1961 (9) TMI 45 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Board of Revenue in exercising revisional powers beyond the period of limitation.
2. Inclusion of commission paid and sale proceeds in the business turnover.
3. Assessment of tax on amounts collected as tax.
4. Legality of including the sum of Rs. 7,74,62,706-1-6 in the net turnover.
5. Applicability of the doctrine of merger in the context of revisional orders.

Issue-Wise Detailed Analysis:

1. Jurisdiction of the Board of Revenue in Exercising Revisional Powers Beyond the Period of Limitation:
The appellant contended that the Board of Revenue invoked its revisional jurisdiction after the expiry of the period of limitation prescribed under section 12 of the Madras General Sales Tax Act. Section 12(4)(b) prescribes a period of four years from the date on which the order was communicated to the assessee. The order of the Deputy Commercial Tax Officer was dated 28th November, 1952, and the Board issued a notice on 4th August, 1958, which was beyond the four-year limit. The Board argued that the limitation period should be computed from 26th August, 1954, the date on which the Deputy Commissioner's order was communicated. The court held that the plain words of section 12(4)(b) indicate that the period of four years has reference only to the order which is the subject-matter of revision. Therefore, the Board exercised its powers of revision beyond the period of limitation, rendering the proceedings incompetent.

2. Inclusion of Commission Paid and Sale Proceeds in the Business Turnover:
The appellant argued that a sum of Rs. 1,44,294-14-4, representing commission paid to Comorin Investment Trading Co., Ltd., was wrongly included in the purchase value of cotton. Additionally, Rs. 81,546-0-1, representing sale proceeds from empty drums and miscellaneous articles, should not have been included as they were not part of the business turnover. The Commercial Tax Officer upheld the exclusion of the commission but included the sale proceeds in the turnover. The court did not delve into this issue further as the appeal was allowed on the ground of limitation.

3. Assessment of Tax on Amounts Collected as Tax:
The assessee contended that they should not have been assessed on amounts collected by them by way of tax amounting to Rs. 6,57,971-4-9. The Deputy Commissioner dismissed this contention, holding that the Madras General Sales Tax (Definition of Turnover and Validation of Assessments) Act, 1954, permitted the inclusion of tax in the taxable turnover. The court did not address this issue further due to the appeal's success on the limitation ground.

4. Legality of Including the Sum of Rs. 7,74,62,706-1-6 in the Net Turnover:
The Board of Revenue proposed to revise the assessment by including Rs. 7,74,62,706-1-6 in the net turnover, arguing it was wrongly excluded. The appellant objected, stating there was no wrongful exclusion. The court noted the lack of materials to determine whether these sales were inside sales liable to assessment. The Government Pleader conceded that the Board's order could not be supported based on the reasoning provided. The court stated that it would have remitted the matter for fresh disposal if the proceedings were not barred by limitation.

5. Applicability of the Doctrine of Merger in the Context of Revisional Orders:
The Government Pleader argued that the order of the Deputy Commercial Tax Officer merged with the order of the Deputy Commissioner, and the limitation period should be computed from the latter's order. The court held that the doctrine of merger did not apply in this context, as the revisional powers under section 12 of the Act are distinct and separate. The period of limitation should be computed from the date of the order being revised, not from the date of any subsequent orders. The court emphasized that the revisional power is limited to correcting illegality, impropriety, or irregularity and does not encompass the entire assessment proceeding.

Conclusion:
The appeal was allowed on the ground that the Board of Revenue exercised its revisional powers beyond the prescribed period of limitation. The order of the Board of Revenue was set aside, and the appellant was awarded costs. The court did not find it necessary to address other issues in detail due to the decision on the limitation issue.