1964 (8) TMI 66 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the assessment made by the assessing authority on 22nd October, 1959, could be modified only by the very assessing authority under section 16 of the Madras General Sales Tax Act of 1959 on the basis of an escaped turnover.
2. Whether the Deputy Commissioner is entitled to exercise his powers of revision under section 32 of the Act on the basis that the order of the initial assessing authority is vitiated by errors of fact or law as escaped assessment.

Issue-wise Detailed Analysis:

1. Authority to Modify Assessment under Section 16:
The main point of contention was whether the assessment made by the Assistant Commercial Tax Officer on 22nd October, 1959, could be modified solely by the original assessing authority under section 16 of the Madras General Sales Tax Act of 1959. The petitioners, dealers in hides and skins, argued that the turnover relating to the purchase value of untanned hides and skins and the sale value of tanned goods should not be taken into account, referencing a Bench decision of the Madras High Court which was later reversed by the Supreme Court. The Deputy Commissioner revised the assessment to include these turnovers based on the Supreme Court's decision.

2. Deputy Commissioner's Powers of Revision under Section 32:
The petitioners contended that only section 16 applied to their case, which allows the original assessing authority to modify the assessment based on escaped turnover, and that the Deputy Commissioner could not exercise his powers of revision under section 32. The Full Bench decision in State of Madras v. Louis Dreyfus & Co. Ltd. was cited, which held that the powers under section 16 and section 32 are mutually exclusive. However, the court noted that the Full Bench decision might require reconsideration in light of Supreme Court judgments.

Analysis of Legal Provisions:
The court examined the provisions of the Madras General Sales Tax Act, 1939, and the 1959 Act. Section 16 deals with the assessment of escaped turnover, allowing the assessing authority to reassess within five years if turnover has escaped assessment. Section 32 provides the Deputy Commissioner with the power to revise orders passed by the assessing authority to correct errors of fact or law. The court referred to the Full Bench decision in Louis Dreyfus, which distinguished between escaped turnover (addressed by section 16) and improper or illegal assessments (addressed by section 32).

Supreme Court Judgments:
The court considered Supreme Court judgments that expanded the interpretation of escaped assessment. In Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, the Supreme Court held that a turnover could escape assessment even if no assessment was made. The court also referenced Maharaj Kumar v. Income-tax Commissioner and Maharajadhiraj Sir Kameshwar Singh v. State of Bihar, which supported a broader interpretation of escaped assessment, including cases where the assessing authority had already applied its mind but excluded certain incomes.

Conclusion:
The court concluded that the Deputy Commissioner had jurisdiction under section 32 to revise the assessment made by the original assessing authority. It held that the powers of revision under section 32 are distinct and separate from the powers under section 16, and both can coexist. The court rejected the argument that section 16 alone should apply, ruling out section 32. The revision petition was dismissed, affirming the Deputy Commissioner's authority to revise the assessment.

Final Order:
The revision petition is dismissed. No costs.