1965 (3) TMI 64 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the Board of Revenue's notice dated 23rd June, 1961, to refix the turnover for the year 1954-55 is within the time limit prescribed by law.

Detailed Analysis:

Issue 1: Timeliness of the Board of Revenue's Notice
The central question in this appeal is whether the notice issued by the Board of Revenue on 23rd June, 1961, seeking to revise the turnover for the year 1954-55 is within the statutory time limit. The State contends that under clause (i) of sub-section (3) of section 12 of the Madras General Sales Tax Act, 1939, the Board of Revenue may exercise its power of revision within four years from the date on which the order was communicated to the assessee. The State argues that the relevant order is the one dated 7th August, 1957, passed by the Commercial Tax Officer, in which the earlier order of the Deputy Commercial Tax Officer dated 29th February, 1956, is said to have merged. Conversely, the assessee contends that the relevant order is the one dated 29th February, 1956, and since the notice was issued more than four years after this date, it is barred by time.

Legal Provisions and Interpretations
Under section 9 of the Madras General Sales Tax Act, the assessing authority is empowered to assess tax based on the return submitted by the assessee. Appeals can be made against this assessment within thirty days, and subsequent appeals can be made to higher authorities, including the Appellate Tribunal and the High Court. The Act also provides for revisions by the Commercial Tax Officer, Deputy Commissioner, and the Board of Revenue within specified time limits.

Merger Doctrine and Precedents
The State's argument hinges on the doctrine of merger, suggesting that once an appellate authority (here, the Commercial Tax Officer) has passed an order, the original order merges into the appellate order. This doctrine was supported by several precedents, including Kristnamachariar v. Mangammal and Nagendra Nath Dey v. Suresh Chandra Dey, which dealt with the Limitation Act. However, these precedents were deemed not directly applicable to the present case.

Supreme Court's Position
The State also cited the Supreme Court's decision in Commissioner of Income-tax v. Amritlal Bhogilal, which held that the appellate authority's decision is the operative decision in law. However, this decision was qualified by stating that the merger applies only to the subject matter of the appeal and not to any matter outside the scope of the appeal. In the present case, the liability of the assessee as an unlicensed dealer was not the subject matter of the appeal before the Commercial Tax Officer.

High Court's Analysis
The High Court referred to its own precedents, including Madura Mills Company Limited v. State of Madras and Jainulabdeen Sahib v. State of Madras, which clarified that the general rule of merger is not of universal application. Specifically, the court held that the theory of merger does not apply when the appellate authority could not have legally addressed the issue in question. In this case, the Commercial Tax Officer could not have assessed the assessee as an unlicensed dealer under section 6-A, as the department had no right of appeal for enhancement.

Conclusion
The High Court concluded that the Board of Revenue could only exercise its powers of revision within four years from the date of the Deputy Commercial Tax Officer's order dated 29th February, 1956. Since the notice was issued more than four years after this date, it was barred by time. The appeal was dismissed, and the order of Veeraswami, J., was upheld.

Final Judgment
The appeal is dismissed with costs of Rs. 250. The Board of Revenue's notice dated 23rd June, 1961, is deemed to be outside the statutory time limit, and the writ petition by the respondent is upheld.

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