2002 (12) TMI 585 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. The scope of Section 35 of the Kerala General Sales Tax Act, 1963.
2. The power of the Deputy Commissioner to reopen assessments based on materials not available during the original assessment.
3. The distinction between the powers under Section 19 and Section 35 of the Act.
4. The applicability of Section 35(2A) in the present case.
5. The impact of previous legal precedents on the interpretation of Section 35.

Detailed Analysis:

Issue 1: Scope of Section 35 of the Kerala General Sales Tax Act, 1963
The Court examined the scope of Section 35, which allows the Deputy Commissioner to revise any order passed or proceedings recorded under the Act by any subordinate officer. The section empowers the Deputy Commissioner to make enquiries and pass orders as deemed fit, provided they are within the provisions of the Act. The Court emphasized that the Deputy Commissioner's power under Section 35 is supervisory and distinct from the original assessment power.

Issue 2: Power of the Deputy Commissioner to Reopen Assessments Based on New Materials
The Deputy Commissioner invoked Section 35 to set aside a revised assessment order based on materials (an Intelligence Officer's report) that were not available during the original assessment. The Court upheld the Deputy Commissioner's action, stating that the revisional power includes the authority to consider new materials if they reveal irregularities, illegalities, or improprieties in the original assessment.

Issue 3: Distinction Between Powers Under Section 19 and Section 35
The Court highlighted the difference between the powers under Section 19 (reopening assessments for escaped turnover) and Section 35 (revisional jurisdiction). The powers under Section 19 are vested in the assessing authority to conduct roving enquiries for escaped turnover, while Section 35 allows the Deputy Commissioner to correct illegalities in subordinate officers' orders. These powers are distinct and mutually exclusive, meaning the Deputy Commissioner can exercise revisional power without infringing on the assessing authority's jurisdiction under Section 19.

Issue 4: Applicability of Section 35(2A)
The Court addressed the contention that Section 35(2A), which extends the period for revisional orders, was not applicable. The Court clarified that the Deputy Commissioner acted within the permissible timeframe and that the revised order, being the effective determination of the assessee's liability, was the correct subject for revision.

Issue 5: Impact of Previous Legal Precedents
The Court considered various Supreme Court decisions and previous High Court rulings to interpret Section 35. It reaffirmed the Full Bench decision in Madras Rubber Factory Ltd. v. State of Kerala, which allowed the Deputy Commissioner to use revisional powers to correct assessments based on new materials. The Court rejected the argument for reconsideration of the Full Bench decision, noting its consistency with Supreme Court principles and its long-standing application.

Conclusion:
The Court set aside the Sales Tax Tribunal's order and upheld the Deputy Commissioner's order, allowing the revision based on new materials. The Court affirmed that the Deputy Commissioner's revisional power under Section 35 includes the authority to correct assessments by considering new materials that reveal irregularities, without infringing on the assessing authority's powers under Section 19. The tax revision case was allowed, sustaining the Deputy Commissioner's order.