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TMI Blog1977 (3) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1953-54, that is, 1st April, 1953, to 31st March, 1954, two assessment orders were made by the said Nadkarni, both dated 31st October, 1955, one in respect of the general tax payable by the respondents and the other in respect of the special tax payable by the respondents. On 16th December, 1955, a notice was issued to the respondents by the said Deshpande in which it was stated that it was revealed from the inspection of the respondents' books of account that they had not kept a true account of the goods bought and sold by them and had thus contravened the provisions of section 22 of the said Act. By the said notice the respondents were called upon to show cause why the licence granted to them under sections 12 and 12A of the said Act should not be suspended. By this notice the respondents were further called upon to submit their reply by 28th December, 1955. On 2nd January, 1956, the said Deshpande issued to the respondents two notices under section 14 of the Act, one in respect of the assessment period 1st April, 1954, to 31st March, 1955, and the other in respect of the assessment period 1st April, 1955, to 30th September, 1955, directing the respondents to attend before h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson and examine him on oath. Section 38 of the said Act deals with investigation of offences and it confers power upon the Collector to authorise any person appointed under section 3 to assist him to investigate offences punishable under the said Act. Section 13 of the said Act deals with the filing of returns and section 14 deals with assessment of taxes. It is difficult to understand how or why section 23 was written in the column headed "under section" in the witness summons. The original intention in preparing this witness summons appears to be clear. It was to summon the respondents for the purpose of examining them with respect to the returns filed by them, but when this was changed to investigation, it is difficult to understand why section 23 of the said Act has been written instead of section 38. This summons was served on the respondents on 2nd March, 1956, and is signed on behalf of the respondents by someone whose signature is indecipherable. In pursuance of the said summons, Mr. Vishnu Vyas, an Advocate, appeared on behalf of the respondents and applied for an adjournment on the ground that the senior partner of the respondent-firm, Hansraj Vishram Ravani, was sick a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentions taken up by the respondents were: (1) that there could be no best judgment assessment in reassessment proceedings under section 15 of the said Act, (2) that the said Deshpande, who was Sales Tax Officer (III), Enforcement Branch, Bombay, had no jurisdiction either to pass the said orders of assessment or reassessment, and (3) that the service of the notices under sections 14 and 15 of the said Act on the said Chhogalal Dave was not a valid service. When these matters came up before a Regular Bench of the Tribunal, the Bench referred these three points to a Special Bench for its decision. By a common judgment delivered in all the said four revision applications on 24th July, 1969, the Special Bench of the Tribunal decided all these three points in favour of the respondents. Following the decision of the Special Bench, the Regular Bench by a common judgment dated 12th August, 1969, allowed all the said four revision applications and set aside the said orders of reassessment and assessment. Arising out of the judgment of the Special Bench of the Tribunal and the said order passed by the Regular Bench, eight cases have been stated to us by the Tribunal at the instance of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the judgment of the Special Bench and the second out of the order of the Regular Bench; Sales Tax References Nos. 67 and 71 of 1976 are in respect of the assessment for the period 1st April, 1954, to 31st March, 1955, the first arising out of the judgment of the Special Bench and the second out of the order of the Regular Bench; and Sales Tax References Nos. 68 and 72 of 1976 are in respect of the assessment for the period 1st April, 1955, to 30th September, 1955, the first arising out of the judgment of the Special Bench and the second out of the order of the Regular Bench. So far as the first question is concerned, both learned counsel are agreed that our decision in Commissioner of Sales Tax v. P. Ambalal and Co.[1976] 38 S.T.C. 333., would govern the case and, according to that decision, it should be answered in the negative in favour of the department. The real controversy before us has ranged round questions Nos. (2) to (4) which deal with the jurisdiction of the said Deshpande to make the said orders of reassessment for the period 1st April, 1953, to 31st March, 1954, and the said orders of assessment for the periods 1st April, 1954, to 31st March, 1955, and 1st April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from himself to any person to whom he has delegated his powers and duties in respect thereof, and he may likewise transfer any such proceeding (including a proceeding already transferred under this sub-section) from one such person to another to whom the said powers and duties have been delegated or to himself." By an order dated 18th May, 1953, the Collector of Sales Tax delegated to all Sales Tax Officers his powers and duties, inter alia, under sections 14 and 15 of the said Act, that is, his powers to assess and reassess dealers as also his powers and duties, inter alia, under the Rules which dealt with these two topics. By an order dated 3rd May, 1955, the said V.S. Deshpande, who was then Sales Tax Officer, Poona City, I Division, Poona, was transferred to Bombay as Sales Tax Officer, Licence Circle, Ill Division, Bombay. On 20th August, 1955, the Government of Maharashtra issued a notification in the Finance Department, purporting to do so under section 3(1) of the said Act. The said notification was as follows: "FINANCE DEPARTMENT Sachivalaya, Bombay, 20th August, 1955. No. STO. 2255/135393-XIX.-In exercise of the powers conferred by sub-section (1) of section 3 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Dn. III, Bombay. (v) Shri V.S. Deshpande, for information." As the notings above the said order show, this order was made in pursuance of the said Government notification dated 20th August, 1955, and a letter dated 16th December, 1955, from the said Deshpande who had by that time raided the office of the respondents and had seized their books of account and had on the same day as the said order of assignment, namely, 16th December, 1955, issued a notice to the respondents to show cause why their licence under sections 12 and 12A of the said Act should not be suspended. It appears that by such orders of assignment as the one we have before us jurisdiction was conferred upon several officers in respect of such dealers as may be assigned to them by the Collector, Additional Collector or Assistant Collector. This jurisdiction was found to be legally defective and, accordingly, in order to validate the defects the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act, 1959 (Bombay Act No. 22 of 1959), was passed. The said Validating and Amending Act received the assent of the President on 11th April, 1959, and was published in the Bombay Government Gazette, Extraordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said officers." By the said Validating and Amending Act certain other legal defects which had been found in the said Act and had been the subject of judicial pronouncements were sought to be validated. The Statement of Objects and Reasons to the said Validating and Amending Act, inter alia, provided as follows: "4. By certain notifications issued by Government under the Bombay Sales Tax Act, 1953, jurisdiction was conferred on certain officers of the Sales Tax Department only in respect of such dealers as may be assigned to them by the Collector, Additional Collector or Assistant Collector. The jurisdiction so conferred has been found to be legally defective and it is necessary to validate the action taken by the officers in pursuance of the powers and jurisdiction conferred on them by the said notifications. 5.. In the present Bill it is proposed to make all the amendments and validating provisions necessitated by the circumstances mentioned above." The Special Bench of the Tribunal held that the said order dated 2nd January, 1956, was an order of transfer of proceedings under section 44(2) of the said Act and that it gave subjectwise jurisdiction to the Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , "an order of assessment"; and that it being an administrative order, no notice to the respondents was necessary nor was it necessary to give an opportunity to the respondents to be heard or to record any reasons for the passing of the said order. Learned counsel for the applicant lastly submitted that assuming that the said order was bad in law and invalid, all defects in it were cured by reason of the validating provisions of the said section 52. Learned counsel for the respondents agreed with learned counsel for the applicant in one thing, namely, that this was an order of assignment simpliciter under the said notification dated 20th August, 1955. He, however, submitted that so far as concerns proceedings which were pending they could not be assigned in the fashion in which they were purported to be done by the said impugned order but must be transferred in exercise of the power conferred by section 44(2) of the said Act. On behalf of the respondents it was further contended that this order affected the assessees; and since it was the practice of the department, whenever there was a raid or books of account were seized, to have a reassessment either by the same officer who ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector and nowhere mentioned any other officer save that by the amendment made with retrospective effect in the definition of the term "Collector" given in clause (5) of section 2 of the said Act, the word "Collector" was to be so read as to have always included an Additional Collector of Sales Tax. With respect to other officers, however, they could exercise any power or perform any duty of the Collector only if the Collector delegated such power or duty to them in exercise of his power of delegation conferred upon him under section 44(1) of the said Act. So far as Sales Tax Officers are concerned, we have seen that by the said order dated 18th May, 1953, the Collector had delegated to them all his powers and duties, inter alia, under sections 14 and 15 of the said Act, that is, of assessment and reassessment. The persons who could be appointed by the State Government under section 3(1) to assist the Collector were set out in rule 3(1) of the Bombay Sales Tax (Procedure) Rules, 1954 (hereinafter for the sake of convenience referred to as "the said Rules"). These persons are the Assistant Collector of Sales Tax, Sales Tax Officers and Inspectors of Sales Tax. Sub-rule (4) of rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime assigned to them for all or any of the purposes of the said Act by either the Collector or the Additional Collector. Even assuming in exercise of the powers under sub-section (1) of section 3 read with sub-section (2) thereof or by itself there was power in the State Government to specify the jurisdiction of any of the sales tax authorities, there was no power in the State Government to confer jurisdiction upon them with respect to certain individual dealers, let alone such individual dealers as may be assigned to them at a future date by either the Collector or the Additional Collector. The power, therefore, conferred by the said notification dated 20th August, 1955, upon the Collector and the Additional Collector to so assign dealers was not valid in law. Any assignment of dealers made by the Collector or the Additional Collector in pursuance of the power of assignment so purported to be conferred upon them would, therefore, be equally invalid and, consequently, all actions taken, including assessment and reassessment by the Sales Tax Officers and the Assistant Collector to whom the dealers were so assigned, would be invalid as being without jurisdiction. When this legal posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said Act or any of the purposes of the said Act. While construing this section, we must bear in mind that what the legislature intended to validate was the action taken by the Sales Tax Officers and the Assistant Collectors upon whom such jurisdiction was purported to be conferred so that their orders and actions could not be challenged on the ground of want of jurisdiction, and that is what the opening part of section 52 did. In order to obviate any argument with respect to the validity of assignment of dealers made by the Collector and the Additional Collector to the Sales Tax Officers and the Assistant Collector of the Enforcement Branch, it was also necessary to validate the purported assignment of dealers by the Collector and the Additional Collector. This the opening part of the said section next proceeded to do by providing that the Collector and the Additional Collector should "be deemed to have been duly invested with power so to assign dealers to the officers specified in clauses (a) and (b) (hereinafter referred to as 'the said officers')". The phrase "so to assign" means to assign dealers from time to time for all or any of the purposes of the said Act. Thus, the op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conferred on the said officers under the said notifications or that the Collector, the Additional Collector of Sales Tax, Bombay State, Bombay, or the said Assistant Collector of Sales Tax was not duly invested with powers so to assign dealers to the said officers". The concluding portion makes it expressly clear that the bar to the challenge was to two things only: (1) to the jurisdiction conferred upon the Sales Tax Officers and the Assistant Collector of Sales Tax, Enforcement Branch, under the said notification dated 20th August, 1955, and the other notifications referred to earlier and the orders of assignment made thereunder by the Collector and the Additional Collector, and (2) to the exercise of the power of assignment of dealers inter alia by the Collector and the Additional Collector. Thus, the challenge on the merits to any order made by the Sales Tax Officers or the Assistant Collector of the Enforcement Branch or on any ground other than the one relating to their jurisdiction was not precluded. That this was the object of the legislature is also shown by the Statement of Objects and Reasons which we have reproduced above which states that it was necessary "to validate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistant Collector and the Sales Tax Officers of the Enforcement Branch is the whole State of Bombay. The subjectwise jurisdiction is "such dealers as are from time to time assigned to them for all or any of the purposes of the Bombay Sales Tax Act, 1953, by the Collector or the Additional Collector of Sales Tax, Bombay State, Bombay". It is true that for the subjectwise jurisdiction to come into being, a further order of assignment by the Collector or the Additional Collector was necessary, and so far as the respondents are concerned, that order of assignment was the one dated 2nd January, 1956. Reading the said notification and the said order of assignment the effect to our mind is clear. It transferred the case of the respondents for all purposes to the Sales Tax Officer (III), Enforcement Branch, Bombay, and it expressly made it clear that in this was included the opening of the assessment for the period 1st April, 1950, to 31st March, 1954, and making the assessment for the period 1st April, 1954, to 30th September, 1955. By reason of the provisions of section 52 of the said Act, the said notification and the said order operated to confer valid jurisdiction upon the said Deshp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where for the purposes of such proceedings the dealer has appointed an agent under clause (a) or clause (c) of section 43 of the Bombay Sales Tax Act, 1953, service could either be upon the dealer or his said agent. It is an admitted position that Chhogalal Dave was not an agent of the respondents within the meaning of clause (a) or clause (c) of section 43. The service of notice upon him was, therefore, defective and bad and not valid in law. It was, however, sought to be argued on behalf of the applicant that by his said letter dated 12th March, 1956, the assessees stated that the explanation which the said Chhogalal Dave would give would be binding upon him and that, therefore, the respondents accepted the said service of the notices upon the said Chhogalal. That does not appear to us to be a valid argument, because the said letter was written in connection with the witness summons issued upon the respondents for the purpose of investigation and not for the purpose of assessment or reassessment. It was further submitted on behalf of the applicant that there were other facts which would show that the respondents had acquiesced in the service of the said notices upon the said Chh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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