1984 (12) TMI 287 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the ex parte assessment order dated 3rd June, 1965.
2. Refusal of the Assistant Commissioner, Commercial Taxes, to revise the ex parte assessment order.
3. Interpretation of the revisional powers under the Bengal Finance (Sales Tax) Act, 1941, and the applicable rules.

Issue-wise Detailed Analysis:

1. Validity of the ex parte assessment order dated 3rd June, 1965:
The petitioner, Paper Products Ltd., challenged the assessment order dated 3rd June, 1965, passed by the Commercial Tax Officer, Sealdah Charge, for the fourth quarter ended on 31st July, 1962. The petitioner contended that the discrepancy between the return figures and the profit and loss figure was due to the inclusion of taxes realized by the Calcutta office amounting to Rs. 5,094.60. The Commercial Tax Officer, however, made an ex parte assessment to the best of his judgment, determining the gross turnover at Rs. 6,40,000 and the taxable turnover at Rs. 3,70,431.10, significantly higher than the figures provided by the petitioner. The petitioner-company argued that they did not receive any intimation of the assessment order until 20th December, 1966, and thus could not appeal within the stipulated time.

2. Refusal of the Assistant Commissioner, Commercial Taxes, to revise the ex parte assessment order:
The petitioner-company submitted a petition on 19th May, 1967, requesting the Assistant Commissioner of Commercial Taxes to revise the ex parte assessment order on his own motion. The Assistant Commissioner did not initiate any suo motu proceeding but asked the petitioner-company to show cause why the petition should not be rejected as time-barred. The petitioner argued that the refusal to revise the ex parte order resulted in a gross failure of justice and that the application was not properly appreciated. The Assistant Commissioner treated the application as a revisional application made by the petitioner and rejected it as time-barred.

3. Interpretation of the revisional powers under the Bengal Finance (Sales Tax) Act, 1941, and the applicable rules:
The learned Judge analyzed the provisions of sections 20(1), 20(3), rules 71, 80(2), and 80(5) of the Bengal Finance (Sales Tax) Act, 1941. It was determined that there are two broad categories for exercising revisional power: (1) when a dealer makes an application for revision, and (2) when the revising authority exercises such powers on its own motion (suo motu). The essence of revisional jurisdiction lies in the duty of the superior Tribunal or Officer to ensure that subordinate Tribunals or Officers act within the bounds prescribed by law. The revising authority has the power to correct illegal or improper orders.

The learned Judge referred to the decisions in East Asiatic Co. (India) Ltd. v. State of Madras and State of Andhra Pradesh v. J. Papaiah, concluding that the revising authority has jurisdiction to initiate suo motu revision and that the petitioner's application was merely a request to exercise this power. The order passed by the revisional authority was quashed, and the Assistant Commissioner of Commercial Taxes was directed to consider the prayer in accordance with the law.

Appeal by the Respondents:
The respondents, including the Assistant Commissioner, Commercial Taxes, and the Commercial Tax Officer, Sealdah Charge, appealed against the decision. The appellants contended that the revisional authority's power is controlled by the provisions of the Act and the Rules. They argued that the power of revision cannot be exercised as an inherent power and must be in accordance with the Act and Rules. The appellants asserted that an aggrieved party cannot initiate revisional proceedings if an appeal is available, and that the revisional authority's suo motu power is intended to correct improper orders when the aggrieved party does not challenge them.

Conclusion:
The appeal was allowed, and the judgment of the learned trial judge was set aside. The court held that exercise of revisional power at the instance of a party runs counter to the exercise of such power on its own motion by an authority. The revisional authority's power must be exercised strictly in accordance with the provisions of the Act and Rules, and the initiation of revisional proceedings by an aggrieved party cannot be considered as suo motu. There was no order as to costs.

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