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TMI Blog1962 (4) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... rm submitted a return, showing the gross turnover for the period of four quarters ended 31st March, 1955, at Rs. 15,62,840-5-6 and the corresponding trading profit and loss account was also produced, showing the sales at the same figure. The Commercial Tax Officer verified the sales with the cash memos and found them to agree. In the above return submitted by the petitionerfirm (assessee) exemption was claimed first under section 5(2)(a)(i) of the aforesaid Act, that is, for sale of goods, declared tax-free under section 6, for an amount of Rs. 84,248-1-6. That part of the claim was wholly allowed by the assessing officer. The assessee-firm also claimed exemption under section 5(2)(a)(ii) for sales to "registered dealers" for Rs. 14,78,594-4-0. In respect of this part of the claim of exemption, the assessing officer allowed exemption only to the extent of Rs. 21,073-3-0 but he disallowed the claim in respect of Rs. 14,57,521. He found that the sales had apparently been made to "registered dealers" but the reason for his disallowing exemption in respect of Rs. 14,57,521 was that the said officer was suspicious about "the genuineness and integrity" of the relative transactions, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard and rejected by Shri N. Roy Choudhury, Additional Member, Board of Revenue, by his order, dated 30th March, 1960, wherein he found, inter alia, as follows: "The declaration forms show that by and large individual transactions were of heavy amounts. The sales are all said to be in cash purchases by them being also in cash. It is argued that the defects in respect of the 9 declaration forms are of a technical nature. One of the most curious circumstances is that the registration certificates of all 30 purchasing dealers except one were cancelled in some cases within months, in some cases within a year and one or two cases within two years of the sale transactions evidenced by them. If, in these circumstances, the authorities below have rejected 9 declaration forms, I do not see any reason why I should interfere." Against this order of the Board of Revenue, the assessee-firm moved this Court under Article 227 of the Constitution of India and obtained the present rule. Mr. Alak Gupta, appearing on behalf of the petitioner-firm has attacked before us the correctness and propriety of the order of the learned Additional Member, Board of Revenue, mainly on the ground that the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional application under section 20(3) of the Act and it is not possible to ascertain on what legal ground the said rejection is based. Another error also, according to Mr. Gupta, is apparent on the face of the record, namely, that the tribunal below failed to appreciate that if the sales in question were not genuine transactions, those could not be considered in determining the gross turnover for the purpose of assessment of tax under the Act. Mr. Gupta also referred to three cases before the Board of Revenue, namely: (1) Case No. 22 of 1951 (Shriniwas Jiwanram v. State of West Bengal), (2) Case No. 268 of 1957 (Messrs Royal Stores Supply v. State of West Bengal), and (3) Case No. 1 of 1954 (P. L. Mukherjee and Sons v. State of West Bengal), where the Board of Revenue had held that a seller could not be responsible for the movement of the purchasing dealer and also that defects in declaration forms, similar to those in question in the present case, were immaterial and of no consequence and attacked the order of the Board of Revenue in the present case as having violated canons of natural justice and also basic principles in the matter of exercise of jurisdiction in disregarding it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Hills Division(2), Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumala(4), and Shri Ambica Mills Co. Ltd. v. S.B. BhattA.I.R. 1961 S.C. 970. in support of his above contention. Mr. Mukherjee also contended that the impugned order was based on inferences from facts, available to the tribunals below from the departmental file, and, according to Mr. Mukherjee, such decision was not revisable in the exercise of the powers of this Court under Article 227 of the Constitution. For this branch of his submission, Mr. Mukherjee relied on the case of Kapur Brothers v. Commercial Tax Officer and Another[1958] 9 S.T.C. 121; A.I.R. 1958 Cal. as an authority. The contention of Mr. Mukherjee regarding the limits of the scope of Article 227 has to be examined before we proceed to consider Mr. Gupta's submissions on the merits. It may perhaps be conceded, for purposes of this case, that the jurisdiction of this Court under Article 227 of the Constitution will not be exercised for correction of mere errors of law or fact of the tribunals below and that the powers under Article 227 are to be exercised only to keep the subordinate tribunals within the bounds of their authority or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, it will extend to cases of jurisdictional error as also errors apparent on the face of the record: vide Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumala A.I.R. 1960 S.C. 137. The case of Shri Ambica Mills Co. Ltd. v. S.B. BhattA.I.R. 1961 S.C. 970. does not, to say the least, lay down anything to the contrary. No doubt, in Nagendra Nath Bora v. Commissioner of Hills DivisionA.I.R. 1958 S.C. 398., there are some observations not wholly reconcilable with the above view but in view of the later Supreme Court decision, Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumala A.I.R. 1960 S.C. 137. , those observations have lost much of their force. In our view, then, if the decision of a tribunal can be shown to be arbitrary and devoid of reason or erroneous on the face of it, or to be based on an error on a jurisdictional point then, by the exercise of the power of superintendence under Article 227 of the Constitution, this Court can and should revise the said decision. What is a jurisdictional error has been the subject of illuminating judicial decisions. In this case, however, we need concern ourselves with only one aspect of that matter and it is enoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of such error, the tribunal has assumed jurisdiction to levy tax on deductible or non-taxable amount and has failed to exercise jurisdiction to grant deduction or exemption enjoined by law. It follows then that if there has been an error by the tribunal of the nature, contended for by Mr. Gupta, it is on a jurisdictional point and on the authority of the decisions above referred to, it clearly comes within the purview of Article 227 of the Constitution and makes the decision of the tribunal amenable to the powers of revisional superintendence of this Court under that Article. On the merits, Mr. Gupta has pointed out that the impugned transactions were sales to "registered dealers" who, at the date of the particular transaction, held registration certificates issued by the department. This is admitted on all hands. But the deductions have been disallowed for the reason that, sometime later, these registration certificates were cancelled by the department. This cancellation of the registration certificates, however, cannot have retrospective effect so as to affect the legality or validity of the above transactions of sale of earlier dates. The reason that impelled the Commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it proceeds upon a reason which was rejected by the appellate authority, the Assistant Commissioner and also by the Additional Commissioner, against which no objection was or could be taken by the department. On behalf of the opposite parties, Mr. Mukherjee has not relied on the reason of suspicious nature of the transactions but he has sought to justify the order of the Board of Revenue by relying on the reason that the declaration forms were defective as was held by the Assistant Commissioner of Commercial Taxes. Regarding these defects, Mr. Mukherjee has contended that the relevant Form XXIV, prescribed under rule 27-A of the Bengal Sales Tax Rules requires the purpose of the purchase to be entered in it, where that form provides the following entry,"are for *resale use in manufacture of goods for sale use in the execution of contracts packing of goods for resale" and a foot-note in that form says " strike out whichever is not applicable". In the Forms II-A and II-B, which are the forms of certificates for registration of the dealer, the relevant portion reads as follows: "the business is wholly mainly partly Sales of the following goods to this dealer will be free of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elves contemplate that the purpose of the purchase may well be either the purpose of manufacture or resale or any of the several alternatives mentioned in the foot-note of these forms, either "wholly" or "mainly" or "partly". If the certificate of registration of any particular registered dealer would include those multiple purposes, then, in the declaration form, all the alternatives taken together may very well be the purpose of purchase and none of the entries in Form No. XXIV would require to be scored out. In the present case, there is nothing to show that the certificates of registration of the dealers to whom the goods in question were sold, did not include those multiple purposes. Besides, in view of the contents and structures of the several forms (Nos. IIA, IIB and XXIV), it seems to us that the mere nonstriking out of the alternatives would not, in any sense, be a fatal defect. Therefore, the mere fact that none of the four entries above mentioned in Form XXIV has been scored through does not by itself show that the declaration form used was defective. That is the only reason which weighed with the Assistant Commissioner of Commercial Taxes in disallowing the deduction i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in several cases that circumstances, similar to those relied on by the tribunals below on the instant occasion are of no consequence, they acted arbitrarily in refusing the deduction claimed in the present case under section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941. There is considerable force in this submission of Mr. Gupta. Even apart from the question whether the doctrine of precedents would apply in full vigour to tribunals of the nature of Board of Revenue, it is certainly a consideration of natural justice that the authorities in the sphere of taxation cannot hold the citizen to their whims and caprices in matters, concerning essential practices of trade and business, allowing deductions under section 5(2)(a)(ii) in some cases and disallowing such deductions in some others, although the circumstances appertaining to both the categories were exactly similar. In the matter of operation of the Bengal Finance (Sales Tax) Act, the Board of Revenue is ordinarily the highest authority and decisions of that tribunal are binding on the taxing authorities. It is only just and fair that the citizen who has taken his guidance from the earlier decisions of the Board shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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