1970 (6) TMI 43 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Competence of the Additional Commissioner to reassess gross turnover using additional material not available to the assessing officer.
2. Authority of the Additional Commissioner to rely on a report initiated before the filing of the revision petition.

Issue-Wise Detailed Analysis:

1. Competence of the Additional Commissioner to reassess gross turnover using additional material not available to the assessing officer:

The primary question was whether the Additional Commissioner was competent to reassess the gross turnover by considering additional material unavailable to the assessing officer. The court referenced two significant Supreme Court decisions to address this issue. In *State of Kerala v. K.M. Cheria Abdulla & Co.*, the court differentiated between an appeal and a revision, emphasizing that a revisional authority's jurisdiction is confined to the legality or propriety of the order or the regularity of the proceedings. However, the majority judgment in the same case, delivered by Shah, J., clarified that the revising authority could make or direct further enquiry if necessary for rectifying defects. This view was supported by the later decision in *Swastik Oil Mills Ltd. v. H.B. Munshi*, where the Supreme Court held that the revising authority could hold an enquiry or admit additional material if it deemed necessary for a just decision.

The court concluded that the Additional Commissioner was competent to consider the report from the Commercial Tax Officer, which was not available to the assessing officer. The report indicated discrepancies in the dealer's cash memos and suggested suppressed sales. The Additional Commissioner provided the dealer with a copy of the report and an opportunity to respond, thus adhering to principles of natural justice. The court held that the Additional Commissioner could use the material obtained under section 14 for revision purposes, as it was for "the purposes of this Act," including revision of assessment under section 20.

2. Authority of the Additional Commissioner to rely on a report initiated before the filing of the revision petition:

The second issue was whether the Additional Commissioner could rely on a report initiated before the filing of the revision petition. The court examined rule 80A of the Bengal Sales Tax Rules, which allows the revisional authority to make or cause an enquiry before finally disposing of the matter. The court noted that although the notice under section 14(1) and the resulting report were not directed by the Additional Commissioner, the Additional Commissioner could still consider the report as part of his enquiry under rule 80A.

The court emphasized that the Additional Commissioner gave the dealer notice of the report, provided a copy, and allowed the dealer to represent his case, thus satisfying the requirements of natural justice. The court rejected the argument that the enquiry initiated before the filing of the revision petition could not be considered, holding that the Additional Commissioner had the authority under section 20(3) of the Bengal Finance (Sales Tax) Act, 1941, read with rule 80A, to rely on the report.

Conclusion:
Both questions were answered in the affirmative, supporting the revenue's position. The court held that the Additional Commissioner was competent to reassess the gross turnover using additional material and had the authority to rely on a report initiated before the filing of the revision petition. The dealer was provided with adequate opportunity to respond, ensuring compliance with principles of natural justice. The references were disposed of accordingly, with costs awarded to the revenue.