Santoshi Tel Utpadak Kendra Vs. Deputy
Commissioner of Sales Tax [1981] INSC 125 (24 July 1981)
PATHAK, R.S.
PATHAK, R.S.
BHAGWATI, P.N.
CITATION: 1981 AIR 1617 1982 SCR (1) 97 1981
SCC (3) 466 1981 SCALE (3)1094
ACT:
Bombay Sales Tax Act 1959, S. 51(1) (a)-Scope
of- Assessment order by Sales Tax Officer-Assessee's first appeal before
Assistant Commissioner disposed of-Assessee's second appeal before Sales Tax
Tribunal pending-Commissioner of Sales Tax whether competent to revise the
appellate order of Assistant Commissioner.
HEADNOTE:
The appellant, a partnership firm, was
assessed by the Sales Tax Officer, who estimated the turnover for the Calendar
year 1971, and for the first six months of the year 1972 and made two orders of
assessment dated 26 March 1973 under section 33 of the Bombay Sales Tax Act,
1959 levying Sales Tax and penalty. Against the assessment and penalty orders
for the two periods, the appellant appealed under clause (a) of sub-section (1)
of section 55 of the Act to the Assistant Commissioner. By a common order dated
29th September, 1973 the Assistant Commissioner reduced the quantum of the
turnover and, consequently, the tax liability for each of the periods. Not
fully satisfied by the relief granted, the appellant proceeded in second appeal
to the Sales Tax Tribunal on 8th December, 1973. During the pendency of the
appeals before the Tribunal, the Deputy Commissioner, issued two notices to the
appellant on 24th April, 1974 requiring it to show cause why the appellate
orders dated 29th September, 1973 passed by the Assistant Commissioner should
not be revised under section 57 of the Act. The appellant objected to the
exercise of revisional power by the Deputy Commissioner during the pendency of
the appeals before the Tribunal. On 12th September 1975 the Deputy Commissioner
rejected the objection. Against the order of rejection the appellant filed two
appeals before the Tribunal, and by its order dated 27th October, 1977 the
Tribunal dismissed the appeals. The Tribunal took the view that its deciding
those appeals would result in nullifying the revisional power vested in the
Deputy Commissioner. The two second appeals filed by the appellant against the
appellate orders dated 19th September, 1973 passed by the Assistant
Commissioner were adjourned.
The appellant filed a writ petition in the
High Court against the order of the Deputy Commissioner dated 12th September,
1975 rejecting its preliminary objection and also against the order passed by
the Tribunal on 27th October, 1977 dismissing his appeals as well as the
notices issued by the Deputy Commissioner on 24th April, 1974 in the purported
exercise of his revisional power, contending that the Commissioner of Sales Tax
could not exercise his revisional power against the appellate order of the
Assistant Commissioner when a second appeal against that order was pending
before the Tribunal.
98 The High Court rejected the appellant's
contention observing that as the statute did not provide any other forum or
jurisdiction for protecting the interests of the Revenue, it was always open to
the Commissioner to interfere in revision with an order prejudicial to the
Revenue notwithstanding that such order may be already under appeal before the
Tribunal.
Allowing the appeal to this Court,
HELD: 1. It is not open to the Commissioner
to invoke his power under clause (a) of sub-section (1) of section 57 and
summon the record of an order over which the Tribunal has already assumed
appellate jurisdiction. The subordinate status of the Commissioner precludes
that. [102 G]
2. An assessment order under the Bombay Sales
Tax Act is appealable under section 55 of the Act. When the order is made by
the Sales Tax Officer an appeal goes to the Assistant Commissioner. If the
order is made by the Assistant Commissioner an appeal goes to the Commissioner
and if it has been made by the Commissioner or Deputy Commissioner or
Additional Commissioner an appeal lies before the Tribunal. Sub-section (2) of
section 55 provides for a second appeal against the appellate order of the
Assistant Commissioner. The second appeal lies at the option of the appellant
to the Commissioner or the Tribunal. The Tribunal exercises appellate
jurisdiction by way of second appeal in respect of an assessment order made by
the Sales Tax Officer. It also exercises by way of first appeal, appellate
jurisdiction over an assessment order made by the Commissioner. It is at the
apex of the appellate hierarchy, the Sales Tax Officer, the Assistant
Commissioner and the Commissioner all of them being, subordinate to it. [101
C-E]
3. While the Commissioner exercises
revisional jurisdiction over an order passed by any officer or person
subordinate to him, the Tribunal is the revisional authority over an order of
the Commissioner. The Act constitutes the Tribunal an appellate as well as a
revisional authority over the Commissioner. In quasi-judicial matters the
Commissioner is therefore subordinate to the Tribunal.
[102 D]
4. The Tribunal is the supreme appellate and
revisional authority under the statute. It cannot be divested of its
jurisdiction to decide on the correctness of an order, it cannot be frustrated
in the exercise of that jurisdiction, merely, because a subordinate authority,
the Commissioner, has also been vested with jurisdiction over that order.
Unless the statute plainly provides to the
contrary that appears to be incontrovertible. [102 F]
5. The High Court was in error in concluding
that the power to enhance an assessment can be discovered only in the
revisional jurisdiction of the Commissioner and nowhere else. [104 H-105 A]
6. In a second appeal under sub-section (2)
of section 55 of the Bombay Sales Tax Act, the Tribunal has power to enhance
the assessment. That being so, it is open to the Revenue to invoke that power
in a pending second appeal filed by the dealer before the Tribunal. [104 G]
7. The Commissioner being a subordinate
authority to the Tribunal cannot interfere with an order pending in appeal
before the Tribunal, especially when 99 the interest of the Revenue is protected
by the power of enhancement vested in the Tribunal while disposing of a second
appeal filed by a dealer. [105 G] Commissioner of Sales Tax v. Motor and
Machinery Manufacturers Ltd., (1976) 38 STC 78 over-ruled.
Commissioner of Income Tax v. Amritlal Bhogilal
(1958) 34 ITR 130 (SC) distinguished.
Ramlal Onkarmal v. Commissioner of Income
Tax, Assam (1962) 44 ITR 578, Kelpunj Enterprises v. Commissioner of Income Tax
Kerala. (1977) 108 ITR 294, Russell Properties (P.) Ltd. v. A. Chowdhury,
(1977) 109 ITR 229 inapplicable.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1968 of 1978.
Appeal by special leave from the judgment and
order dated 22nd/23rd June/5th July 1978 of the High Court of Bombay (Nagpur
Bench) in Special Civil Application No. 238 of 1978.
V.S. Desai, P.H. Parekh, C.B. Singh, B.L.
Verma & Miss V. Caprihan for the Appellant.
R.H. Dhebar & M.N. Shroff for the
Respondent.
The Judgment of the Court was delivered by
PATHAK, J. This appeal by special leave raises the important question whether
the Commissioner of Sales Tax can revise under cl. (a) of sub-s. (1) of s. 57
of the Bombay Sales Tax Act, 1959, an appellate order passed by the Assistant
Commissioner when the assessee's second appeal against that order is pending
before the Maharashtra Sales Tax Tribunal.
The appellant is a partnership firm, carrying
on the business of manufacturing and selling vegetable The Sales Tax Officer
estimated the turnover for the calendar year 1971 and made an order dated 26th
March, 1973 levying Sales Tax at Rs. 73,198.62 and a penalty of Rs. 36,197.64.
On the same date, another assessment order was made for the first six months of
the year 1972, where again on the basis of an estimate the Sales Tax Officer
computed the tax Rs.
81,745.71 and levied a penalty of Rs.
37,572.26. The two assessment orders were apparently made under s.33 of the
Bombay Sales Tax Act, 1959. Against the assessment and penalty orders for 100
the two periods, the appellant appealed under cl. (a) of sub-s. (1) of s. 55 of
the Act to the Assistant Commissioner. By a common order dated 29th September,
1973 the Assistant Commissioner reduced the quantum of the turnover and,
consequently, the tax liability to Rs.
30,494.67 and the penalty to Rs. 11,745.71
for the first period and a tax liability of Rs. 16,447.33 and penalty of Rs.
5,572.26 for the second period. Not fully satisfied by the relief granted, the
appellant proceeded in second appeal to the Maharashtra Sales Tax Tribunal on
8th December, 1973.
During the pendency of the appeals before the
Tribunal, the Deputy Commissioner, Nagpur issued two notices to the appellant
on 24th April, 1974 requiring it to show cause why the appellate orders dated
29th September, 1973 passed by the Assistant Commissioner should not be revised
under s. 57 of the Act. The appellant objected to the exercise of revisional
power by the Deputy Commissioner during the pendency of the appeals before the
Tribunal. On 12th September, 1975 the Deputy Commissioner rejected the
objection. Against the order of rejection the appellant filed two appeals
before the Tribunal, and by its order dated 27th October, 1977 the Tribunal
dismissed the appeals.
At the same time, the Tribunal adjourned the
two second appeals filed by the appellant against the appellate orders dated
29th September, 1973 passed by the Assistant Commissioner. The Tribunal took
the view that its deciding those appeals would result in nullifying the
revisional power vested in the Deputy Commissioner.
The appellant filed a writ petition in the
High Court of Bombay against the order of the Deputy Commissioner dated 12th
September 1975 rejecting its preliminary objection and also against the order
passed by the Tribunal on 27th October, 1977 dismissing his appeals, as well as
the notices issued by the Deputy Commissioner on 24th April, 1974 in the
purported exercise of his revisional power.
The only point pressed by the appellant
before the High Court was that the Commissioner of Sales Tax could not exercise
his revisional power against the appellate order of the Assistant Commissioner
when a second appeal against that order was pending before the Tribunal. The
High Court turned down the plea by its order dated 5th July, 1978, observing
that it was always open to the Commissioner to interfere in revision with an
order prejudicial to the Revenue notwithstanding that such order may be already
under appeal before the Tribunal. The High Court felt compelled to take this
view because, in its opinion, the statute did not provide any 101 other forum
or jurisdiction for protecting the interests of the Revenue. It relied on its
earlier judgment in Commissioner of Sales Tax v. Motor and Machinery
Manufactures Ltd., and also sought support from the observations of this Court
in Commissioner of Income Tax v.
Amritlal Bhogilal. It spoke further of
"the anomaly of overlapping jurisdiction" between the Commissioner
and the Tribunal, and referred with approval to an earlier decision of the High
Court in H. B. Munshi v. Oriental Rubber Industries Pvt. Ltd.
An assessment order under the Bombay Sales
Tax Act is appealable under s.55 of the Act, and we may mention only that when
the order is made by the Sales Tax Officer an appeal lies to the Assistant
Commissioner, if the order is made by the Assistant Commissioner an appeal goes
to the Commissioner and if it has been made by the Commissioner (or Deputy
Commissioner or Additional Commissioner) an appeal lies before the Tribunal.
Sub-s. (2) of s.55 provides for a second appeal against the appellate order of
the Assistant Commissioner. The second appeal lies at the option of the
appellant, to the Commissioner or the Tribunal. The Tribunal, it will be
noticed, exercises appellate jurisdiction by way of second appeal in respect of
an assessment order made by the Sales Tax Officer. It also exercises, by way of
first appeal, appellate jurisdiction over an assessment order made by the
Commissioner. It is at the apex of the appellate hierarchy, the Sales Tax
Officer, the Assistant Commissioner and the Commissioner all of them being, therefore,
subordinate to it.
S.57 of the Act provides for revisional
jurisdiction.
"57 (1) Subject to the provisions of
section 56 and to any rules which may be made in this behalf.
(a) the Commissioner may, of his own motion,
call for and examine the record of any order passed (including an order passed
in appeal) under this Act or the rules made thereunder by any officer or person
subordinate to him, and pass such order thereon as he thinks just and proper;
102 Provided that, no notice in the
prescribed form shall be served by the Commissioner under this clause after the
expiry of three years from the date of the communication of the order sought to
be revised, and no order in revision shall be made by him hereunder after the
expiry of five years from such date;
(b) the Tribunal, on application made to it
against an order of the Commissioner (not being an order passed under
sub-section (2) of s.55 in second appeal) within four months from the date of
the communication of the order, may call for and examine the record of any such
order, and pass such order thereon as it thinks just and proper.
It will be noticed that while the
Commissioner exercises revisional jurisdiction over an order passed by any
officer or person subordinate to him, the Tribunal is the revisional authority
over an order of the Commissioner (not being an order passed by the
Commissioner disposing of a second appeal). The Act thus constitutes the
Tribunal an appellate as well as a revisional authority over the Commissioner.
Plainly, therefore, in quasi-judicial matters the Commissioner is subordinate
to the Tribunal.
Now it seems to us past question that when
the appellate jurisdiction of superior authority is invoked against an order
and that authority is seized of the case, it is inconceivable for a
sub-ordinate authority to claim to exercise jurisdiction to revise that very
order. The Tribunal is the supreme appellate and revisional authority under the
statute. It cannot be divested of its jurisdiction to decide on the correctness
of an order, it cannot be frustrated in the exercise of that jurisdiction,
merely because a subordinate authority, the Commissioner, has also been vested
with jurisdiction over that order. Unless the statute plainly provides to the
contrary, that appears to us to be incontrovertible. It is not open to the
Commissioner to invoke his power under cl. (a) of sub-s. (1) of s. 57 and
summon the record of an order over which the Tribunal has already assumed
appellate jurisdiction. The subordinate status of the Commissioner precludes
that.
The High Court felt burdened by the
compulsion that unless a contemporaneous exercise of concurrent jurisdiction
was read into sub-s. (1) of s.57, so that both the Tribunal and the
Commissioner 103 could be regarded as simultaneously enjoying "overlapping
jurisdiction" in respect of the same order, it would be impossible to
safeguard the interests of the Revenue; for, says the High Court, a second
appeal is available only to a dealer and not to the Revenue, and an enterprising
dealer could, by expeditiously filing a second appeal before the Tribunal
effectively shut out the Commissioner from interfering with the order in the
interests of the Revenue.
The High Court found itself driven to the
conclusion that the Commissioner was entitled to revise an order at any stage,
otherwise there could be cases where the assessment could not be enhanced. The
High Court, we think, has overlooked an important provision of the Act. In our
opinion, the appellate powers elaborated in sub-s. (6) of s.55 take account of
such a need. Their comprehensive sweep can be judged from the terms of the
sub-section.
"(6) Subject to such rules of procedure
as may be prescribed, every appellate authority (both in the first appeal and
the second appeal) shall have the following powers:
(a) in an appeal against an order of
assessment, it may confirm, reduce, enhance or annul the assessment; or it may
set aside the assessment and refer the case back to the assessing authority for
making a fresh assessment in accordance with the direction given by it and
after making such further inquiry as may be necessary; and the assessing
authority shall thereupon proceed to make such fresh assessment and determine
where necessary, the amount of tax, payable on the basis of such fresh
assessment;
(b) in an appeal against an order imposing a
penalty, the appellate authority may confirm or cancel such order or vary it so
as either to enhance or reduce the penalty.
(c) In any other case, the appellate
authority may pass such orders in the appeal as it deems just and proper;
Provided that, the appellate authority shall
not enhance an assessment or a penalty or reduce the amount 104 of draw-back,
set off or refund of the tax, unless the appellant has had a reasonable
opportunity of showing cause against such enhancement or reduction".
Three distinct categories of cases are
enumerated An appeal against an assessment order, an appeal against a penalty
order and an appeal in any other case. The power to enhance the liability is
given to the appellate authority in the first two categories only. We are
concerned with one of them, an appeal against an order of assessment.
Now the sub-section speaks of an
"appellate authority both in the first appeal and the second appeal".
It is quite clear, therefore, that the appellate powers detailed in cl.
(a) have the same amplitude in a second
appeal as in a first appeal. An appellate authority disposing of a first appeal
has power to enhance the assessment. So has appellate authority in a second
appeal. We may also point out that when an appellate authority is considering a
second appeal a "first appellate" order, it is examining an order
which can be broadly described as an order of assessment. It is a final order
disposing of an appeal which, in a sense, is a continuation of the assessment.
A second appeal against such an order is an appeal against an order of
assessment.
En passant, it will be noticed that sub-s.
(6) of s.55 of the Bombay Sales Tax Act is in pari materia with sub-s. (1) of
s. 251 of the Income Tax Act, 1961. The language is almost identical. Sub-s.
(1) of s. 251 sets forth the same three categories and the power to enhance is
confined to an order of assessment and an order imposing a penalty. But in the
case of a second appeal under the Income-tax Act, there is a distinct departure
from the scheme under the Bombay Sales Tax Act. S.253 does not expressly speak
of the "power to enhance", and makes no distinction in regard to the
extent of the appellate power between any of the cases in which a second appeal
lies from an order under s.251.
It is evident then that in a second appeal
under sub-s. (2) of s.55 of the Bombay Sales Tax Act, the Tribunal has power to
enhance the assessment. That being so, plainly it is open to the Revenue to invoke
that power in a pending second appeal filed by the dealer before the Tribunal.
The High Court is in error in concluding that the power to enhance an
assessment can be discovered only in the 105 revisional jurisdiction of the
Commissioner and nowhere else. The compulsion which drove the High Court to the
construction placed by it on sub-s. (1) of s.57 of the Act does not have
substance, and the entire sub-stratum underlying the High Court judgment must
give way.
On the view which finds favour with us we
cannot approve of the law laid down on the point in Motor and Manufacturers
Ltd. (supra) nor do we see any overlapping of, or conflict in, the powers of
the Commissioner and the Tribunal inferred in Oriental Rubber Industries Pvt.
Ltd.
(supra). As regards the observation of this
Court in Amritlal Bhogila (supra), that was not a case where a subordinate
authority sought to exercise its revisional jurisdiction over an order pending
in appeal before a superior authority. No support can be derived by the respondent
from that case. For the same reason, Ramlal Onkarmal v. Commissioner of
Income-tax, Assam decided by the Assam High Court Kelpunj Enterprises v.
Commissioner of Income-tax, Kerala, decided by the Kerala High Court and
Russell Properties (P) Ltd. v. A. Chowdhury, decided by the Calcutta High
Court, placed before us by the respondent have no relevance.
Our attention has been invited to s.34 of the
Maharashtra Agriculture Income Tax Act, 1962 where when defining the revisional
power of the Commissioner the Legislature has expressly incorporated a
provision prohibiting the Commissioner from exercising his revisional power
against an order pending in appeal before the Assistant Commissioner or
Tribunal. It is urged that if a similar prohibition was intended against the
Commissioner under the Bombay Sales Tax Act, an express provision to that
effect would have been made. Reference has also been made to the provisions in
the Customs Act, 1962 conferring revisional jurisdiction. We are not impressed
by the contention. The absence of an express provision cannot detract from the
conclusion reached by us - a conclusion flowing from the necessary intendment
of the statute - that the Commissioner being a subordinate authority to the
Tribunal, cannot interfere with an order pending in appeal before the Tribunal,
and further that the interest of the Revenue is protected by the power of
enhancement vested in the Tribunal while disposing of a second appeal filed by
a dealer.
106 In the result, the appeal is allowed, the
judgment dated 5th July, 1978 of the High Court is set aside, and the order
dated 29th October, 1977 of the Tribunal and the revisional proceedings before
the Deputy Commissioner, including the orders made by him, are squared. The
appellant is entitled to its costs.
N.V.K. Appeal allowed.
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