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TMI Blog1976 (10) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and were liable to joint assessment? (4) Whether the finding of the Assistant Commissioner (Judicial), Sales Tax, that the two firms were separate firms could be reversed in law by the Additional Judge (Revisions), Sales Tax, when no revision had been filed against that part of the finding by the State and the only dispute before the Additional Judge (Revisions) was that the firm at Sirsaganj was not acting as an agent of the applicant-firm?" The material facts are briefly these: M/s. Raj Kumar Kotwaj of Shikohabad is a registered firm carrying on business of selling bricks, deshi ghee and empty tins. That firm consisted of three partners, namely, Raj Kumar, Kotwaj and Kastur Chand. Another firm by the same name carrying on business at Sirsaganj is also a registered firm. All the three partners of the former firm and one Murarilal were the partners of the latter firm. Murarilal was also carrying on business in deshi ghee, foodgrains and empty tins at Sirsaganj separately under the name and style of M/s. Har Bilas Murarilal. The two firms, namely, M/s. Raj Kumar Kotwaj, Shikohabad, and M/s. Raj Kumar Kotwaj, Sirsaganj, had made to the Sales Tax Officer a common application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Additional Judge (Revisions), Sales Tax, Aligarh, dismissed all the revision petitions, but gave a direction that the turnovers of M/s. Raj Kumar Kotwaj of Shikohabad and M/s. Raj Kumar Kotwaj of Sirsaganj should be assessed jointly as, In his opinion, the latter firm was an associate firm of the former firm and both the firms constituted one dealer. He also gave a direction that the turnover of M/s. Har Bilas Murarilal should not be taxed in the hands of the assessee, M/s. Raj Kumar Kotwaj, Shikohabad. As stated earlier, the assessee moved the Additional Judge (Revisions), Sales Tax, to refer to this court the aforesaid questions of law. Questions Nos. (1) and (4) relate to the competence of the revisional authority to give a finding that the two firms, namely, M/s. Raj Kumar Kotwaj, Shikohabad, and M/s. Raj Kumar Kotwaj, Sirsaganj, constituted an association of persons. Shri R. K. Gulati, the learned counsel for the assessee, contended that when only the assessee went up in revision against the direction of the Assistant Commissioner (Judicial) to find out whether the firm at Shikohabad was acting as the agent of the other two firms and the revenue did not go up in revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate or assessing authority assessing or appellate authority, or of under this Act, in its discretion, call for any other person aggrieved by an order and examine, either on its own motion made by an appellate authority, not being or on the application of the Commissionan order mentioned in section 10-A, may, er of Sales Tax or the person aggrieved, in its discretion, for the purpose of satisthe record of such order and pass such fying itself as to the legality or propriety order as it may think fit: of such order, call for and examine the Provided that no such application shall relevant record and, after giving the be entertained in any case where an parties a reasonable opportunity of being appeal lay against the order but was not heard and after making such further preferred." inquiry, if any, as it deems necessary,- (a) confirm, cancel or vary such order, or (b) set aside the order and direct the assessing or appellate authority, as the case may be, to pass a fresh order after such further inquiry as may be specified." Under the amended section 10, the revising authority has no suo motu power of revision. Following the decision of the Supreme Court in Keshavlal Jetha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a point not urged by either of the parties, it is desirable that the revisional authority should indicate to the parties what it proposes to do, so that they (the parties) may have an opportunity of putting forth their respective contentions on that point. But, in these references, it is not possible to gather from the statement of the case what transpired at the hearing of the revision petitions before the Judge (Revisions). Moreover, in these references, the question as to whether the proceedings before the Judge (Revisions) suffered from violation of the rules of natural justice for want of notice to the parties as to what the revisional authority proposed to decide is not one of the questions referred to us. Hence we are not called upon to express any opinion on that question in these references. Section 10(3)(i), as it stood prior to 1st October, 1970, empowered the revisional authority to pass such order as it might think fit. The words "pass such order as it may think fit" also occur in section 115 of the Code of Civil Procedure and in sections providing for revision under many enactments. In Pattammal v. Krishnaswami IyerA.I.R. 1928 Mad. 794., it was held that when a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed the revision petition. In the writ petition it was contended that the revisional powers of the Commissioner were restricted to only those matters which the revision petitioner wanted to be revised. Repelling that contention, a Division Bench of the Madhya Pradesh High Court held that under section 22-A of that Act the powers of revision are wide, that the Commissioner could exercise revisional powers of his own motion or on an application made by a dealer and could, subject to the provisions of the Act, pass such order as he thought fit and that nowhere in that section was it stated that where a dealer applies for revision of an order made by any authority subordinate to the Commissioner, he should exercise revisional powers only in regard to the matters specifically raised by the party. Their Lordships added that when the Commissioner took up a matter in revision, whether suo motu or on an application by a dealer, then he (the Commissioner) was entitled to consider the whole case. In the light of the aforesaid rulings, it is clear that once a matter comes up before the revisional authority, whether suo motu or on a revision petition filed by an assessee, it is entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Firman declaring the four nephews of the Raja to be his heirs, each being entitled to one-fourth share in the estate. The estate was under the superintendence of the Government for some years. During that period each heir was given one-fourth share in the income of the estate. The question before the Supreme Court was whether the heirs could be assessed as an association of individuals under the Hyderabad Agricultural Income-tax Act, 1950. The Supreme Court held that the four nephews of the Raja did not form a unit for the promotion of any joint enterprise to earn income, profit or gains, that the collection of the entire income from the estate by one of the sharers or even by a common employee, would not make that income an income of joint venture and that each of the sharers got his income as an individual and not as an association of individuals. State of Madras v. VR. M. SM. Karuppan Chettiar[1966] 61 I.T.R. 488. was also a case of heirs who inherited certain agricultural lands, held them as tenants-incommon and got them cultivated under a common management and a common account was maintained showing their individual shares of income. The Madras High Court held that those h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Gulati argued that there was no relevant material on the basis of which the Judge (Revisions) could come to a conclusion that M/s Raj Kumar Kotwaj, Shikohabad, and the firm M/s Raj Kumar Kotwaj, Sirsaganj, constituted an association of persons. On the other hand, the learned standing counsel for the department contended that the following circumstances constituted the materials for the finding of the Judge (Revisions) that these two firms constituted an association of persons: (i) Both the firms made joint applications in the assessment years 1963-64 and 1964-65 for being registered as "dealer". One firm was stated as the branch of the other firm. (ii) Both the firms submitted common returns of turnover showing the turnovers of both the firms for these two assessment years. The learned standing counsel maintained that unless there was a common business of these two firms, there was absolutely no reason why they should have made a common application for registration of the firms and filed common returns. These circumstances, according to the learned standing counsel, were very material and the Judge (Revisions) could base thereon his finding that they constituted an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax, holding that the aforesaid two firms constituted an association of persons and, consequently, were a dealer as defined in section 2(c) of the U.P. Sales Tax Act and that the two firms were liable to be assessed jointly. (4) The finding of the Assistant Commissioner (Judicial) that the two firms were separate firms and had to be assessed separately, could be reversed by the Additional Judge (Revisions), Sales Tax, even though the revenue had not filed any revision against the order of the Assistant Commissioner (Judicial) and the assessee had merely challenged the direction of the Assistant Commissioner (Judicial) to the Sales Tax Officer to ascertain whether or not the firm of Shikohabad was liable to pay tax on the turnovers of goods sold by it as the agent of the firm at Sirsaganj. In the circumstances of the case, we make no order as to costs in these references. Reference answered accordingly. Appendix [The judgment of the Division Bench of the Allahabad High Court consisting of K.B. ASTHANA and SATISH CHANDRA, JJ., in Commissioner of Sales Tax, U.P., Lucknow v. Sri Krishna Ram Chandra (Sales Tax Reference No. 757 of 1972) delivered on 9th October, 1974, is printe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the order fixing exemption fee at Rs. 1,000 was also allowed in part and it was held that the dealer was liable to deposit Rs. 750 as exemption fee. The Sales Tax Officer was directed to make the necessary adjustments for the payments made by the assessee. The net result of the various appellate orders was that the turnover of foodgrains was reduced by Rs. 13,076. The exemption fee was reduced from Rs. 1,000 to Rs. 750 and the Sales Tax Officer was directed to make the necessary adjustments from the excess tax of the balance exemption fee. Aggrieved, the State went up in revision against the order reducing the turnover of foodgrains and the exemption fee. The Judge (Revisions) held that the order of assessment and the order dismissing the application for exemption together constituted an order contemplated by rule 20-B(h). Therefore, service of the order under rule 20-B(h) would be complete only after both the orders of 29th September, 1965, had been served on the assessee. The assessment order was served on the assessee on 25th September, 1967, and, therefore, the appeal filed on 30th September, 1967, against that order would be within time and the same could not ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not have been appealed against as finally fixing the exemption fee because it did not determine the exemption fee. It assessed the tax. It was appealable on merits. This order was hence appealable within 30 days of the service thereof. The order was served on the dealer on 25th September, 1967, and, as such, the appeal filed by the dealer on 30th September, 1967, was within time. The revisional power was conferred in the following terms under section 10: "10. (3)(i) The Revising Authority may, for the purposes of satisfying itself as to the legality or propriety of any order made by any appellate or assessing authority under this Act, in its discretion, call for and examine, either on its own motion or on the application of the, Commissioner of Sales Tax or the person aggrieved, the record of such order and pass such order as it may think fit: Provided that no such application shall be entertained in any case where an appeal lay against the order but was not preferred ..............." The U.P. Sales Tax (Amendment) Act (3 of 1971), which came into force on 1st October, 1970, repealed and re-enacted section 10. It took away the power of the revising authority to pass ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evising authority. The amending Act No. 3 of 1971 did not in terms operate retrospectively. The amendment taking away the suo motu revisional jurisdiction could not be characterised as a legislation in the matter of procedure. It would not automatically operate retrospectively. Since the appellate order dated 26th October, 1968, did not attain finality on the day when it was passed because it was subject to the suo motu revisional jurisdiction, it could not, in law, be said that it gained finality because of the effect of Amending Act No. 3 of 1971. Its status as an order which was subject to being revised continued. In relation to that order the revisional authority could exercise the suo motu revisional jurisdiction. In this view the Judge (Revisions) had jurisdiction to revise the aforesaid appellate order dated 26th October, 1968. In the result, we answer both the questions in the affirmative, in favour of the assessee and against the department. Since no one has appeared on behalf of the assessee, there will be no order as to costs. The fee of the learned counsel appearing for the department is, however, assessed at Rs. 100. - - TaxTMI - TMITax - CST, VAT & Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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