1958 (8) TMI 44 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Commercial Tax Officer under section 12(2) of the Madras General Sales Tax Act.
2. Legality and propriety of the rebate cancellation by the Commercial Tax Officer.
3. Maintainability of the suit filed by the respondent company.

Detailed Analysis:

1. Jurisdiction of the Commercial Tax Officer under section 12(2) of the Madras General Sales Tax Act:
The primary issue was whether the Commercial Tax Officer had the authority under section 12(2) to examine and revise the order passed by the Deputy Commercial Tax Officer. The lower court had ruled that the Commercial Tax Officer did not have this power. However, the High Court disagreed, stating that section 12(2) allows the Commercial Tax Officer to "call for and examine the records of any order passed by the Deputy Commercial Tax Officer" to ascertain the "legality or propriety of such order or the regularity of such proceedings." This interpretation was supported by previous rulings, including the Supreme Court's definition of "propriety" in Raman and Raman Ltd. v. Government of Madras and a similar judgment by Krishnaswami Nayudu, J., in C. P. Azeez Haji v. Government of Madras. The court emphasized that the Commercial Tax Officer's powers were not limited to errors apparent on the face of the record and could extend to a thorough examination of the records.

2. Legality and propriety of the rebate cancellation by the Commercial Tax Officer:
The rebate in question was initially granted by the Deputy Commercial Tax Officer without proper verification of the original Form 8 applications. The Commercial Tax Officer later found that these applications were not submitted in time and that the Deputy Commercial Tax Officer had not followed the prescribed procedure. The High Court supported the Commercial Tax Officer's decision to cancel the rebate, noting that accepting copies without recording reasons and without verifying the originals was "erroneous and improper and illegal and irregular." The court highlighted that the law did not provide any power to condone the delay in submitting Form 8 applications, making the original rebate order illegal.

3. Maintainability of the suit filed by the respondent company:
The respondent company had filed a suit challenging the Commercial Tax Officer's order, which was initially entertained by the Subordinate Judge. The High Court, however, set aside the lower court's judgment, stating that the Commercial Tax Officer had acted within his jurisdiction under section 12(2). The court did not find it necessary to delve into the maintainability of the suit in light of its findings on the other issues.

Conclusion:
The High Court allowed the appeal, setting aside the judgment and decree of the lower court. The suit filed by the respondent company was dismissed, and each party was directed to bear its own costs. The court clarified that the Commercial Tax Officer had the jurisdiction to examine and revise the Deputy Commercial Tax Officer's order and that the rebate cancellation was both legal and proper. The decision underscored the importance of following statutory procedures and the broad powers vested in superior tax authorities to ensure compliance and prevent revenue loss.