1958 (8) TMI 42 - HC - VAT and Sales Tax

Issues Involved:

1. Applicability of Section 22-B to orders passed before its enactment.
2. Justification of the Commissioner's action in reopening and remanding the assessment.

Issue-wise Detailed Analysis:

1. Applicability of Section 22-B to Orders Passed Before Its Enactment:

The primary issue for consideration was whether Section 22-B of the Central Provinces and Berar Sales Tax Act, 1947, which came into force on December 1, 1953, could be applied to orders passed before this date. The assessee contended that Section 22-B, inserted by M.P. Act No. XX of 1953, could not have retrospective operation and thus could not affect orders passed on August 18, 1953.

To address this, the court examined the provisions of the original Section 22 and the new sections 22, 22-A, 22-B, and 22-C introduced by the Amending Act of 1953. The original Section 22 was a composite section dealing with appeals and revisional powers. Under the original Section 22(5), the Commissioner had the power to revise any order passed by a subordinate authority, either upon application or suo motu, subject to the rules framed under the Act.

The new Section 22-B allowed the Commissioner to call for and examine the record of any proceeding and pass orders if the original order was erroneous and prejudicial to the interests of the revenue, provided this was done within two years from the date of the order sought to be revised. The court noted that the new Section 22-B did not impose any greater disability on the assessee compared to the original Section 22(5). Instead, it introduced a two-year limitation period for the Commissioner to exercise his revisional powers, which was seen as providing greater protection to the assessee.

The court rejected the argument that Section 22-B could not be given retrospective operation. It held that the new section merely regulated the exercise of the Commissioner's revisional powers and did not impair any vested rights or impose new obligations or disabilities on the assessee. Thus, the Commissioner was entitled to revise orders passed prior to December 1, 1953, provided the revisional order was made within two years from the date of the original order.

2. Justification of the Commissioner's Action in Reopening and Remanding the Assessment:

The second issue was whether the Commissioner of Sales Tax was justified in reopening the assessment and making an order of remand. The assessee argued that the Commissioner's action effectively reopened the assessment on the ground of a wrong deduction allowed by the Regional Assistant Commissioner, which should fall under Section 11-A and be subject to a three-year limitation period from the expiry of the assessment period.

The court clarified that Section 11-A dealt with the power of the original assessing authority to reopen an assessment where there was under-assessment or escaped assessment, and this power was subject to a three-year limitation period. However, Section 11-A had no relation to the revisional powers of the Commissioner under Section 22-B. The court emphasized that Section 22-B(2) provided a specific two-year limitation period for the Commissioner to exercise his revisional powers, which was distinct from the three-year period under Section 11-A.

The court concluded that the Commissioner's order of revision was within the two-year limitation period provided under Section 22-B(2) and thus was justified. The order of remand was upheld as it was in accordance with the revisional powers conferred by Section 22-B.

Conclusion:

1. The revisional powers under Section 22-B can be exercised by the Commissioner even in respect of orders of subordinate authorities passed prior to December 1, 1953, provided the revisional order is passed before the expiry of two years from the date of the order sought to be revised.
2. The order of remand was justified in view of the answer to the first question.

The applicant-assessee was ordered to pay the costs of the State in both references. The references were answered accordingly.

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