State of Tamil Nadu vs Gani Abdul Khader and Company

Thanikkachalam, J.—The department is the petitioner. While completing the original assessment for the year 1974-75, the assessing

authority levied tax on the first sales of hides and skins falling under entry 7(b) of Schedule II of the Tamil Nadu General Sales Tax Act at 1(1/2)

per cent. at single point. The Additional Deputy Commissioner considered that the levy of 1(1/2) per cent. on the first sales of hides and skins is to

be taxed at 3 per cent. Therefore, the Additional Deputy Commissioner, came to the conclusion that the order passed by the assessing authority in

levying tax at 1(1/2) per cent. is erroneous and prejudicial to the assessing officer u/s 32 of the Tamil Nadu General Sales Tax Act, 1959

(hereafter referred to as ""the Act""). The Additional Deputy Commissioner after issuing notice to the assessee and after hearing the objections

raised by the assessee, levied tax the sales of hides and skins at 3 per cent. Aggrieved, the assessee filed an appeal before the Appellate Tribunal.

The Appellate Tribunal held that the order of the assessing authority does not suffer from any legal or procedural infirmity as first sales of hides and

skins is liable to tax under entry 7(b) of Schedule II of the Act. Thus the Tribunal ultimately held that there is no cause action for the Additional

Deputy Commissioner for setting aside the order of the assessing authority. The Tribunal has also held that the Additional Deputy Commissioner

cannot sit himself in the armed chair of the assessing authority and pass an order of assessment. It was therefore ultimately held that the Additional

Deputy Commissioner has no jurisdiction to revise the assessment u/s 32 of the Act.

It is against this order, the department is in revision before this Court. The learned Government Advocate (Taxes) submitted that the Additional

Deputy Commissioner has got ample powers u/s 32 of the Act to revise the assessment. It was further submitted that on the newly gathered

materials, it is open to the Additional Deputy Commissioner to direct the assessing authority to make fresh assessment. It was also submitted that

the limitation period as contemplated u/s 16(1) of the Act do not apply in the case where the Additional Deputy Commissioner exercised his

jurisdiction u/s 32 of the Act, because according to the learned Government Advocate both the sections are independent and operating in a

different field. It was submitted that in the present case the Additional Deputy Commissioner has merely recast the assessment and did not

introduce any new addition. In support of this contention, reliance was placed on the decisions reported in -

Ram Kanai Jamini Ranjan Pal Pvt. Ltd. Vs. Member, Board of Revenue, W. Bengal, ;

State of Kerala Vs. K.M. Charia Abdullah and Co., ; and

A decision of this Court rendered in Venkateswara Metal Industries v. State of Tamil Nadu [1989] 74 STC 364.

On the other hand, the learned counsel appearing for the assessee while supporting was made correctly with regard to the hides and skins by the

assessing authority, there is no ground for interference by the Additional Deputy Commissioner u/s 32 of the Act. Again it was submitted that the

submitted that the Additional Deputy Commissioner u/s 32 of the Act cannot make an assessment by himself. It was therefore submitted that the

Additional Deputy Commissioner has got no jurisdiction to interfere with the order passed by the assessing officer in levying tax on the first sale of

the hides and skins, which comes under entry 7(b) of Schedule II of the Act.

We have heard the rival submissions. The fact remains that in the original assessment, the assessing officer on the first sales of hides and skins

levied tax at 1(1/2) per cent. since the goods fall under entry 7(b) of Schedule II of the Act. According to the Additional Deputy Commissioner,

the tax leviable on hides and skins is 3 per cent. and not 1(1/2) per cent. and hence he exercised his jurisdiction u/s 32 of the Act and revised the

assessment by levying tax at 3 per cent. on the abovesaid goods. On the merits, so far as the levy of tax on the first sale of hides and skins is

concerned, since this item of goods fall under entry 7(b) of schedule II of the Act, there is no infirmity in the assessment made by the assessing

officer.

In so far the order passed by the Additional Deputy Commissioner is concerned, while passing the order, the Additional Deputy Commissioner

issued notice to the assessee calling for the objections. After considering the objections. The Additional Deputy Commissioner recast the

assessment and levied tax at 3 per cent. on the first sales of hides and skins. It is well established that the Additional Deputy Commissioner while

exercising his jurisdiction u/s 32 of the Act, it is not possible for him to make a reassessment by himself.

In Ram Kanai Jamini Ranjan Pal Pvt. Ltd v. Member, Board of Revenue, West Bengal 1976 38 STC, cited supra, the Supreme court, while

considering the provision of section 14(1) and 20(3) of the Bengal Finance (Sales Tax) Act and rule 80A of the Rules, held as under :

The purposes of this Act are twofold, viz, the levy of a general tax on the sale goods to supplement the lost revenues and for promoting the

general public good; and secondly, to see that this is done under the provisions of the Act and not by carrying out in a capricious or arbitrary

manner. Therefore, a revisional authority has to be created. What is revision ? The essence of revisional jurisdiction lies in the duty of the superior

Tribunal or officer entrusted with such jurisdiction to see that the subordinate Tribunals or officers keep themselves within the bounds prescribed

by law and that do their duty requires them to do and that they do it in a legal matter. This jurisdiction being one of superintendence and correction

in appropriate cases, it is exercisable even suo motu as is clear from the numerous statutory provisions to revision found in various Acts and

Regulations such as the Civil Procedure Code, Criminal Procedure Code, Income Tax Act, etc. The jurisdiction of suo motu revision is not

cribbed and cabined or confined by conditions and qualifications. The purpose of such an amplitude being given suo motu revisions appears to be

as much to safeguard the interest of the exchequer as in the intersts of the assessee. The State can never be the appellant and if there is an order

against the State to its prejudice, and naturally the assessee in whose favour the order is passed does not prefer an appeal, the State would suffer

unless its intersts are safeguarded by the exercise of such supervisory jurisdiction as the one given to the authorities abovementioned.

Again in State of Kerala v. K. M. Cheria Abdulla and Company 1965 16 STC 875 while considering the provisions of section 12, 19 of the

Madras General Sales Tax Act, 1939 and rule 14-A of the Madras General Sales Tax Rules, 1939, the Supreme Court held as under :

..... It would not invest the revising authority with power to launch to upon enquiries at large so as either to trench upon the powers which are

other expressly reserved at large so as either to trench upon the power which are expressly reserved at large by the Act or by the Rules to other

authorities or to ignore the limitations inherent in the exercise of those powers. For instance, the power to reassess escaped turnover is primarily

vested by rule 17 in the assessing officer and is to be exercised subject to certain limitations, and the revising authority will not be competent to

make an enquiry for reassessing a taxpayer. Similarly the power to make a best judgment assessment is vested by section 9(2)(b) in the assessing

authority and has to be exercised in the manner provided. It would not be open to the revising authority to assume that power. The revisional

power has to be exercised for ascertaining whether the order passed is illegal or improper or the proceeding recorded is irregular and it is in aid of

that power that such orders may be passed as the authority may think fit. One of the inquiries in considering the legality or property of the orders

passed by the subordinate officer which the revising or the appellate authority may make is about the correctness of the tax levied and it after

perusing the record the authority is prima facie satisfied about the illegality or impropriety of the order or about the irregularity of the proceeding, it

may in passing its order direct an additional enquiry. Neither section 12 nor rule 14-A authorises the revising authority to enter generally upon

enquiries which may properly be made by the assessing authorities and to reopen assessments.

Similarly the Madras High Court in A. Velayutha Raja v. Board of Revenue (C.T.), Madras-5 1970 26 STC 176 held that in passing an original

order of assessment the Board exceeded its powers u/s 345 and that the order was also passed beyond the time-limit. Therefore, the order was

unenforceable in law. It was further held that the revisional powers exercised by the Board of Revenue u/s 34 of the Madras General Sales Tax

Act, 1959, are subject to the provisions of the Act and therefore a best judgment assessment or an original assessment by the Board u/s 34 on the

ground of escapement of turnover is bad in law and unsustainable. It is not a mere subjective satisfaction that is envisaged in section 34 but it

should stand the test of objectiveness as also the prescribed guidelines set in the section itself and it should be in accordance with the order

provisions of the Act.

The learned Government Advocate also brought to our notice a decision of this Court rendered in Venkateswara Metal Industries v. State of

Tamil Nadu [1989] 74 STC 364. According to the facts arising in this case, the original assessment was not revised u/s 16 of the Act before that

assessment was made subject to revision by the Board of Revenue in the said case unlike the cases cited in that decision. This is a case of

withdrawing the exemption by the Board of Revenue with respect to a turnover which was wrongly given by the assessing officer. Here the

turnover has been already determined by the assessing officer. The question that was to be decided was whether the exemption granted by the

assessing officer with respect to certain turnover was legally correct. Therefore, that decision was rendered on the facts available on record.

Following the decisions of the Supreme Court in 1965 16 STC 875 (State of Kerala v. Cheria Abdulla and Company), 1976 38 STC 1 at page 7

(Ram Kanai Jamini Ranjan Pal Pvt. Ltd. v. Member, Board of Revenue) and the decision of this Court rendered in 1970 26 STC 176 (Velayutha

Raja v. Board of Revenue), we hold that the Additional Deputy Commissioner has got no jurisdiction to make an assessment after issuing notice

and hearing the assessee. The question of limitation does not arise in the present case. The Additional Deputy Commissioner exceeded the

jurisdiction u/s 32 of the Act. Therefore, we find that there is no infirmity in the order passed by the Tribunal in setting aside the suo motu order

passed by the Additional Deputy Commissioner u/s 32 of the Act. In that view of the matter, the revision is dismissed. No costs.

Petition dismissed.