5'ucd hv the Dcputv Commissioner was time barred; and (iii) that the proce~~:;igo;; to he insiituted were barred bv time. hecausc limitation of a reasonable time: wi1hin which the revisional powers are to he e."{erci~ed must he implied in the statute itself.

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SWAST!K OIL MILLS V. COMMR. s. TAX (Bhargava, J.) 493

HELD : The proceedings initiated by the Depu~y Commissioner of Sales Tax against the appellant were not incompeteot and the High Court was right in refusing the writ sought by the appellant.

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(i) Whenever a power is conferredi on an authority to revise an order, it is entitled to examine the correctness, legality and propriety of the order and to pass such suitable orders as it may think fit in the circum stances of the particular case. The proceedings for revision, if started suo tnotu, must not be based on a mere conjecture and there should be some ground for invoking the revisional powers. Once these powers are invoked. the actual interference must be based on sufficient grounds and, if it is considered necessary that some additional enquiry should be made to arrive at a proper and just decision, there can be no bar to the revits iog authority holding or directing a further enquiry and thereafter ad mitting additional nrnterial. [496 A-CJ

Th,• State u/ Kera/a v. K. M. Cheria Abdulla and Company, [1965] 1

S.C.R. 601, explained and followed.

State of Anclhra Pradesh v. T. G. Lakslunaiah Setty & Sons, 12 S.T.C.

663; disapprovecl.

In the present case. the notice issued by the Deputy Commissioner. on !he face of it. disclosed the reasons which led him to take proceedings for exercising hi<.; revisional powers suo motu, and it- could not be said on those facts th~lt he was acting merely on conjecture. There was no reason to think that, when proceeding witll his inquiry, he would nor keep within the lin1itations indicated by this Court in K. M. Cheria Abdulla·s case.

(ii) The effect of s. 77(1) (a) of the Act of 1959' is to continue in force the Act of 1953 as m,n as the Act of 1946 to the extent to which they were in force when !he Act of 1959' came into force for the pur poses of levy. assessm·ent, reassessment and collectio·n of sales~tax. Fur thermore, by virtue of s. 7(e) of the Bombay General Clauses Act, 1904, which was made applicable to the repeal of the .Act of 1953 by s. 77(3) of the 1959 Act, any Jegal proceeding in resoect of levy, imposition or recovery of tax is to continue and any fresh investigation, legal proceed ing or remedy could be instituted as if there had been no repeal by the Act of 1959. Consequently, the repeal of the Act of 1953 did not in any way affect the power of the Deputy C.Ommissioner to institute pro ceedings for revision suo motu against the appellate order of the Assi'ltant Collector which had hecn na5sed in exercise of his power under the Act of 1946. f499 C-500 BJ

Although the Deputy Commissioner, In seeking to cxerci"e revisionat powers should have proceeded under s. 22 of the Act of 1946 and not under s. 31 of the 1'°53 Act, this fact was immaterial as the provisions of the two Sections were similar. [500 'D-E]

(ili) Section 22 of the Act of 1946 ands. 31 of the Act of 1953 do not lay down any pcricxl of limitation for the exercise of the power of revision hy a· .Deputy Commissioner suo motu. and no such limitation could be read in the two Acts. f500 Gl

The State of Orissa v. Debaki Debi and Others. 15 S.T.C. 153. Commissioner of Income-tax, Bomba,v City I v. Narsee Nngsee & Co., 31 l.T.R. 164, Manordas Kalidas v. V. V. · Tatke, 11 S.T.C, 87. Bisesar House v. State of Bombay, 9 S.T.C. 654, distinguished.

494

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[1968] 2 S.C.R.

Maharaj Kumnr Kamal Singh v. CJ.T., Bihar and Orissa, 35. l.T.R. A

1, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 637 ol

1967.

Appeal from the judgment and order dated January 27, 1966 of the Bombay High Court in Misc. Application No. 112 of B 1963.

S. T. Desai, G. L. Sanghi, B. Datta and 0. C. Mathur, for the

appellant.

R. M. Ha:amavis, S. P: Nayar, and R. H. Dhebar, for the

respondent;.

of the

The Judgment of the Court was delivered by Bhargava, J. The Swastik Oil Mills Ltd., appellant, carries on business of manufacturing vegetable oils, soaps and other product. and selling them in India as well as exporting them out- Jt was registered as a dealer under the various SaJe, side India. Tax Acts in force in Bombay. The first of these Acts was the Bombay Sales Tax Act 5 of i 946, which was replaced by th .· Bombay Sales Tax Act 3 of 1953. The third and the latest Act now in force in Bombay is the Bombay Sales Tax Act 51 of 1959. The appellant was assessed to sales tax on its turnover for the periods from 1st April, 1948 to 31st March, 1950, and from ls1 April, 1950 to 31st March, 1951 on the basis of Relums of turn In these Returns, the appellant claimed over submined by it. exemption from tax in respect turnover reprcsentin~ the despatches or. transfer of goods from its Head Office Bombay. to its various Depots or Branches in o•her Stales in India, and also exemption in respect of sales which were allcccd to have taken place in the course of inter-State trade after 26th January. 1950. The Sales Tax Officer in his order of assessment dated 2nd January, 1954 rejected both these claims. The appellant went up in appeal before the Assistant Collector of Sales Tax. who, in his appellate order dated 29th October. 1956, accepted the claim of the appellant in respect of the despatches to its various Depots or Branches in other States in India, but disallowed the claim in respect of the alleged inter-State sales. As a result of partially allowing the claim of the appellant, the Assistant Collector reduced the tax imposed by a sum of·Rs. 19,240-15-6 for the period between 1st Aoril, 1948 to 31st March, 1950. and Rs. 97,208/- for the second period between 1st April, 1950 to 31st March. 195 I. and directed refund of these amounts to the appellant. The revisions filed by the appellant against the rejection of its claim in respect- of inter-State sales were still pending, when. on 7th · January, 1963, a notice was iSllued by the Deputy Commissioner of Sales Tax, ~ombay City Division, in Form XXIV under

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SWAST!K OIL MILLS 1'. COMMR. s. TAX (Bhargava, J.)

495

section 31 of the Bombay Sales Tax Act, 1953, intimating the appellant that he proposed to revise suo motu the appellate orders passed by the Assistant Collector of Sales Tax insofar as he had allowed deduction in respect of the entire goods despatched to its Branches in other States outside Maharashtra, because, in so doing, he had overlooked the provisions contained in proviso (b) to sub-clause (ii) of Rule 1 under sub-section (3) of section 6 of the Bombay Sales Tax Act, 1946 as amended by the Bombay Sales 'T'ax Amendment Act 48 of 1949. On receipt of this notice, the appellant put in appearance before the Deputy Commissioner, who is the respop.dent in this appeal, and raised several objec tions against the proposed revisional proceedings, making a request that the proceedings be dropped: Since the respondent did not accept this request, the appellant filed a petition under Article 226 of the Constitution in the High Court of Bombay challenging the notice dated 7th January, 1963, with the prayer that the notice be quashed and the respondent be restrained from taking any action against the appellant in pursuance thereof. The petition was <lismissed by the High Court and, now, on certificate granted by to this that Cou(t, the appellant has come up Court.

in this appeal

In this appeal, Mr. S. T. Desai, appearing on behalf of the appellant, urged the same objections against the notice which were the basis of the prayer for writ in the High Court, and we proceed to deal with them in the order in which he has put them forward before us in his submissions. The first point urged by learned counsel was that, in exercise of the revisional powers, the Deputy Commissioner of Sales Tax, whether acting under the Sales Tax Act of 1946, or of 1953, or of 1959, could only proceed to take action on the basis of the material" already present on the record and was not entitled to act on conjecture or to institute any en quiry so as to include additional material in order to .ii:dge ·the In support of this correctness of the order sought to be revised. proposition, learned counsel referred us to a decision of the Andhra Pradesh High Court in State of Andhra Pradesh v. T. G. Lakshmaiah Setty & Sons.('). In that case, the Deputy Com missioner, in exercising the revisional jurisdiction, . was found by the High Court to have based his assessment on guess-work, and the Court held that "this conjecture could not be a justification If the for seeking to revise the order of the .assessing authority. Deputy Commissioner could, on the material· before him, find data It must for revising the assessment, it was open to him to do so. be made clear that he has no jurisdiction to tra\,'el · beyond the record that is available to the assessing authority and the basis should be found on the record already in existence." We are unable to accept this principle laid down by that High Court as

(I) 12 S.T.C. 66!.

SUPREME COURT REPORTS

(1968] 2 S.C.R.

correct. Whenever a power is conferred on an authority to re vise an order, the authority is entitled to examine the cclrrectness, Jegaiity and propriety of the order and to pass such suitable orders as the authority may think fit in the circumstances of the particular ca<c before it. When exercising such powers. there is no reason why the authority should not be entitled to hold an enquiry or 1.lircct an enquiry to be held and, for that purpose, admit addi tional material. The proceedings for revision, if started s1w motu, must not, of course, be based on a mere conjecture and there should be some ground for invoking the revisional powers. Once those powers are invoked, the actual interference must be basllCI on sufficient grounds and, if it is considered necessary that some '1d<.litional enquiry should be made to arrive at a proper and just decision. there can be no bar to the revising authority holdinj! a further enquiry or directing such an enquiry to be held by some other appropriate authority. This principle has been clearly recognised by this Court in The State of Kera/a v. K. M. Cheria Abdulla and Company('). In that case. sub-section (2) of s. 12 of the Mauras General Sales Tax Act, .1939, which came up for suo mollt interpretation, empowered the Deputy Commissioner, or under certain circumstances on an application, to call for and examine the record of any order pussed or proceeding recorded under the provisions of that Act by any officer subordinate to him, for the -purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceeding, and to pass such order with as he thought fit. This Court held:-

respect thereto

"There is no doubt that the revising authority may only call for the record of the order or the proceeding, and the record alone may be scrutinised for ascertaining the legality or propriety of an order or regularity of the proceeding. But there is nothing in the Act that for passing an order in exercise of his revisional juris diction. if the revising authority is satisfied that the sub ordinate officer has committed an illegality or i..'llpro priety in the order or irregularity in the proceeding, he cannot make or direct any further enquiry."

It wa.' further held : -

"It is, therefore, not right baldly to propound that, revisional in passing an order in the exercise of his jurisdiction, the Deputy Commissioner must, in all cases, be restricted to the record maintained by the officer subordinate to him, and can never make enquiry outside that record."

(I) (l965) IS C.R. 6·'11.

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SWAST!K OIL MILLS v. COMMR. s. TAX (Bhargava, J.)

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"It would not invest the

revising authority with power to launch upon enquiries at large so as either to trench upon the powers which are expressly reserved by the Act or by the Rules to other authorities or to ignore the limitations inherent in the exercise of those powers. For instance, the power to reassess escaped turnover is primarily vested by rule 17 in the assessing officer and is to be exercised subject to certain limita tions, and the revising authority will not be competent to make an enquiry for reasssssing a taxpayer. Similarly, the power to make a best judgment assessment is vested by section 9(2) (b) in the assessing authority and has It would not to be exercised in the manner provided. be open to the revising authority to assume that power." (p. 887).

that

In the present case, the notice issued by the Deputy Commis sioner of Sales Tax, on the face of it, discloses the reasons which led him to take proceedings for exercising his revisional powers suo motu, and it cannot be said on those facts that he was acting merely on conjecture. The Deputy Commissioner has not yet proceeded further under the notice to make the assessment. We have no doubt that. when the Deputy Commissioner does make an enquiry, if any, for the purpose of exercising his revisional powers, he will keep within the limitations indicated by this Court in the case cited above. The notice cannot be quashed or the proceedings restrained merely on the ground the Deputy Commissioner may have to hold some enquirfus in order to pro perly exercise his revisional jurisdiction. Mr. Desai on behalf of the appellant emphasised the circurnstance, that ins. 12(2) of the Madras General Sales Tax Act, which was considered by this Court, the Deputy Commissioner's power was expressed by stating that he may pass such order as he thinks fit, while no such words occur in the corresponding provisions in the Bombay Sales Tax Acts with which we are cbncerned, but we do not think that this circumstance makes any difference. A revising authority necessa rily has the power to make such order as, in the opinion of that authority, the case calls for when the authority is satisfied that it is an appropriate case for interference in exercise of revisional In fact, in s. 12(2) of the Madras General Sales Tax powers. Act, the Deputy Commissioner, when exercising his powers, was to call for the record of the order or proceeding ·before passing any order which he thought fit, so that there was an expression used which could have been interpreted as limiting his powers to the examination of the record only without holding any further

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498

SUPREME COURT REPORTS

[I 968] 2 S.CR.

enquiry, and, yet, tbs Court held that the Deputy Commissioner could not be restricted to the record and was empowered to make an enquiry outside that record. In the provisions relating to revi sions in the three Bombay Sales Tax Acts, there arc no such words indicating any limitation; and that would be an additional reason for holding that there can be no bar to an appropriate enquiry being held by the Deputy Commissioner when seeking to cxerci5e his revisional powers s110 motu.

The next point urged by learned counsel was that the notice in question was issued on the 7tll January, 1963, when the Act of 1959 had already come into force and the Act of 1953 had been repealed, so that if any revisional jurisdiction could be exercised by the Deputy Commissioner, it could only be under the Act of 1959 and not under the Act of 1953. On this basis, advantage was sought to be taken of the circumstance that, umler :he Act of 1959, the revisional powers conferred by s. 57 can be exercised within five years from the date of the order sought 10 be revised and, at the relevant time in 1963, could only be. exercised within two years from the date of that order. · The order sought to be revised was passed on 29th October, 1956, so that the notice to issued more than 6 years exercise revisional powers was being It appears to us that this sub after that order had been passed. mission is adequately met by the provisions contained in s. 77 of the Act' of 1959. The Act of 1953 was repealed by s. 76 of the Act of 1959 and then s. 77 lays down :

"(!) Notwithstanding the repeal by s. 76 of any of

the laws referred to therein,-

( a) those laws (including any earlier law continued in force under any provisions thereof), and all rules, regulations, orders, notifications, fonns and notices issued under those laws and in force immediately b~­ fore the appointed day shall, subject to the provisions of s. 42 continue to have effect for the purposes of the refund . or levy, assessment, reassessment, collection, set-off of any tax, or the granting of a draw-back in respect thereof, or the imposition of any penalty, which levy, .isscssment. reassessment, collection, refund, set off, draw-back or penalty relates to any period before the .ippointed day, ·or for any other purpose whatsoever connected with or incidental to any of the purposes nforesaid;

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SWASTIK OIL MILLS V. COMMR. s. TAX (Bhargava, J.) 499

( 3) Without prejudice to the provisions coutained in the foregoing ·sub-sections and section thereto, sec tion 7 of the Bombay General Clauses Act, 1904, shall apply in relation to the repeal of any of the laws refer red to in section 7 6 as if the law so repealed had been an enactment within the meaning of section 7 oE that Act."

(We have only quoted the portions of s. 77 with which we are concerned) .

The effect.of s. 77(1)(a) is to continue in force the Bombay Sales Tax Act of 1953 as well as the Bombay Sales Tax Act of 1946 to the extent to which they were in force when this Act of 1959 came into force for the purposes mentioned in that clause. These purposes included levy, assessment, reassessment and collec tion of sales-tax, so that the proceedings ·against the appellant. which had been initiated under the Act of 1946, continued to be governed by the provisions of that Act. Section 7 of the Bombay General Clauses Act I of 1904, which was made applicable by s. 77(3) to the repeal of the Act of 1953, includes the folloWin.~ provisions:-

"Where this Act, or any Bombay Act, or Maha rashtra Act, made after the commencement of lhis Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not-

( c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or

( e) affect any investigation,

legal proceeding or remedy in respect of any such right, privilege, obliga tion, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalcy, forfeiture or punishment may be imposed, as if the repealing Act had not been passed."

Very clearly, the repeal of the Act of 1953 by the Act of 1959 did not affect the rights and liabilities of the assessee to tax under the Act of 19$3 or the Act of t 946 in respect of the turnover which became ·liable to sales-tax under the Act of 1946. The effect of clause ( e) of s. 7 of the Bombay General Clauses Act

500

SUPREME COURT REJ>ORT5

[ 196~] 2 S.C.R.

for

revision

further is that any legal proceeding in respect of levy, imposition or recovery of that tax is to continue and any fresh investigation. legal proceeding or remedy could be instituted as if there had been no repeal by the Act of 1959. Consequently, the repeal of 1he Act of 1953 did not in any way affect the power of the Deputy suo motu Commissioner to institute proceedings against the appellate ord~r of the Assistant Collector which had It been passed in exercise of his powers under the Act of 1946. is true. as urged by Mr. Desai in the alternative, that, in fact, the proceedings should have been taken not under s. 31 of the Act of 1953, but under s. 22 of the Act of 1946. This is so. because when the Act of 1946 was repealed by the Act of 1953, similar provisions were made in the Act of 1953 to continue in force the provisions of the Act of 1946 in respect of rights and liabilities which may have accrued or have been incurred under the Act of 1946. Section 48 (2) and s. 49 (I) clearly contained provisions indicating that, in respect of a liability to tax under the Act of 1946, the rights and liabilities of the asscssee had to be determined in accordance with the provisions of the Act of 1946 and all legal proceedings or remedies in respect thereof had also to be taken under the same Act. Consequen!ly, the Deputy Commissioner. in seeking to exercise revisional powers aj!ainst the order of the Assistant Collector passed und. • the Act of 1946, had to proceed under s. 22 of the Act of 1946. That, however, is not at all 111aterial, because the provisions of s. ~2 of the Act of 1946 arc quite similar to those of s. 3.1 of the Act of 1953. The mere inco·rect mention of s. 31 of the Act of I 953 in the notice is immaterial. The Deputy Commissioner has the jurisdiction and power to revise the order under ~. 22 of the Act of 1946 and. consequently. the proceedings initiated by him arc not without jurisdiction.

The last submission made by Mr. Desai was that, if it be held 1hat the revisional powers arc sought to be exercised under the Act of 1946, it should be held that the proceedings sought to be instituted are harred by time, because limitation of a reasonable t imc, within which the rcvisional powers are to be exercised, must be implied in the statute itself. Section 22 of the Act of 1946 and s. 31 of the Act of 1953 do not Jav down any limitation for exercise of the power of revision by a Deputy Commissioner suo moru, and we are not prepared to accept that any such limitation In support of his oro must be necessarily read in the two Acts. position that such a limitation must he read by us, Mr. Desai the State of Orissa v. referred to the decision of this Court in Debaki Debi a11d Others('). That case, however, has no rele Yancc at all. because. in the Orissa Sales Tax Act. there was a proviso in general terms laying down that no order "assessing the

(I) ~SS.T.C..J<J.

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SWAST!K OIL MILLS v. COMMR. s. TAX (Bharguva, J.)

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amount of tax shall be passed after the lapse of 36 mo~f:bs from the expiry of the period", and it was held th~t th1.s pro~1s101;1 was. in substance, not a real proviso to the section m which 1t was placed but was in fact, a period of limitation prescribed for all orders' of assess:Uent m'ade under any other' provision of the Act. In the Bombay Sales Tax Acts of 1946 and 1953, there is no such general provision prescribing a period of limitation for making an assessment and, even though the effect of the order of the Dy. Comin.issioner passed in revision may be to bring about an assess ment to tax of turnover which was set aside by the Assistant Col lector in appeal, such an assessment· does hot come under any provision relating to limitation.

· The decision of the Bombay High Court in Commissio"er of Income-tax, Bombay City I v. Nar~ee Nagsee & Co.(') is also In that case, section 11 of the Business similarly inapplicable. Profits Tax Act, 194 7, which had no limitation prescribed for an order of assessment, was held to be governed by the 4 years' period of limitation which was prescribed under s. 14 for issue of a notice for reassessment. The decision in that case turned on the fact that, if" proceeding for reassessment could not. be start- ed after the expiry of four years from the end of the chargeable accounting period concerned, it would be totally unreasonable to hold that the first assessment of tax can be made after the expiry of that period. The case before us relates to exercise of revisional powers and does not deal with the question of the first assessment to be made when the Return is initially filed by an assessee. In fact, when a revisional power is to be exercised, we think that the only limitations, to which that power is subject, are those indicated by this Court in K. M. Cheria Abdulla & Co's(') case. These limi tations are that the revising authority should not trench upon the powers which are expressly reserved by the Acts or by the Rules to other authority and should not ignore the limitations inherent in the exercise of those powers. Jn the present case, the Deputy Commissioner, when seeking to exercise his revisional powers, is clearly not encroaching upon the powers reserved to other autho rities. Under the Act of 1946, the first assessment is made by If information comes into his the Sales-Tax Officer under s. 11. possession that any turnover in respect of sales or supplies of any goods chargeable to tax has escaped assessment in any year or has been under-assessed or assessed at a lower rate or any deduc tions have been wrongly made therefrom, proceedings can be taken afresh under s. 1 lA. On the face. of it, if a first assessment order is made under s. 11· and any turnover escapes assessment, the appropriate provision, under which action is to be taken for · assessing that turnover to tax, is s. 1 lA. There is, however, no provision. under which the power now sought to be exercised by

(I) 31I.T.R.164:

(2) [1965] 1 S.C.R. 601.

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[I %8] 2 S.C.R

the Deputy Commissioner in the case before .us could have been In this case, as we have indi exercised by any other authority. cated earlier. the first assessment of tax was made by the Sale.s Tax Officer, and the turnover now in question was assessed to tax by him. Having once assessed that turnover to tax, he could not initiate a fresh proceeding in respect of it under s. I IA. The assessment made by him was set aside in appeal by the Assistant Collector and it is this order of the Assistant Collector which is sought to be revised by the Deputy Commissioner. This is, therefore, not a case where the powers are being exercised for the purpose of asse.ssing or reassessing an escaped turnover. The case is one where the revisional powers are sought to be exercised to correct what appears to be a., incorrect order passed in appeal by the Assistant Collector, and, for such a purpose, proceedings could not possibly have beeri taken under s. I IA. In exercisin)! his revisional powers. therefore. the Deputy Commissioner is not encroaching upon the jurisdiction of any other authority specially entrusted with taking such. proceedings.

the In this connection, Mr. Desai relied on a decision of Bombay High Court in Manordas Ka/idas v. V. V. Tatke('). The decision in that case also related to this very Act of 1946, but the point to be kept in view is that in that case, the revisional power was sought to be exercised in respect of the original assessment order passed by the Sales Tax Officer under s. 11 of the Act. It was in these circumstances that the Bombay High Court, after referring to its two decisions in Bisesar House v. State <>f Bom bay('), and Commr. of Income-tax v. Narsee Navec & Co.(') held:-

"In neither of those two cases, revisional powers were sought to be exercised, but the principle of those case>o must, in our judgment, apply for the same reasons to the exercise of revisional jurisdiction, and that jurisdic tion must be exercised within a reasonable period, and the yard-stick of reasonableness will be the period prescribed for re-assessment."

It appears that. in view of the fact that proceedings for re-~­ ment could have been taken under s. 11 A .in that case and, instead. revisional powers were sought to be exercised, that Court held that the exercise of such revisional powers must be J!Ovemcd hy the same limitation which applied to the exercise of power of re Jn fact, the correct principle that should have been assessment. applied in that case is the principle mentioned by us earlier laid down in K. M. Cheria Abdulla & Co.('). The revision should have been held to be incomretent on the ground that the power

(I) 11 S.T.C. 87. (J) 31 l.T.R. 16~.

(2) 9 S.T.C. 654. (4) 1196~) 1 S.C.R. Ml.

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SWASnK OIL MILLS "· COMMR. s. TAX (Bhargava, J.)

503

was sought to be exercised for assessment of escaped wmover which had not 'been assessed at all at the initial stage of assess ment under s. 11 and proceedings under s. l lA could have been competently initiated for br!nging that turnover to tax. Instead, the Court eqpated the proceeding in revision with the proceeding for reassessment and applied the 4-year period of limitation which was prescribed only for reassessment and not for exercise of revi sional power. In our opinion, the ultimate decision in that case was perfectly correct, but we are unable to affirm the view that 1he revisional power is governed by any period of limitation laid down in s. 1 lA for proceedings for re-assessment of escaped turn over.

In that case, it was held that

Reference, in this connection, was also made to a decision of this Court in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, Bihar and Orissa('), in which the Court dealt with a case of an assessee whose income to the extent of Rs. 93,604/ representing interest on arrears of rent was omitted to be brought to assessment by the Income-tax Officer. Subsequently, in another case, the Privy Council held that interest on arrears of rent pay able in respect of agricultural land was not agricultural income and, consequently. the Income-tax Officer initiated reassessment proceedings under s. 34(1 )(b) of the Income-tax Act. The dr cumstance relied upon by learned counsel for the appellant was that the omission by the Income-tax Officer to bring to assessment that interest was patt of an order made 'by him after his initial assessment order had been set aside by the Appellate Assistant Commissioner who directed a fresh assessment, allowing the appeal the escaped against that order. income could be brought to tax under s. 34 ·of the Income Tax Act; and, on the basis of this decision, it was urged that, similarly, in the present case,· the turnover now sought to be brought to revisional powers could be re-assessed under tax in exercise of that' s. l lA. This argument ignores the circumstance that, case, the last order, under which the income from interest had been exempted from tax, was an order made by the Income Tax Officer himself, though after the assessment proceedings had been remanded to him by the Appellate Assistant Commissioner. Since the income had escaped assessment under an order passed by the I,ncome-tax Officer himself, he could competently take proceedings the under section 34. assessee now sought to be taxed in the revislonal proceedings did not escape lia'bility to tax under the orders of the Sales-tax Officer ~nd, on the other hand. was actually taxed by him, which imposi tion of tax was sc;t aside in appeal. Consequently, the Sales Tax Officer could not possibly take proceedings under s. 11 A in res pect of that turnover.

In the case before us, the t11rnover of

in

A

B

c

D

E

F

G

II

II) 351.T.R: I.

,.

•

504

SUPREME COURT REPORTS

(!968]_2 S.C.R.

For these reasons, we hold that the proceedings initiated by the Deputy Commissioner of Sales Tax against the appellant are not incompetent and the High Court was right in refusing the writ sought by the appellant. The appeal fails and is dismissed with costs.

R.K.P.S.

A

B

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