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TMI Blog1978 (12) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... owed that there was a suppression of a turnover of Rs. 22,602.87. The assessing authority took proceedings for bringing the amount of escaped turnover to tax by applying the provisions of section 16 of the Act. Ultimately, on verification of the relevant records, it was found that the turnover, which could be taken as suppressed, came to only Rs. 1,930 and the assessment thereon under section 16 was made on 3rd March, 1967. The total taxable turnover was taken as Rs. 1,88,856.22 comprising Rs. 1,86,926.22 originally assessed and Rs. 1,930 brought to tax under the reassessment proceedings. There was an appeal against this order before the Appellate Assistant Commissioner. In addition to disputing the taxation on Rs. 1,930, it was brought to his notice that the turnover assessed on 7th February, 1963, included sale of humidifiers of the value of Rs. 1,26,778.32 and that this sum was not properly brought to tax. The Appellate Assistant Commissioner observed that the assessment order taxing the said sum had been served on 16th February, 1968, and that if the assessee was aggrieved against that order of assessment, it ought to have preferred an appeal within the period allowed under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases of reassessment where the rate of tax assessed at the original assessment was lower than that leviable under the provisions of the Act. Sub-section (2) of section 16 authorises the levy of penalty in cases where the escape from assessment was due to wilful non-disclosure of assessable turnover by the dealer. Section 31 provides for an appeal to the Appellate Assistant Commissioner and it runs, to the extent material, as follows: "31. Any person objecting to an order passed by the appropriate authority under..............sub-sections (1) and (2) of section 16.............may, within a period of thirty days from the date on which the order was served on him in the manner prescribed, appeal against such order to the Appellate Assistant Commissioner having jurisdiction." The appeal to the Appellate Tribunal can be filed by any person objecting to the order passed by the Appellate Assistant Commissioner under section 31. It is in the context of these provisions that the question of the scope of the appeal to the Appellate Assistant Commissioner and to the Tribunal is to be examined. As far as the Tribunal is concerned its powers are somewhat widely conferred so as to cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the form itself reads as follows: "Nature of goods Rate of tax Escaped turnover/Turnover assessed at lower rate (1) (2) (3) Rs. P. ---------------- Total --------------- Place: Date: Assessing Authority." Thus, taking the statutory provision and the rule framed under the Act, it is clear that the assessing authority would have only to give the amount of escaped turnover brought to tax under the reassessment proceedings. Though in the assessment order in practice the information regarding the turnover as originally assessed, if any, is also set out, the strict requirement of the law would be satisfied if the escaped turnover alone and the tax due thereon are mentioned in the order. Thus, without going into any authority, on the statutory provision, as it is, it is clear that the reassessment proceeding is confined to the escaped turnover and that the appeal against the reassessment proceeding can only be against the said turnover or any part thereof. This question as regards the scope of the appeal came up for consideration in State of Madras v. Mettor Industries Limited[1973] 32 S.T.C. 239. In the original assessments made under section 12 of the Act, certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the revenue, but not in the appeals filed by the assessee against orders of reassessment, whose subject-matter would only be confined to the escaped turnovers. The State could not, it was held, seek to bring to tax the other items dealt with in the original assessment. In State of Tamil Nadu v. C.M. Tiles[1976] 38 S.T.C. 440., a similar problem came up again for consideration. In the original assessment, the assessee was granted exemption on a turnover of Rs. 21,596.34 on the ground that it represented labour charges shown separately in the sale bills. The assessment was made on a turnover of Rs. 17,096.24. Subsequently, reassessment proceedings under section 16 were initiated and the sum of Rs. 21,596.34 was brought in for assessment. That order was confirmed on appeal. When the matter came before the Tribunal at the instance of the assessee, it was held that both the turnover of Rs. 21,596.34, which was brought to tax in the reassessment, and Rs. 17,096.24, which was brought to tax in the original assessment, were not liable to be taxed. The legality of this order was attacked in this Court, and it was held that in the reassessment proceedings under section 16 the subjectmat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to make "best judgment assessment", that section contemplated section 18 being invoked or applied and section 18 authorised the "best judgment assessment" in certain circumstances. In explaining that what could be. done under the original assessment could also be done in the reassessment, the Supreme Court, at page 85, held as follows: "What is true of the assessment must also be true of reassessment because reassessment is nothing but a fresh assessment. When reassessment is made under section 19, the former assessment is completely reopened and in its place fresh assessment is made. While reassessing a dealer, the assessing authority does not merely assess him on the escaped turnover but it assesses him on his total estimated turnover. While making reassessment under section 19, if the assessing authority has no power to make best judgment assessment, all that the assessee need do to escape reassessment is to refuse to file a return or refuse to produce his account books. If the contention taken on behalf of the assessee is correct, the assessee can escape his liability to be reassessed by adopting an obstructive attitude. It is difficult to conceive that such could be the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the order made under section 12A of the Act, and not the initial assessment order, that would be the starting point for computing the period of limitation. The reason explained appears to be that once an assessment was reopened, the initial order for assessment ceased to be operative and that the effect of reopening the assessment was to vacate or set aside the initial order of assessment and to substitute in its place the order made on reassessment. The initial order for assessment could not be said to survive, even partially, although the justification for reassessment arose because of turnover escaping assessment in relation to a part of the turnover, which was originally assessed. It was held that the result of reopening the assessment was a fresh order of assessment would have to be made including those matters in respect of which there was no allegation of the turnover escaping assessment. The order of the Deputy Commissioner was held to be legal. The provisions of the Mysore Act have been extracted at page 179 of the Reports (39 S.T.C.) and they appear to be differently worded as compared to section 16 of the Tamil Nadu Act. It is not possible, therefore, to apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer in exercise of his powers of revision brought to tax certain other items. There was an appeal against this order of revision which was not successful. The further proceeding in this Court against the order of the Appellate Tribunal also failed. When the appeal against the original assessment was taken up, after the decision of the Supreme Court, the appellate authority took the view that he had no jurisdiction to interfere with the original order of assessment, as it no longer existed after its revision by the Commercial Tax Officer. The appeal to the Tribunal also failed. This Court held, on revision proceedings against the order of the Tribunal, that the appeal survived for consideration. As the turnover in dispute was not taxable under a decision of the Supreme Court, it was, deleted from the assessment by this Court. This case clearly shows that the original assessment still held the field and could be corrected in appeal or revision. In fact, the decision of the Supreme Court in State of Uttar Pradesh v. Manohar and Company[1971] 28 S.T.C. 606 at 609 (S.C.). emphasises the distinctive character or separate existence of the original assessment and the reassessment. In that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded against him in his original assessment. The assessees who figure in this tax revision case are M/s. Indian Refrigeration Industries Private Limited, Coimbatore. They carry on business in the supply and installation of humidifiers. They also deal in electric fans. Their assessments to sales tax were with the joint Commercial Tax Officer, Coimbatore VIII. The assessment for 1961-62 was made by him, in the ordinary course, by order dated 7th February, 1963. In that assessment, the assessees' taxable turnover for the year was determined as under: Total turnover ... ... Rs. 1,86,926.22. Exemption ... ... Rs. Nil. Taxable turnover ... ... Rs. 1,86,926.22. While determining the taxable turnover at Rs. 1,86,926.22, the assessing authority had included therein a sum of Rs. 1,26,778.32, which represented the assessees' trading receipts in humidifiers. The assessees did not appeal against this assessment. Nor did they other. wise object to any part of the turnover determined therein. They paid the tax demand without question. Subsequently, the joint Commercial Tax Officer reopened the same assessment to bring to charge what he considered to be suppressed turnover. And, over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exclusion of the amount from the assessees' taxable turnover for 1961-62. In this tax revision case filed by the Deputy Commissioner of Commercial Taxes under section 38 of the Tamil Nadu General Sales Tax Act, 1959, the order of the Tribunal is challenged as erroneous in point of law. The objection, however, is not directed against the finding on merits. The contention, rather, is that in the events that happened, the Tribunal should have properly refused to entertain the assessees' ground of appeal relating to the turnover of Rs. 1,26,778.32. The learned Additional Government Pleader took the following line in argument. He said that under the scheme of the Act an assessment and a reassessment are independent proceedings concluded by separate orders of the assessing authority. According to him, even the subject-matters of the two proceedings are quite different. He said that whatever is brought to charge in the first instance is alone the subject-matter of the original assessment, and whatever is assessed as turnover escaping assessment is alone the subject-matter of the reassessment. It followed, he said, from this dichotomy that an appeal from an order of reassessment c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no allegation of the turnover escaping assessment." In another decision of the Supreme Court, Commissioner of Sales Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali[1973] 32 S.T.C. 77 (S.C.)., the same idea was expressed in the following passage: "What is true of the assessment must also be true of reassessment, because reassessment is nothing but a fresh assessment. When reassessment is made under section 19, the former assessment is completely reopened and in its place fresh assessment is made. While reassessing a dealer, the assessing authority does not merely assess him on the escaped turnover but it assesses him on his total estimated turnover." It seems to me that in the face of these clear enunciations by the Supreme Court of the legal position as to the precise scope and effect of reassessments the view expressed by this Court in State of Tamil Nadu v. C.M. Tiles[1976] 38 S.T.C. 440. and State of Madras v. Mettur Industries Ltd. [1973] 32 S.T.C. 239., can no longer be regarded as authoritative. The Bench decisions of this Court were apparently not cited before the Supreme Court. But it is clear, all the same, that the Supreme Court has rejected outright the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh tendency to be found in taxing statutes. Courts have often found a comparative study of different tax laws a fruitful discipline, even if it were not, strictly speaking, a direct aid to statutory construction. This kind of task is now easily undertaken because of the large number of tax cases which go before our courts and the good number which get reported in the specialised law journals. Learned judges who sit and dispose of tax revisions and tax references thus find themselves in a position to perceive broad trends which run right through case-law, albeit under different fiscal enactments. They are able to deduce general principles even from the "bare bones" of the statutes. And when tax principles thus get established, slowly but surely, by this kind of judicial process, they become authoritative expositions in themselves of the way in which the relevant taxing provisions have perforce to be construed. If the position were otherwise, courts would merely be adding their own contribution to the growing complexity of tax laws, instead of discovering unity in complexity. It is in this sense that the two Supreme Court decisions, Deputy Commissioner of Commercial Taxes v. H.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax and not a collection of as many taxes as there are sources or heads of income. Likewise, it may well be said that sales tax, as levied in this country, is not a collection of as many taxes as there are sales. It is, on the contrary, a single tax on annual turnover. Even the exemption limit of tax is with reference to annual total turnover, up to a point. Again, even where the tax structure is based on differential rates, the rate schedules are applied not to individual items of sales, but only to the slices of total turnover distinguished on the basis of description and classification of the goods dealt in. These, perhaps, are the reasons why some theoretical writers refer to sales tax, quite accurately, as turnover-tax. This basic characteristic of the tax being a recurring annual tax on aggregate turnover cannot, in our opinion, be lost sight of in any discussion about the nature and purpose of the process of assessment and reassessment. When the assessing authority computes the aggregate amounts for which a dealer sells goods during a year, he does. so for making an assessment of the taxable turnover. If, in the process, he subsequently discovers that some items of sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they alone occupied the field of reassessments. These considerations, I believe, provide the rationale behind the principles laid down by the Supreme Court in Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu[1977] 39 S.T.C. 177 (S.C.). and Commissioner of Sales Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali[1973] 32 S.T.C. 77 (S.C.). In the former case, what was directly in point was whether an order of enhancement made by a Deputy Commissioner sitting in revision was barred by limitation. The question arose under the Mysore Sales Tax Act, 1957. The Act fixed a time-limit for the exercise of revisional power by the Deputy Commissioner. In that case, there were actually two orders of assessment passed by the assessing authority: one was an original assessment; the other was a reassessment. The Deputy Commissioner's order of enhancement in revision related to certain items which had already figured in the original assessment, and not added for the first time in the reassessment. If the date of the original assessment were to enter into the reckoning, the Deputy Commissioner's order would be time-barred. It would, however, be within time if the computation were made, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contention, the Supreme Court went into the real nature and object of reassessments and held that when once the initial assessment was reopened by the assessing authority, the reassessment that followed was meant to take the place of the initial assessment. In both the decisions of the Supreme Court aforesaid, copious citation was made to earlier cases bearing on corresponding reassessment provisions under different sales tax enactments. There was a reference even to similar provisions in the Income-tax Act and decisions arising thereunder. No question was raised or considered in either of these cases as to whether the reassessment provisions in the other statutes were in Pari materia. The court discussed the position rather as one of general principle, and laid down the law on these terms. In an early decision of the Supreme Court, I find a similar procedure having been adopted: Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpor[1963] 14 S.T.C. 976 (S.C.). The Act under consideration in that case was the Central Provinces and Berar Sales Tax Act, 1947. The question arose from a reassessment under section 11-A of that Act. In the course of their judgment, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sri Ramulu[1977] 39 S.T.C. 177 (S.C.). and which sought to place a restricted view of the reassessment was literally based on these words in the section. But that argument, as I have shown, did not weigh with the court. Section 16 of the Madras General Sales Tax Act, 1959, is also similarly worded, for it speaks of turnover which has "escaped assessment" and empowers the assessing authority to determine "the turnover which escaped assessment". But these words, in isolation, cannot control the scope of reassessment, in the context of the entire gamut of the provisions relating to the machinery of assessment, and in the context of the general scheme of the Act. Having regard to the way the Supreme Court dealt with a similar position in Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu[1977] 39 S.T.C. 177 (S.C.)., I think I would be justified in refusing to place a much too literal construction on the words of the section and circumscribe the area of reassessment made by the assessing authority within the narrow confines of turnover escaping assessment. The learned Additional Government Pleader referred us to an earlier decision of the Supreme Court reported in State of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "in the circumstances of the present case, it cannot be said that there was a merger of the one in the other, because the question of exemption of the value of yarn purchased from outside the State of Madras was not the subject-matter of revision by the Deputy Commissioner". They observed that the doctrine of merger is not one of rigid and universal application. They rejected the theory that there is fusion or merger whenever there are two orders, one by an inferior tribunal followed in appeal or revision by another order of a superior tribunal. They said that it would all depend on the nature and subject-matter of the appellate or revisional order, and the scope of the statutory provision conferring the appellate or revisional jurisdiction. The learned Additional Government Pleader urged that this decision must properly govern the present case. I must, however, reject this contention as untenable. The decision in State of Madras v. Madurai Mills Co. Ltd.[1967] 19 S.T.C. 144 (S.C.). is clearly distinguishable from the kind of case which is before us and which the Supreme Court dealt with in Commissioner of Sales Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali[1973] 32 S.T.C. 77 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets aside the entirety of the original assessment and brings about an overall fresh assessment of the taxable turnover and not merely of the amount brought to charge as escaped turnover, it stands to reason that the appeal must also comprehend the entirety of the turnover. But there is really something more to this view of the scope of the appellate jurisdiction than the dialectic of pitting one syllogism against another. As a matter of general principle, an appeal, as it has often been described, is a retrial or a rehearing. This is particularly true in tax cases. I have earlier shown how tax laws are devised to the end that no one who is subject to the charge is allowed to go scot-free or even get away with an under-assessment. I have shown how this position is sought to be ensured by back duty and other machinery provisions. This is one side of the picture in fiscal legislation. Equally manifest from the other side of the picture is the anxiety of modern legislatures to protect the subject against overassessment and excessive taxation. This explains why an assessment is laid open to an appeal, or rather, to a succession of appeals, by aggrieved assessees. The avowed object of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. The learned Additional Government Pleader argued that since the assessees had allowed the inclusion of Rs. 1,26,778.32 in the original assessment to become final without having filed any appeal as against it, they were estopped from asking for relief in the appeal against the reassessment. I should have thought that such an argument as this might, perhaps, have been apposite if really the assessees had appealed from the original assessment on this point. Such an argument, in my view, can have no relevance in this case, because the first and the only time the assessees had appealed against the inclusion of Rs. 1,26,778.32 was in their appeal against the reassessment order. That they had not previously questioned this amount in any appeal against the original assessment is, therefore, a point in their favour, rather than against them. It need hardly be said that for an assessee who had once tried an appeal against a disputed turnover in the original assessment and failed, the Act does not provide for a second innings. This is clear not only from the general scheme of the Act, but also from sections 31 and 33. Each section contemplates an appeal only once as respects a g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g authorities inspected the business place of the assessee and on a check of the accounts and after due analysis, they found that the dealer had suppressed a turnover of Rs. 22,602.87. On 16th January, 1967, a notice under section 16 of the Act was given to the assessee, in due form, to show cause why the taxable turnover should not be redetermined due to the discovery of suppression of sales. In his reply dated 31st January, 1967, the assessee apart from denying the liability under section 16 of the Act, also claimed a deletion of a turnover of Rs. 1,39,344.23, which was originally brought to tax in the proceedings under section 12 of the Act, which was undertaken by the assessing officer. That was on the ground that the presently disputed turnover related to works contracts. The assessing officer rejected the request for deletion of the turnover of Rs. 1,39,344.23, as originally assessed. But, with reference to the notice under section 16, he passed an order that a sum of Rs. 1,930.00 alone was suppressed and he added this on to the originally assessed turnover of Rs. 1,86,928.22. He also levied a penalty of Rs. 73 on the escaped turnover of Rs. 1,930. The assessee appealed on 6t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in State of Madras v. Mettur Industries Limited[1973] 32 S.T.C. 239. and State of Tamil Nadu v. C.M. Tiles[1976] 38 S.T.C. 440. No doubt, the Division Bench judges in the cases cited above proceeded on the footing that the reassessment proceeding under section 16 is an independent proceeding and it could only relate to the escaped turnover and that no part of the turnover which was assessed in the original assessment can be deemed or considered as being part of the original assessment proceedings under section 12 of the Act. In that view, our Court held that on a further appeal to the Tribunal in such matters the subject-matter could only relate to the escaped turnover and not to the original turnover, which was brought to tax under section 12 of the Act, and if the assessee did not dispute the original taxable turnover he could not dispute the same in the reassessment proceedings. Balasubrahmanyan, J., took the view that having regard to the decision of the Supreme Court in Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu[1977] 39 S.T.C. 177 (S.C.). , the opinion expressed by our Court in State of Madras v. Mettur Industries Limited[1973] 32 S.T.C. 239. and State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in having allowed the ground to be taken by the assessee in relation to the concerned disputed turnover. The only argument of the learned Additional Government Pleader was that in the Supreme Court decisions, section 16 of the Tamil Nadu General Sales Tax Act was not considered expressly, but on a comparison of the relative provisions which were considered by the Supreme Court in the two decisions cited above, the learned Judge was of the view that the comparative provisions relating to reassessment under the State laws considered by the Supreme Court in the above two decisions were almost similar, having regard to the context in which the words are used in the relevant comparable sections in the other Acts and the general scheme and the structure of those enactments. He was of the view that the Supreme Court has expressly laid down that the reassessment proceeding is merely a continuation of the original assessment proceedings and that the order passed ultimately on reassessment, on the basis of escaped turnover under section 16 would be the order which could be challenged by any assessee. He thereafter considered in detail the scheme of taxation under tax laws and rightly obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the reassessment cannot be accepted in the light of the provisions of the Act and, particularly, in the view taken by the Supreme Court in State of Uttar Pradesh v. Manohar and Company[1971] 28 S.T.C. 606 (S.C.). In those circumstances, differing from Balasubrahmanyan, j., he allowed the revision petition. As already expressed by me, I am in complete agreement with the observations of Balasubrahmanyan, J. It is no doubt true that in the subterranean hierarchy of statutory tribunals set up under the Tamil Nadu General Sales Tax Act starting from the assessment officer and ending with the Sales Tax Appellate Tribunal, which is invariably tested at the High Court level and at the Supreme Court level, a procedural distinction is maintained between the original assessment and an assessment reopened under section 16 of the Act. The reopening of an assessment is occasioned because the initial order of assessment projects a mistake which is apparent on record. Even while issuing a notice of reassessment, it is not in dispute that a reference has to be made to the original order and the word "reassessment" by itself suggests that there is an effacement by necessity of the original ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d turnover and bring to tax such of those items which have so escaped and conclude the issue. As it is an accepted canon in tax law that for a given year there can be only one assessment, which determines the taxable turnover of the assessed, the dichotomy thought of by Sethuraman, J., as if there could be two distinct and separate assessments for a particular assessable year does not appear to me to be an acceptable proposition in the light of the pronouncements made by the Supreme Court. Balasubrahmanyan, J., in his judgment referred to the comparable provision in the Mysore Sales Tax Act, 1957. Though the language of section 12-A(1) of the Mysore Sales Tax Act is not in pari materia with section 16 of the Tamil Nadu General Sales Tax Act, yet, having regard to the pronouncements made by the Supreme Court, a too literal construction of the words deployed in the Mysore Act ought not to prevent a court of law from culling out the real sense or meaning and purport of the section to hold that the reassessment is not necessarily confined to the turnover relatable to the escaped turnover. Balasubrahmanyan, J., rightly rejected the contention based on the doctrine of merger as not bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no independent appeal against the original order of assessment. But, as in my view, there can be only one assessment and in a case where there has been a reopening of an original assessment, the reassessment order can only be said to be the only assessment order, the assessee has a right to challenge that order in all its aspects. In conclusion I agree with Balasubrahmanyan, J., and dismiss the tax revision case, confirming the counsel's fee already fixed by the learned Judge. On the expression of opinion by the Chief justice, as a third judge, the case came for final disposal and the Court delivered the following judgment on 13th June, 1979: The judgment of the Court was delivered by SETHURAMAN, J.-In accordance with the provisions of section 98 of the Code of Civil Procedure, as there was a difference of opinion on the question whether the assessee could, in the appeal against the reassessment proceedings, challenge the assessability of a sum which had been included in the original assessment and which the assessee had not objected to in any appeal filed against the said assessment, there was a reference to a third judge. The majority view now is that the assessee could agi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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