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TMI Blog1969 (3) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... gularity of such proceedings, and to pass such order in reference thereto as it thinks fit, sub-section (4) contemplates enhancement of an assessment after giving an opportunity to the assessee to show cause against the proposed enhancement. We would, therefore, accept the submission made by the learned Principal Government Pleader that the aforesaid decision requires reconsideration by a Full Bench. Post this T.R.C. before a Full Bench, after obtaining the orders of the Hon'ble the Chief Justice. In pursuance of the abovesaid order of reference the petition came on for hearing before the Full Bench. K. Ranganathachary, for the petitioner. The Advocate-General, for the State. JUDGMENT The judgment of the court was delivered by VENKATESAM, J.-This case has been referred to a Full Bench by Basi Reddy, J., and one of us (Sambasiva Rao, J.) on the ground that the view of the Division Bench in State of Andhra Pradesh v. Varre Pothuraju[1964] 15 S.T.C. 222; [1963] 2 A.L.T. 201. as to the scope and meaning of section 14(4) of the Andhra Pradesh General Sales Tax Act, 1957, vis-a-vis the revisional jurisdiction under section 20 of the said Act, has cut down the amplitude of the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned to accept the explanation on behalf of the dealer, and assessed him to tax on a further turnover of Rs. 71,970. Against the order of the Commercial Tax Officer, an appeal was preferred to the Assistant Commissioner, Commercial Taxes, Guntur, who, by his order dated 28th March, 1962, refused to interfere and dismissed the appeal. Against that decision an appeal was preferred to the Sales Tax Appellate Tribunal, Hyderabad, in T.A. No. 473 of 1962 and the Tribunal by its order dated 3rd March, 1964, dismissed the appeal, and upheld the order of the Commercial Tax Officer. Against the order of the Tribunal the revision petition has been preferred under section 22(1) of the Act. The contention raised before the Appellate Tribunal was that the turnover of Rs. 71,970 on which additional tax was levied by the Commercial Tax Officer was an escaped turnover, which he had no jurisdiction to assess, and relied on State of Andhra Pradesh v. Varre Pothuraju[1964] 15 S.T.C. 222; [1963] 2 A.L.T. 201. The Tribunal held that on the facts and the observations that case was distinguishable from the instant case, as the authority which assessed the escaped turnover is the Commercial Tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for increasing the turnover threefold, as it amounted to a redetermination of turnover to the best of his judgment, which is not warranted by section 20, and that the decision of the Bench of this court is good law. The learned Acting Advocate-General, appearing for the State, in refuting the contentions on behalf of the dealer, submitted: (1) The Commercial Tax Officer acted as a revisional authority under section 20(2) of the Act, and made the assessment to the best of his judgment, and the language of section 20 in no way curtails that power. (2) The curtailment of the revisional powers under section 20 ought not to be inferred by reference to section 14. Further, even escaped turnover can be assessed by an assessing authority by way of best judgment after the addition of section 14(4-A) in 1963. (3) The decision of this court in State of Andhra Pradesh v. Varre Pothuraju[1964] 15 S.T.C. 222; [1963] 2 A.L.T. 201. holding that a revisional authority cannot make a best judgment assessment cannot be accepted as good law. In order to decide the questions debated before us, it is necessary to advert to the relevant provisions of the Act before referring to the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing one and half times the amount of that tax, if the turnover had escaped assessment or had been under-assessed or assessed at too low a rate by reason of its not being disclosed by the dealer: Provided that before issuing any direction for the payment of any penalty under sub-section (2), sub-section (3) or sub-section (4), the assessing authority shall give the dealer a reasonable opportunity to explain the omission to disclose the information, and make such inquiry as he considers necessary." Section 19 deals with appeals against orders passed or proceedings recorded by an authority under the Act. Section 20 deals with revision by the Board of Revenue, and other prescribed authorities, and is as follows: "20. (1) The Board of Revenue may suo motu call for and examine the record of any order passed or proceeding recorded by any authority, officer or person subordinate to it, under the provisions of this Act, including sub-section (2) of this section, for the purpose of satisfying itself as to the legality or propriety of such order or as to the regularity of such proceeding and may pass such order in reference thereto as it thinks fit. (2) Powers of the nature referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gality, propriety and regularity" is of wide import, especially having regard to the fact that the Board of Revenue is empowered to pass such order in reference thereto as it thinks fit. It may then be noted that under section 20(2) the powers of the Board of Revenue under section 20(1) may also be exercised by the Deputy Commissioner of Commercial Taxes and the Commercial Tax Officer, in respect of orders passed by officers subordinate to him, and the powers under section 20(1) as well as section 20(2) can be exercised only within a period not exceeding four years from the date on which the order was served on the dealer. Section 20(4) makes it clear that in exercise of the powers under section 20 of the Act, an assessment may be enhanced, but only after giving an opportunity to the assessee against the proposed enhancement. The order of the Commercial Tax Officer, in the instant case, makes it abundantly clear that he did not act as an assessing authority, but only exercised the revisional powers, though the provision of law, viz., section 20(2), had not been quoted, and in the exercise of that power he levied tax on an additional turnover, which, in his judgment, had escaped. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the assessee before the Full Bench was that on a proper construction of the provisions of that Act, the Board of Revenue was intended to be the sole and exclusive revising authority, and rule 14(2) which authorised the Commercial Tax Officer to exercise powers of revision was beyond the rule-making power. It was further contended that section 19(2)(f) referred to above specifically provides for rules being made for the assessment of escaped turnover of an assessee and the period within which reassessment proceedings could be started, and as rule 17 framed for this purpose vested the jurisdiction to assess an escaped turnover with the assessing authority, viz., the Deputy Commercial Tax Officer, it would be contrary to the rules of construction to read rule 14(2) as conferring upon the Commercial Tax Officer an unfettered jurisdiction to reopen assessment and effect a reassessment, even after a lapse of the period of two years prescribed by rule 17(1). Rajamannar, C.J., speaking for the Full Bench, stated the position thus: "No doubt in a general sense both rule 14(2) as well as rule 17(1) serve a common purpose, viz., to gather revenue which has improperly escaped but while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his revisional jurisdiction, called upon the assessee to show cause why the turnover should not be enhanced by him, and eventually enhanced the turnover. On appeal to the Tribunal, the majority of the members took the view that the revising authority could not enhance the turnover as that was the function of the assessing authority. It was against that order that revision was preferred by the State to the High Court. Chandra Reddy, C.J., speaking for the Bench, compared section 20 of the Act with section 12 of the Madras General Sales Tax Act, and held that it was in identical language except for a minor difference, and that, therefore, the argument on behalf of the State that the revising authority could deal with the orders of the assessment in any way he liked, could not be accepted. The Bench took the view that the precise contents of the power to revise must be gathered from sections 20 and 14 of the Act, analogous to section 9 of the Madras General Sales Tax Act and the Rules thereunder. The learned Chief Justice summed up the position thus: "In the context of this enquiry, we have to bear in mind the fact that it is not the Deputy Commissioner of Commercial Taxes that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the principle enunciated in that case had full vigour in the context of the enquiry before them. We have already pointed out that the question for consideration before the Full Bench of the Madras High Court was, whether rule 14 of the Madras General Sales Tax Rules was valid, and, if so, whether the powers thereunder could be exercised in cases to which rule 17 relating to escaped assessment was applicable. The Full Bench in answering that question, as stated above, pointed out the distinction between the two rules, and that rule 14(2) was intra vires, and that the revisional power under rule 14 could not be exercised in a case to which rule 17 applied. In the case before the Bench of this Court, the question turned upon the construction of section 20 which has already been extracted. We have noticed how the language of section 20(1) is of wide amplitude, and section 20(4) expressly empowered the revising authority to enhance the assessment. In that situation, the question for consideration is, whether the amplitude of the language used in section 20 in relation to revisional powers can be whittled down by a reference to section 14(4), which specifically relates to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinks fit for performing the functions conferred on them under the Act, and such officers shall perform their functions within such local limits as the Government may assign. Rule 17 conferred on the Deputy Commissioner the power to determine and tax the escaped turnover in cases where revisions have been taken to them [under sub-rule (1-A)] and also where revisions have not been taken to them [sub rule (3-A)]. It was further held that section 9 does not deal with escaped turnover, but is a provision to determine the turnover of a dealer in the first instance, and that rule 17 cannot be said to be in conflict with section 12(2). That section, it was held, dealt with cases where the Deputy Commissioner, suo motu, or on application, called for the record and determined the legality or propriety of an order made by one of the subordinate officers. In view of rule 17, their Lordships held that the power of revision of the Deputy Commissioner is not limited to the powers under section 12(2), and that rule 17 dealt with a separate and independent jurisdiction in regard to determining and taxing escaped turnovers, and that the provisions of section 12(2) are in no way in conflict with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to make a best of judgment assessment. Relying upon this decision, the learned counsel for the assessee contends that it was not open in the instant case for the Commercial Tax Officer to have made a best of judgment assessment under section 14(4). But that contention lacks substance because the learned counsel himself had to admit that the assessment was made by the Commercial Tax Officer not as an assessing authority, but as a revisional authority. The Supreme Court in The State of Kerala v. K.M. Cheria Abdulla and Company[1965] 16 S.T.C. 875 (S.C.). held that the words in section 12(1) of the Madras General Sales Tax Act, that the revisional authority "may pass such order with respect thereto as he thinks fit", mean such order as in the circumstances of the case for rectifying the defect be regarded as just. It was held that that power may in some cases include power to make or direct such enquiry as the Deputy Commissioner may find necessary for rectifying the illegality or impropriety in the order or irregularity in the proceeding. It was pointed out that while the Act in that case conferred on the prescribed authority the power to entertain an appeal under section 11, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied with tax, there was no rule which compelled the assessing authority to inform the assessee that the tax levied against him was nil. Since there was no assessment to tax against the respondent, it was held there could be no appeal under section 11 of the Madras Act of 1939 against an order of nil assessment, and no bar to the jurisdiction of the Deputy Commissioner under section 32(1) of the Madras General Sales Tax Act of 1959 could arise, and that the proceedings taken by him under that section were, therefore, valid. In The Swastik Oil Mills Ltd. v. H.B. Munshi, Deputy Commissioner of Sales Tax, Bombay[1968] 21 S.T.C. 383 (400) (S.C.)., one of the contentions was that the revisional authority exercising its power of suo motu revision under section 31 of the Bombay Sales Tax Act (3 of 1953) could not travel beyond the order sought to be revised, and that he cannot order a further enquiry or rely on material extraneous to the record of the order under revision. Bhargava, J., speaking for the court, followed the decision in The State of Kerala v. K.M. Cheria Abdulla and Company[1965] 16 S.T.C. 875 (S.C.). , and stated the position thus: "In fact, when a revisional power is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able, and we are not in a position to say from the short note placed before us that the Supreme Court has taken a view differing from what has been laid down in The State of Kerala v. K.M. Cheria Abdulla and Company[1965] 16 S.T.C. 875 (S.C.). and The Swastik Oil Mills Ltd. v. H.B. Munshi, Deputy Commissioner of Sales Tax, Bombay1968] 21 S.T.C. 383 (S.C.). Applying the principles enunciated by the Supreme Court in The State of Kerala v. K.M. Cheria Abdulla and Company[1965] 16 S.T.C. 875 (S.C.). and The Swastik Oil Mills Ltd. v. H.B. Munshi, Deputy Commissioner of Sales Tax, Bombay[1968] 21 S.T.C. 383 (S.C.)., we hold that by making the assessment to tax on the additional turnover, the Commercial Tax Officer has not trenched on the powers of the assessing authority, and has exercised a power which is within his competence under section 20(2) as the revisional authority. We, therefore, express our respectful dissent with the contrary view stated in State of Andhra Pradesh v. Varre Pothuraju[1964] 15 S.T.C. 222; (1963) 2 A.L.T. 201. We may also point out that there cannot be any doubt in this regard after the addition of section 14(4-A) in 1963. The Tribunal distinguished the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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