State of Kerala Vs. K. M. Charia
Abdullah & Co. [1964] INSC 215 (5 October 1964)
05/10/1964 SUBBARAO, K.
SUBBARAO, K.
SHAH, J.C.
SIKRI, S.M.
CITATION: 1965 AIR 1585 1965 SCR (1) 601
CITATOR INFO:
RF 1968 SC 843 (2,8,9) F 1976 SC1115 (7) R
1976 SC1545 (15,17) R 1976 SC2136 (12,14) R 1987 SC 558 (6) E 1989 SC1829 (21)
ACT:
Madras General Sales Tax Act (9 of 1939) s.
12(2)(1) and Madras General Sales Tax Rules, 1939, r. 14A-Scope of-If rule
ultra vires the Act.
HEADNOTE:
The respondents submitted return of their
turn-over under the Madras General Sales Tax Act, 1939, and claimed exemption
in respect of certain transactions on the ground that they were commission
sales exempted under the Act. The Deputy Commercial Tax Officer granted the
exemption and assessed tax only on the rest of the turn-over. The Deputy
Commissioner of Commercial Taxes, called for the record of the case and in
exercise of the powers under s. 12(2) (i) of the Act and r. 14A of the Madras
General Sales Tax Rules, directed fresh enquiry in respect of the exemption,
issued a notice calling upon the assessee to show cause against the proposed
revision, heard objections and on the basis of fresh evidence came to the
conclusion that the respondents did, not act as commission agents but carried
on the business of outright purchase and sale in respect of the, entire
turnover. He therefore revised the order of assessment. The assesses' appeal to
the Sales Tax Appellate Tribunal was allowed. The State invoked the revisional
jurisdiction of the High Court. The High Court held that in dealing with a
proceeding under s. 12(2), the revising authority is restricted to the record
before the assessing authority and the order passed on fresh evidence could not
be sustained. It also held that r. 14A which authorised the revising authority
to correct the amount of tax payable after making such enquiry as the authority
considers necessary was ultra vires the Act. The State appealed to the Supreme
Court and contended that the High Court had erred in declaring the rule ultra
vires
HELD (per Shah and Sikri JJ.) : The order
passed by the High Court declaring r. 14A to be ultra vires should be set aside
and the proceedings remanded to the High Court for disposal according to law.
[613 A].
Under s. 12(2) (i) the revising authority may
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 the
regularity of the proceeding.
If after perusing the record the authority is
prima facie satisfied about the illegality or impropriety or irregularity, it
may under r. 14A, before passing an order, direct an additional enquiry. The
validity of the rule even though it is directed to have effect as if enacted in
the Act, is always open to challenge on the ground that it is unauthorised But
there is nothing in the Act prohibiting the revising authority from making or
directing a further enquiry before passing an order in revision, once it is
satisfied on the record about the existence of the illegality, impropriety or
irregularity. The Act, while conferring revisional jurisdiction under s. 12,
leaves it to the State Government by rules framed under s. 19, to prescribe the
procedure to be followed by the authority. A provision authorising the revising
authority to make a further enquiry for effectively exercising his jurisdiction
must be regarded as a provision validly conferring power unless it expressly or
by clear implication nullifies, or is inconsistent with any provision of the Act.
The matter should however be remanded to the High Court to make an enquiry
whether in the circumstances of the 602 case, the Deputy Commissioner was
competent to proceed in the manner he had done and to pass the order in
revision.
For, while the revisional jurisdiction is not
restricted only to cases of arithmetical errors, it would not invest the
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 the
power. [608 F, H; 609 A, D-E, G-H. 611 G-H. 612 A, D, H].
Per Subba Rao J. (dissenting) : Rule 14A in
so far as it confers a power on the revising authority to make a fresh enquiry
and to determine on the basis of the enquiry the correct amount of tax payable
is void, because, while the jurisdiction under s. 12(2) is clearly limited to
the scrutiny of the order passed or the proceedings recorded by the inferior
authority, and the scope of the scrutiny is confined to the question of
legality or propriety of the order or the regularity of the proceedings, the
rule obviously enlarges the enquiry beyond the limits prescribed.
[604 605 A-B].
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 466 of 1962.
Appeal by special leave from the judgment
dated December 2, 1959 of the Kerala High Court in Tax Revision Case No. 1 of
1957.
V. P. Gopalan Nambyar, Advocate-General,
Kerala and V. A. Seyid Muhammed, for the appellant.
A. V. Viswanatha Sastri and R.
Gopalakrishnan, for the respondent.
SUBBA RAO J., delivered a dissenting Opinion.
The Judgment of SHAH and SIKRI JJ. was delivered by SHAH J.
Subba Rao J. I regret my inability to agree.
The facts are fully stated in the judgment of my learned brother Shah J.
It would, therefore, be enough if only the
relevant facts were stated. The respondents are dealers in pepper and other
condiments. For the year 1950-51 they submitted their return under the Madras
General Sales Tax Act, 1939, wherein they claimed exemption in respect of
certain transactions on the ground that they were commission sales exempted
under s. 8 of the said Act. The Deputy Commercial Tax Officer, Cannanore
(Rural) gave the exemption claimed and assessed the tax on the turn-over
relating to transactions other than those exempted. The Deputy Commissioner of
Commercial Taxes, Coimbatore Division, called for the record of the case of the
respondents for the said assessment year, and in exercise of the powers under
s. 12(2) (i) of the Act directed a fresh enquiry in respect of the said
exemption.
He issued a notice on February 9, 1956,
calling upon the respondents to show cause against the proposed revision of
assessment. On the basis of fresh evidence, the Deputy Commissioner of Commercial
Taxes came to the conclusion that the respondents did not act as commission
agents 603 but carried on the business of "outright purchase and We"
in respect of the entire turnover. On that finding, he revised the order of the
Deputy Commercial Tax Officer and assessed the respondents on a larger
turnover.
The short question is whether the Deputy
Commissioner of Commercial Taxes has jurisdiction under s. 12 (2) (i) of the
Act, read with the relevant rule, r, 14-A, to make the order he did.
It is well settled that a subordinate
provision, if inconsistent with the Act, must give way to the Act. Though there
is an apparent conflict between a section of the Act and a rule made there under,
an attempt should be made to reconcile them; that is to say, the rule may be so
construe d, if the phraseology permits it, as to make it consistent with the
Act. If it is not possible, the rule must be struck down.
It is obvious that the rule cannot override
s. 12 of the Act. If s. 12 does not give jurisdiction to the revisional
authority to make a fresh enquiry and decide the case on merits, r. 14-A cannot
confer on him such power, for r.'14-A in that event comes into conflict with S.
12 of the Act and must, therefore, yield to it.
This leads us to the question whether the
revisional jurisdiction conferred under s. 12 of the Act enables the authority
concerned to make a fresh enquiry after issuing notice to the dealer concerned
and determine the question of assessment on merits. The Act provides for
appeals in some cases and revisions in other cases. Under s. 11 (1) of the Act
any assessee objecting to an assessment made on him may, within 30 days from
the date on which he was served with the notice of assessment, appeal to such
authority as may be prescribed; under s. 11(3), the appellate authority may,
after giving the appellant an opportunity of being heard, pass such orders on
the appeal as such authority may think fit. Under s. 12(2) of the Act, the
revisional authority may suo motu "call for and examine the record of any
order passed or proceeding recorded under the provisions of the 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 may pass such order with respect thereto as he thinks
fit." When the Legislature confers a right of appeal in one case and a
discretionary remedy of revision in another, it must be deemed to have created
two jurisdictions different in scope and content. When it introduced the
familiar concepts of appeal and revision, it is also reasonable to assume that
the well-known distinction between these two jurisdictions was also accepted by
the 604 legislature. There is an essential distinction between an appeal and a
revision. The distinction is based on differences implicit in the said two
expressions. An appeal is a continuation of the proceedings; in effect the
entire proceedings are before the appellate authority and it has power to
review the evidence subject to the statutory limitations prescribed. But in the
case of a revision, whatever powers the revisional authority may or may not
have, it has not the power to review the evidence unless the statute expressly
confers on it that power. That limitation is implicit in the concept of
revision. Section 12 (2) is no doubt wider in scope than s. 115 of the Code of
Civil Procedure. Even so the revisional authority's jurisdiction is confined to
the question of legality or propriety of the order or the regularity of the
proceedings. The further limitation on that jurisdiction is that it can only
exercise the same on the examination of the record of any order passed or
proceedings taken by any authority. The section, therefore, not only limits the
scope of its jurisdiction but also defines the material on the basis of which
the said jurisdiction is exercised. The general expression that the authority
"may pass such order as he thinks fit" must necessarily be confined
to the scope of the jurisdiction.
The revisional authority, therefore, cannot
travel beyond the order passed or proceedings recorded by the inferior
authority and make fresh enquiry and pass orders on merits on the basis of the
said enquiry. If it is not construed in this manner, the distinction between
appeal and revision would be effaced.
Bearing this distinction in mind let me look
at r. 14-A.
Rule 14-A of the rules does not make any
distinction between an appellate and a revisional authority. It empowers the
revisional authority to issue a notice to a dealer and determine the correct
amount of tax after making such enquiry as it considers necessary. The said
rule, therefore, confers a power larger than that conferred upon the revising
authority under s. 12(2) of the Act. While the jurisdiction under s. 12(2) of
the Act is clearly limited to the scrutiny of the order passed or the
proceedings recorded by the inferior authority and the scope of the scrutiny is
confined to the question of legality or propriety of an order or the regularity
of such proceedings, r. 14-A obviously enlarges the enquiry beyond the limits
prescribed and permits the revising authority to make a fresh enquiry and pass
fresh assessment orders on the basis of the said enquiry. It is not necessary
to particularize what kind of orders the revising authority can make and what
are the defects that are comprehended by the expression "legality",
"propriety" and .'regularity", They are well-known concepts.
But the said defects 605 can only be
discovered from the said record and proceedings and not by a fresh enquiry. If
so, it follows that r . 14-A insofar as it confers a power on the revising
authority to make a fresh enquiry and to determine on the basis of the enquiry
the correct amount of tax payable by an assessee is void. Therefore, the order
of the High Court is correct.
In the result, the appeal fails and is
dismissed with costs.
Shah J. The respondents are dealers in pepper
and other condiments and have their place of business at Baliapatam, Malabar
(North) District which formerly was part of the State of Madras, but since the
reorganisation of States under the States Reorganisation Act, 1956, forms part
of the State of Kerala. For the year 1950-51 the respondents submitted their return
under the Madras General Sales Tax Act, 1939 showing a gross turnover of Rs.
67,38,710-10-11 in respect of their business, and claimed exemption in respect
of turnover of the value of Rs. 50,83,441-14-4 on the plea that it represented
commission sales which were exempt from tax by s. 8 of the Act. The Deputy
Commercial Tax Officer, Cannanore (Rural) by order, dated February 19, 1952
granted exemption from tax on the commission sales covered by s. 8 and computed
the net taxable turnover of the respondents at Rs. 16,84,060-11-9. By order,
dated February 26, 1952 the Deputy Commercial Tax Officer assessed Rs.
26,313-7-3 as the tax payable on the taxable turn-over of the respondents.
Some time before February 1956 the Deputy
Commissioner of Commercial 'Taxes, Coimbatore Division, called for the record
of the case Of the respondents for the assessment year in question in exercise
of the powers under s. 12(2) (i) of the Act and directed an enquiry into the
validity of the claim about exemption in respect of the commission sales under
s. 8 of the Act.
The Deputy Commissioner then issued a notice
on February 9, 1956 calling upon the respondents to show cause against the
proposed revision of assessment which would result in enhancement of tax. After
hearing the objections raised by the respondents, by order, dated March 4,
1956, the Deputy Commissioner held that the respondents did not act as
commission agents but "carried on business of outright purchase and
sale" in respect of the turnover of Rs.
50,83,355-13-4 and on that view in purported
exercise of the powers vested in him by S. 12 (2) (i) of the Act revoked the
exemption granted by the assessing officer by his order, dated February 19,
1952, revised the order, dated February 26, 1952 and assessed the respondents
to pay tax on a total net turn-over of 606 Rs. 67 ,67,4.16-9-1 for 1950-51. He
directed the assessing officer to take further action in the matter and to
recover the tax due.
Against that order, the respondents moved the
Sales Tax Appellate Tribunal, Madras. The appeal of the respondents was heard
by the Tribunal and by order, dated October 10, 1956 the Tribunal held that the
assessing officer had in assessing the respondents in respect of transactions
for which they had previously ,obtained exemption, acted in excess of his
jurisdiction under s. 12 (2) (i) of the Act and his order was liable to be set
aside. In coming to that conclusion the Tribunal held that rule 14-A of the
Rules framed under the Act which was brought into force on January 1, 1948
could be applied only when the amount of tax payable is found to be less than
the correct amount, thereby indicating that in rule 14-A the "emphasis is
more on the arithmetical aspect rather" than on the merits of an
assessment. In the view of the Tribunal, rule 14-A was "much more
restricted in scope than s. 12 of the Act, and where a case is taken up under
the general power of revision, one has to look at the scope of s. 12 to find
out the extent of the general power, and not rule 14-A." Against the order
passed by the Tribunal, the State of Kerala which had acquired jurisdiction in
respect of the sales tax assessment of the respondents by virtue of the States
Reorganisation Act, 1956, applied to the High Court of Judicature, Kerala. It
may suffice to observe that no question about the vires of rule 14-A was raised
by the assessees before the Taxing authorities, and the State was not
interested in raising such a contention. But the High Court held that in
dealing with a proceeding under s. 12(2) of the Madras General Sales Tax Act
the revising authority is restricted to the record before the assessing
authority and his order passed on fresh evidence could not be sustained. In the
view of the High Court the expression "the record of any order passed or
proceeding recorded" under s. 12(2) restricted the revising authority to
the examination of the legality or propriety of the order of a subordinate
officer or as to the regularity of the proceeding of such authority and
prohibited consideration of any other evidence, and rule 14-A made by the State
Government in exercise of the power under s. 19 of the Act, which authorises
the revising authority or the appellate authority to correct the amount of tax
payable by the dealer after issuing a notice to the dealer and after making
such enquiry as such appellate or revising authority considers necessary was
ultra vires the Art.
The State of Kerala in this appeal contends
that the High Court has erred in declaring rule 14-A ultra vires and in the
disposing of 607 its petition invoking the revisional jurisdiction of the High
Court on that footing. To appreciate the argument it is necessary in the first
instance to read the relevant provisions of the Act and rules framed
thereunder. Section 9 of the Act deals with the procedure of the assessing
authority and S. 10 deals with the payment and recovery of tax. Against an
order of assessment an appeal lies under s. 11 to such authority as may be
prescribed. By S. 12 as amended by the first sub-section, the Commercial Tax
Officer is authorised either suo motu or on application in cases in which an
appeal does not lie to him under s. 11, to exercise revisional jurisdiction.
Sub-section (2) with which we are directly concerned in this appeal provides
(2) The Deputy Commissioner may(i) suo motu, or (ii) in respect of an order
passed or proceeding recorded by the Commercial Tax Officer under subsection
(1) or any other provision 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 the record of any order passed or proceeding recorded under the
provisions of this 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 may pass such order with respect thereto as he thinks
fit." Sub-section (4), insofar as it is material, provides that in
relation to an order of assessment passed under the Act, the power of the
Deputy Commissioner under cl. (1) of sub-s. (2) shall be exercisable only
within a period of four years from the date on which the order was communicated
to the assessee. Sub-section (6) provides that no order may be passed under
sub-ss. (1), (2) or (3) enhancing the assessment, without giving an opportunity
to the assessee to show cause against the proposed enhancement.
Sub-section (1) of S. 19 authorises the State
Government to make rules to carry out the purposes of the Act. By sub-s.
(2) it is provided :
"In particular and without prejudice to
the generality of the foregoing power, such rules may provide for(j) the duties
and powers of officers appointed for the purpose of enforcing the provisions of
this Act;
608 (k) generally regulating the procedure to
be followed and the forms to be adopted in proceedings under this Act; and (1)
any other matter for which there is no provision or no sufficient provision in
this Act and for which provision is, in the opinion of the State Government,
necessary for giving effect to the purposes of this Act." Sub-section (5)
of S. 19 provides that all rules made under this section shall be published in
the Fort St. George Gazette, and upon such publication shall have effect as if
enacted in the Act.
The Advocate-General for the State of Kerala
contends that rule 14-A was validly made in exercise of the powers under s. 19
and that in any event the rule having by sub-s. (5) of s. 19 the effect as if
it is enacted in the Act it is not liable to be declared invalid. The
alternative ground advanced by the Advocate-General may be easily disposed of.
The rules made under S. 19 and published in
the Government Gazette have by the express provision to have effect as if
enacted in the Act : but thereby no additional sanctity attaches to the rules.
Power to frame rules is conferred by the Act upon the State Government and that
power may be exercised within the strict limits of the authority conferred. If
in making a rule, the State transcends its authority, the rule will be invalid,
for statutory rules made in exercise of delegated authority are valid and
binding only if made within the limits of authority conferred. Validity of a
rule whether it is declared to have effect as if enacted in the Act or
otherwise is always open to challenge on the ground that it is unauthorised.
Turning then to the jurisdiction which the
revising authority may exercise under S. 12(2), attention must first be
directed to the phraseology used by the Legislature. The Deputy Commissioner is
thereby invested with power to satisfy himself about the legality or propriety
of any order passed or proceeding recorded by any officer subordinate to him,
or the regularity of any proceeding of such officer, and to pass such orders
with respect thereto as he thinks fit. For exercising this power, he may suo
motu or on application call for and examine the record of any proceeding or
order. 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 609 jurisdiction, if the revising authority is
satisfied that the subordinate officer has committed an illegality or
impropriety in the order or irregularity in the proceedings, he cannot make or
direct any further enquiry. The words of sub-s. (2) of s. 12 that Deputy Commissioner
"may pass such order with respect thereto as be thinks fit" mean such
order as may in the circumstances of the case for rectifying the defect be
regarded by him as just. Power to pass such order as the revising authority
thinks fit may in some cases include power to make or direct such further
enquiry as the Deputy Commissioner may find necessary for rectifying the
illegality or impropriety of the order or irregularity in the proceeding. It is
therefore not right baldly to propound that in passing an order in the exercise
of his revisional 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.
It must be noticed that the Act while
conferring upon the prescribed authority power to entertain an appeal under s. 11,
and a petition in revision under s. 12 does not prescribe the procedure to be
followed by the authorities.
It is left to the State Government by rules
framed under s. 19 to prescribe the procedure of the appellate and the revising
authorities and a provision authorising the making of a further enquiry for
effectively exercising the appellate or revisional power, would in the case of
a taxing statute fall within the scope of the rules. Jurisdiction to revise the
order or proceeding of a subordinate officer has to be exercised for the
purpose of rectifying any illegality or impropriety of the order or
irregularity in the proceeding. But in taking that course the procedure to be
followed is prescribed by the rules, framed under s. 19(1) to carry out the
purposes of the Act and as further illustrated by the head (1), (k) and (j) of
sub-s. (2).
In our view the amplitude of the power
conferred by sub-s. (1) and illustrated by sub-s. (2) of s. 19 takes in the
power to provide for making further enquiry enabling the revising authority to
exercise his powers and unless the power so conferred expressly or by clear
implication nullifies or is inconsistent with any provision of the Act, it must
be regarded as validly exercised. Conferment of power to make further enquiry
in cases where after being satisfied about the illegality or impropriety of the
order or irregularity in the proceeding, the revising authority thinks it just for
rectifying the defect to do so does not amount to enlarging the jurisdiction
conferred by s. 12 (2).
It is in this light that the 610 provisions
of rule 14-A may be examined. That Rule which was added with effect from
January 1, 1948, provides :
"Where the tax as determined by the
initial assessing authority appears to the appellate authority under section 11
or revising authority under section 12 to be less than the correct amount of
the tax payable by the dealer, the appellate or revising authority shall,
before passing orders, determine the correct amount of tax payable by the
dealer after issuing a notice to the dealer and after making such enquiry as
such appellate or revising authority considers necessary." It must be
noticed that the power to determine the correct amount ,of tax after issuing a
notice to the dealer and after making such enquiry as the authority considers
necessary is vested by this rule in the appellate authority as well as the
revising authority. It is usual in taxing statutes to confer such power upon
the appellate and revising authorities. Under the Income-tax Act, 1922, by s.
31(2) the Appellate Assistant Commissioner
was given the power before disposing of any appeal, to make such further
inquiry as he thought fit, or cause further inquiry to be made by the
Income-tax Officer. By s. 33 (4) the Appellate Tribunal was given power to pass
such order in the appeal as it thought fit and that power included the power to
direct additional evidence to be taken or to take evidence itself :
M. L. Tewary v. Commissioner of Income-tax,
Bihar and Orissa(1). By s. 33-A the Commissioner could on his own motion or an
application presented within one year from the date of the order sought to be
revised, call for the record of any proceeding under the Act in which an order
had been passed by any authority subordinate to him and could make such inquiry
or cause such inquiry to be made and subject to the provisions of the Act to
pass such order thereon, as he thought fit. Similar provisions are now
incorporated in the Income-tax Act, Act 43 of 1961. By s. 250(4) of-that Act
the Appellate Assistant Commissioner is authorised before disposing of an
appeal to make such further inquiry as he thinks fit or to direct the
Income-tax Officer to make further inquiry and report the result of the same to
him.
Powers of the Income Tax Appellate Tribunal
and the Commissioner are couched in the same terms as under the Act of 1922 :
[see s. 254(1) and s. 263(1)]. It cannot therefore be said that a provision
which confers upon the appellate or revising authority power to make such
inquiry as such appellate or revising authority considers necessary in itself
amounts to enlarging the (1) (1955) 27 I.T.R. 630.
611 revisional or appellate jurisdiction. The
only difference between the Income-tax Acts and the Madras General Sales Tax
Act is that whereas the power to entertain the appeal or revision application
and to make orders for further enquiry in the hearing of the appeal or revision
is wholly dealt with by the provisions of the Income-tax Acts, under the Madras
General Sales Tax Act the revisional jurisdiction and appellate jurisdiction
are conferred by the Act, but the power of the appropriate authority in the
exercise of the jurisdiction when it appears to the appellate or revising
authority that the correct amount of tax payable by the dealer has not been
paid to make a further inquiry as the authority considers necessary is
conferred by the rules.
But that is no ground for regarding the
conferment of power to travel outside the record of the subordinate taxing
authorities as unauthorised. Investment of powers to make such inquiry as the
appellate or the revising authority considers necessary can manifestly be
invested by cls. (k) and (1) of s. 19 sub-s. (2) and if such power is invested
the rule authorising the making of inquiry is not ultra vires.
The Madras High Court in the State of Madras
v. The Madura Knitting Company Ltd.(1) has held that the powers given to the
revising authority under s. 12(2) are not confined to errors patent on the face
of the record, but would extend to probing further into the records like
calling for despatch registers and other evidence.
But this is not sufficient to dispose of the
appeal before us. The objection that rule 14-A was ultra vires was raised for
the first time before the High Court. The Tribunal had merely held that rule
14-A must be so read as to deal with "the arithmetical aspect rather than
on the aspect of the merits of an assessment." There is, however, no such
restriction in either rule 14-A or in s. 12(2) of the Act.
The power to hold an enquiry to take
additional evidence is a procedural power in aid of the exercise of the
revisional jurisdiction and if the revisional jurisdiction is not restricted
only to cases of arithmetical errors or as the Tribunal called it
"arithmetical aspect", there is no reason to assume that the power
under rule 14-A to make such enquiry as the appellate or the revising authority
considers it just to order or to make would be so restricted. But the power
conferred by rule 14-A by the use of the expression "making such enquiry
as such appellate or revising authority considers necessary" must be read
subject to the scheme of the Act. It would not invest the revising authority with
power to launch upon enquiries at large so as either to trench (1) (1959) 10
S.T.C. 155.
612 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 turn-over is primarily vested by rule 17 in the assessing
officer and is to be exercised subject to certain limitations, and the revising
authority will not be competent to make an enquiry for reassessing a tax-payer.
Similarly the power to make a best judgment assessment is vested by S. 9(2)(b)
in the assessing authority and has to be exercised in the manner provided. It
would not be open to the revising authority to assume that power. The
revisional power has to be exercised for ascertaining whether the order passed
is illegal or improper or the proceeding recorded is irregular and it is in aid
of that power that such orders may be passed as the authority may think fit.
One of the inquiries in considering the legality or propriety of the orders
passed by the subordinate officer which the revising or the appellate authority
may make is about the correctness of the tax levied and if after perusing the
record the authority is prima facie satisfied about the illegality or impropriety
of the order or about the irregularity of the proceeding, it may in passing its
order direct an additional enquiry.
Neither s. 12 nor rule 14-A authorises the
revising authority to enter generally upon enquiries which may properly be made
by the assessing authorities and to reopen assessments.
We are at this stage not called upon to
express any opinion about the correctness of the order passed by the Deputy
Commissioner on the merits. The High Court has not investigated that question,
and we have no materials before us which would justify us in launching upon an
enquiry into this unexplored field. We have, however, thought it necessary to
explain the restrictions inherent in the exercise of power under S. 12(2) read
with Rule 14-A, because counsel for the respondents has urged before us that
the enquiry made by the Deputy Commissioner is inconsistent with the scheme of
the Act, in violation of the rules of natural justice, and in circumvention of
the restrictions on the power to reassess. That is a matter which will demand
investigation before the High Court. We desire only to impress that the view
taken by us that rule 14-A is not ultra vires is not sufficient to dispose of
the revision application filed before the High Court. The High Court will have
to make enquiry whether in the circumstances of the case the Deputy
Commissioner, Coimbatore Division,, was competent to proceed in the manner he
has done and to pass the order which was impugned before the Sales Tax
Appellate Tribunal. The border passed by the High Court declaring rule 14-A to
be 613 ultra vires is set aside, and the proceedings are remanded to the High
Court to be dealt with according to law.
There will be no order as to costs.
ORDER BY COURT In accordance with the opinion
of the majority, the order of the High Court declaring rule 14-A to be ultra
vires is set aside and the proceedings are remanded to the High Court to be
dealt with according to law. There will be no order as to costs.
Appeal allowed and proceedings remanded.
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