1977 (6) TMI 94 - HC - VAT and Sales Tax

Issues Involved:
1. Assessability of a sum of Rs. 26,38,393.38 for the assessment year 1960-61.
2. Legality of the levy and collection of tax on the value of cotton purchased in inter-State trade.
3. Validity of the rectification petitions filed under section 55 of the Tamil Nadu General Sales Tax Act.
4. Invocation of the suo motu revision powers under section 32 of the Act.
5. Time-limit for exercising revisional jurisdiction under section 32.
6. Refusal of the Deputy Commissioner to act under section 32 due to the assessee's failure to appeal.
7. Applicability of the Supreme Court's decision in K.G. Khosla and Co. v. Deputy Commissioner (Commercial Taxes).

Detailed Analysis:

1. Assessability of a sum of Rs. 26,38,393.38 for the assessment year 1960-61:
The dispute concerns the assessability of Rs. 26,38,393.38 for the assessment year 1960-61. The original assessment order was passed on 30th December 1963, without any appeal from the assessee. The assessee, a spinning mill, contended that the tax on the value of cotton purchased in inter-State trade was illegal, void, and without jurisdiction, a realization that came only after the Supreme Court's decision in K.G. Khosla and Co. v. Deputy Commissioner (Commercial Taxes) [1966] 17 S.T.C. 473 (S.C.).

2. Legality of the levy and collection of tax on the value of cotton purchased in inter-State trade:
The assessee filed petitions for rectification under section 55 of the Tamil Nadu General Sales Tax Act for multiple assessment years, including 1960-61, following the Supreme Court's decision in K.G. Khosla. The assessing authority summarily rejected these petitions, and subsequent proceedings before the Deputy Commissioner and the Appellate Assistant Commissioner also proved unsuccessful.

3. Validity of the rectification petitions filed under section 55 of the Tamil Nadu General Sales Tax Act:
The Appellate Assistant Commissioner dismissed the appeal as time-barred, and the Tribunal did not delve into the merits of the matter. The Tribunal's dismissal led to a revision petition before the High Court, which was dismissed in limine.

4. Invocation of the suo motu revision powers under section 32 of the Act:
The assessee filed a writ petition under Article 226 of the Constitution against the Deputy Commissioner's refusal to exercise suo motu revision powers under section 32. The High Court, following earlier decisions, held that the suo motu powers could be invoked by an assessee, and directed the Deputy Commissioner to consider the matter. The Deputy Commissioner, however, refused to exercise this power, stating that the assessee could not reopen a finalized assessment based on subsequent judicial pronouncements.

5. Time-limit for exercising revisional jurisdiction under section 32:
The Tribunal found that the application filed by the assessee on 26th July 1967 was within the four-year period provided under section 32. The Deputy Commissioner had ample time to exercise his jurisdiction but failed to act within the stipulated period. The High Court held that the time-limit for exercising revisional jurisdiction does not apply to orders made pursuant to a court's direction in writ proceedings, as established in Director of Inspection of Income-tax v. Pooran Mall & Sons [1974] 96 I.T.R. 390 (S.C.).

6. Refusal of the Deputy Commissioner to act under section 32 due to the assessee's failure to appeal:
The High Court held that the Deputy Commissioner could not refuse to exercise his jurisdiction under section 32 solely because the assessee had not filed an appeal. This principle was supported by the decision in State of Tamil Nadu v. Palani [1977] 39 S.T.C. 303, which established that the Deputy Commissioner must consider the merits of the case regardless of the assessee's failure to appeal.

7. Applicability of the Supreme Court's decision in K.G. Khosla and Co. v. Deputy Commissioner (Commercial Taxes):
The High Court rejected the State's contention that the assessee could not invoke section 32 based on the Supreme Court's decision in K.G. Khosla. The Court noted that the Supreme Court's decision reversed an earlier High Court decision, which had taken a different view on similar transactions. Therefore, the assessee's reliance on the Supreme Court's decision was justified, and the Deputy Commissioner was obligated to consider the case on its merits.

Conclusion:
The High Court dismissed the State's revision petition, holding that the Deputy Commissioner was wrong in refusing to exercise his jurisdiction under section 32. The Court emphasized that the time-limit for revisional jurisdiction does not apply to orders made pursuant to court directions, and the Deputy Commissioner must consider the merits of the case regardless of the assessee's failure to appeal. The Court awarded costs to the assessee, with a counsel's fee of Rs. 250.

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