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TMI Blog2004 (12) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... -97 and keeping in view the direction of the honourable Court, it is found that the refund as claimed by you is not admissible as the assessment orders passed in this regard is found to be erroneous and prejudicial in the interest of Government revenue. And whereas it is found on scrutiny that the assessment orders for the assessment years 1993-94, 1994-95 and 1996-97 of the Superintendent of Taxes, Guwahati- A prima facie appeared to be erroneous and prejudicial in the interest of Government revenue inasmuch as the payable excise duty in respect of the goods ought to have been included in the assessable turnover of the concerned dealer irrespective of the fact whether such excise duty had been paid by the dealer himself or his assignee vendors. This position has been most unequivocally brought out in the judgment and order of the honourable Supreme Court in the case of Mcdowell Company Limited v. Commercial Tax Officer [1985] 59 STC 277 overruling the earlier judgment in the like cases which seems to have been completely disregarded by the decision taken by the Deputy Commissioner of Taxes (Appeal) while deciding the issue at his end on which the assessment orders are based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 1994-95. The said amount is allowable deduction from the total sale price as per provision 2(34)(d)(i) of the Act. No certain conditions and restrictions prescribed in the Act in this regard. (b) The learned Superintendent of Taxes neither discussed in the assessment orders nor allowed the discount/trade discount amounting to Rs. 3,20,000 and Rs. 3,75,000 during the year 1993-94. The said amount is already allowed by the appellant in the sale price and is allowable deduction as per provision of section 2(34)(d)(ii) of the Act. (c) That the learned Superintendent of Taxes charged/levied interest without any speaking order in the assessment orders during the years 1993-94 and 1994-95. Moreover, the interest was also charged up to the date of chalan, whereas the appellant deposited the advance/due taxes by cheque much ahead of the chalan date. The date of cheque handed over to the department is to be treated as the date of payment of taxes if such cheques are not dishonoured. (d) That the learned Superintendent of Taxes included the excise duty paid directly by the appellant to the Excise Authority of the State during the years 1993-94 and 1994-95. In this regard the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in McDowell Company Limited v. Commercial Tax Officer reported in [1985] 59 STC 277; (1985) 3 SCC 230. It is for this reason the Joint Commissioner of Taxes considered it appropriate to issue the impugned notice expressing his intention to exercise powers under section 36(1) of the Act to revise the assessment orders for the aforesaid three years. 9.. Dr. A.K. Saraf, learned Senior Counsel for the petitioners, argued that the assessment orders passed by the assessing officer in compliance with the direction of the appellate authority cannot be condemned as erroneous and, as such, the Commissioner of Taxes cannot be permitted to exercise the powers of revision under section 36(1) of the Act to revise the assessment orders inasmuch as the powers of revision under section 36(1) is not available for review of the orders of the appellate authority. On maintainability of the writ petitions, Dr. Saraf argued that the show cause notice dated June 22, 2004 is patently without jurisdiction and, therefore, the writ is maintainable. 10. Let us at the beginning look at the two judgments of the honourable Supreme Court delivered in 1977 and 1985. In 1977 judgment, the hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale is thus the total amount and not what is reflected in the bill. We are, therefore, clearly of the opinion that excise duty though paid by the purchaser to meet the liability of the appellant, is a part of the consideration for the sale and is includible in the turnover of the appellant. The purchaser has paid the tax because the law asks him to pay it on behalf of the manufacturer. . 11.. It is, therefore, settled that the sale price includes the excise duty and is a component of the sale price and is, therefore, to be included in the annual turnover of the assessee. The judgment by the Deputy Commissioner of Taxes (Appeals) in the instant case was delivered long after 1985. The appellate authority apparently relied upon the judgment of 1977 which was not the law at the time of disposal of the appeals. The judgment of the appellate authority is contrary to law as interpreted by the honourable Supreme Court and is erroneous. But the Revenue did not prefer any appeal against the aforesaid judgment though provision for appeal against the judgment of the Deputy Commissioner was available. The judgment of the Deputy Commissioner (Appeals) became final and it was binding upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they shall exercise jurisdiction. .. (5) The State Government may authorise an officer, not below the rank of a Deputy Commissioner of Taxes appointed under sub-section (1) to exercise the power and perform the functions of the appellate authority under section 34. 15.. The Joint Commissioner appointed to assist the Commissioner sought to invoke the revisional powers under sub-section (1) of section 36 to revise the assessment orders passed by the assessing officer in pursuance of the orders passed by the appellate authority. It is, therefore, considered expedient to quote hereinbelow the provisions contained in section 36 for better appreciation of the situation at hand: 36. Revision of order by the Commissioner. (1) The Commissioner may call for and examine the records of any proceeding under this Act and if he considers that any order passed therein by any person appointed under sub-section (1) of section 3 to assist him is erroneous insofar as it is prejudicial to the interests of the Revenue, he may, after giving the dealer or the person to whom the order relates an opportunity of being heard and after making or causing to be made such enquiry as he dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the appellate authority: Provided that Commissioner shall not pass any order prejudicial to the dealer or the person to whom the order relates without giving him a reasonable opportunity of being heard. (4) Notwithstanding anything contained in sub-section (4) of section 3, the Commissioner shall not delegate any of the powers or functions under this section to any officer appointed to assist him under sub-section (1) of that section, who is below the rank of a Deputy Commissioner. 16.. It would appear from the provisions in section 36 that the Commissioner is authorised to exercise the powers of revision suo motu and interfere with the orders passed by any officer other than himself if he is of the opinion that any such order is erroneous in so far it is prejudicial to the interest of the Revenue. Sub-section (1) makes it clear that the power of suo motu revision can be exercised by the Commissioner only when any order passed thereunder by any officer appointed to assist him is erroneous in so far it is prejudicial to the interest of the Revenue. The powers under sub-section (1) can be exercised only on fulfilment of two conditions, i.e., (i) the order is erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate authority committed gross error in interpreting the law. The assessing officer passed the final assessment orders relying upon the aforesaid erroneous decision of the Deputy Commissioner of Taxes (Appeals). Thus, the assessments made contrary to the provisions of law were also bad in law. This is so far the first requirement is concerned. 18.. Mr. K.N. Choudhury, learned Senior Counsel for the Revenue, argued that non-inclusion of the excise duty in the sale price resulted in huge loss of revenue to the State. Mr. Choudhury with reference to the materials on record submitted that the loss of revenue was in terms of crores and this has been occasioned because the assessing officer fell in error in applying the correct law. According to Shri Choudhury, though the Revenue did not challenge the orders of the Deputy Commissioner of Taxes (Appeals) before higher forum, yet the powers of revision under sub-section (1) of section 36 should be available for revision of the final assessment orders passed by the assessing officer erroneously in prejudice to the interest of the Revenue. It, therefore, follows that the action of the assessing officer in excluding the excise duty from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner. The words in any proceeding under this Act without any exception indicated therein suggest that an assessment order passed by the taxing authority relying upon a decision of the appellate authority is also subject to revisional powers of the Commissioner. The Legislature do not appear to have had the intention to place the orders passed by the Deputy Commissioner of Taxes (Appeals) at a higher pedestal. The orders passed by the Deputy Commissioner of Taxes (Appeals) cannot be equated with an order passed by the Tribunal or the High Court. 22.. Explanation to sub-section (1) of section 36 provides that the provisions of sub-section (1) shall also apply, notwithstanding that the order sought to be revised has been made the subject of any proceeding by way of appeal, in respect of matters not actually considered and decided in such proceedings. It is thus clear that an order of assessment made by an assessing officer relying on an order passed by the appellate authority other than the Tribunal or the High Court can be revised. Explanation is not to be considered as an exception to the substantive provision. It has to be read in tune with the substantive provisions e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxes are the price that we pay for civilisation. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 23.. The decision in this judgment clearly indicates that there must be a point of finality in all legal proceedings and stale issues cannot be reactivated beyond a particular stage. In the instant case though the assessment was made final, but the effort made by the Joint Commissioner is within the period of limitation prescribed in the Act. In a case where the circumstances required for suo motu revision are present and powers of suo motu revisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of levying tax on the escaped assessment and the provisions of section 37 for the purpose of rectification of arithmetical mistake and factual error. The case at hand is obviously not for correction of arithmetical mistake or factual error. The powers under section 37 for rectification of assessment orders were also not invoked by the assessing officer. It is in this context, the Joint Commissioner issued the notice under sub-section (1) of section 36 after having found that the assessing officer acted erroneously relying upon an erroneous order of the Deputy Commissioner of Taxes (Appeals) which has resulted into loss of revenue. The diligence and promptitude expected from the assessing officer is obviously lacking in the instant case. Therefore, the action See page 511 supra. of the Joint Commissioner cannot be said to be without jurisdiction. The decision in Santalal Mehendi Ratta (HUF) (2002) 2 GLT 262 cannot salvage the situation for the assessee-firm. 25.. In the above background, the decision of the Allahabad High Court in K.N. Agrawal v. Commissioner of Income-tax reported in [1991] 189 ITR 769 relied upon by Dr. Saraf may be looked into. The Allah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge used in section 23(4)(a) is plain and simple and there is no ambiguity in it. The honourable Supreme Court held that the expression any order made under this Act is of wide connotation and it includes an assessment order as well as an appellate order passed under the Act. In the instant case, sub-section (1) of section 36 empowers the Commissioner to call for and examine the records of any proceedings under the Act and to revise any order passed therein if such order is erroneous in so far as it is prejudicial to the interest of the Revenue. Sub-section (3) authorises the Commissioner even to revise, modify or uphold the order of the appellate authority. The language employed in section 23(4)(a) of the Orissa Act and subsection (1) of section 36 of the Act of 1993 are identical and, as such, capable of same interpretation. Explanation to sub-section (1) of section 36 has to be interpreted in tune with the meaning of the substantive provisions of the Act. Therefore, it would be just and proper to hold that the suo motu powers of Commissioner under subsection (1) of section 36 will also cover an appellate order other than the orders passed by the Tribunal or the High Court. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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