# NATHMAL TOLARAM v. SUPERINTENDENT OF TAXES, DHUBRI AND ANOTHER

- **Citation:** [1961] 2 S.C.R. 40
- **Court:** Supreme Court of India
- **Decided:** 1961
- **Case number:** Civil Appeal No. 196 of 1958
- **Bench:** S. K. Das, M. Hidayatullah, K. c. DAS GUPTA, J.C. Shah, N. Rajagopala Ayyangar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nathmal-tolaram-v-superintendent-of-taxes-dhubri-and-another-2238
- **Pages:** 8

## Headnote

Sales Tax-Reassessment-] urisdiction of the
Sales Tax
Officer-High Court's power in References-Advisor>' jurisdiclionPeriod of limitation for proceedings for reassessment-Assam Sales
Tax Act. r947 (Assam r7 of r947), ss. 2(r2). r6(2), r9, r9A, 32(8),
34.
The appellants who were dealers registered under the Assam
Sales Tax Act, r947, submitted a return of their turnover for
the account period April I, r948 to September 30, r948, which
included sales in Assam of all goods other than jute. The
Superintendent of Taxes, however, summarily assessed the
appellants under sub-s. 4 of s. 17 of the Act by order dated
September 30, 1950, to pay tax on sales of jute despatched by
them to Calcutta during the account period. The order of
assessment was confirmed by the Commissioner of Taxes. On
an application by the appellants the Commissioner referred
certain questions of law arising out of the assessment to the
High Court, which then gave its opinion that as the consignments in question were not sales within the meaning of sub-s. 12
of s. 2 of the Act, they were not taxable, and that as to whether
the sales could thereafter be assessed if they fell within the
purview of the Explanation to sub-s. 12 of s. 2, it expressed no
opinion. On receipt of the opinion the Commissioner directed
the Superintendent of Taxes to dispose of the case in accordance
with the judgment of the High Court. The Superintendent of
Taxes then set aside the order of assessment dated September
30, r950, and issued a notice to the appellants on January 30,
r953, directing them to produce the necessary evidence in order
to enable him to ascertain whether the contract of sale involved
in the case came within the purview of the ExpJanation to subs. 12 of s. 2 of the Act. The appellant claimed that the Superintendent had no jurisdiction to commence any further proceeding for assessment as the notice issued to him was beyond three
years from the end of the assessment period as provided by s. rg
of the Act.
Held, that the High Court in answering the questions
refetred to it was exercising an advisory jurisdiction and could
not and did not give any direction to the sales tax authorities
to proceed to assess or not to assess the appellants to sales tax;
it merely gave its opinion that the transactions were not sales
within the meaning of s. 2, sub-s. 12 of the Act and were accordingly not taxable.
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2 S.C.R. SUPREME COURT REPORTS
41
Held,. further, that the Commissioner not having issued any
I96°
i..
notice under s. l9A of the Act or exercised his revisional autho-
-
rity under s. 31, but having merely directed the case to be Nathmal Tola.am
disposed of in accordance with the judgment of the High Court,
v.
the Superintendent of Taxes had no jurisdiction to initiate Sitperintendmt
fresh proceedings for reassessment under s. 19 after the expiry
of Taxes
of three years from the assessment period.
Commissioner of Income Tax, Bombay Presidency and Aden
and others v. Bombay Trust Corporation Ltd., (1936) L.R. 63 I. A.
408, distinguished.

## Text

z960
Octobef' z8.
40
SUPREME COURT REPORTS
[1961]
. NATHMAL TOLARAM
v.
SUPERINTENDENT OF TAXES, DHUBRI
AND ANOTHER.
(S. K. DAS, M. HIDAYATULLAH, K. c. DAS GUPTA,
J.C. SHAH and N. RAJAGOPALA AYYANGAR, ,JJ.)
Sales Tax-Reassessment-] urisdiction of the
Sales Tax
Officer-High Court's power in References-Advisor>' jurisdiclionPeriod of limitation for proceedings for reassessment-Assam Sales
Tax Act. r947 (Assam r7 of r947), ss. 2(r2). r6(2), r9, r9A, 32(8),
34.
The appellants who were dealers registered under the Assam
Sales Tax Act, r947, submitted a return of their turnover for
the account period April I, r948 to September 30, r948, which
included sales in Assam of all goods other than jute. The
Superintendent of Taxes, however, summarily assessed the
appellants under sub-s. 4 of s. 17 of the Act by order dated
September 30, 1950, to pay tax on sales of jute despatched by
them to Calcutta during the account period. The order of
assessment was confirmed by the Commissioner of Taxes. On
an application by the appellants the Commissioner referred
certain questions of law arising out of the assessment to the
High Court, which then gave its opinion that as the consignments in question were not sales within the meaning of sub-s. 12
of s. 2 of the Act, they were not taxable, and that as to whether
the sales could thereafter be assessed if they fell within the
purview of the Explanation to sub-s. 12 of s. 2, it expressed no
opinion. On receipt of the opinion the Commissioner directed
the Superintendent of Taxes to dispose of the case in accordance
with the judgment of the High Court. The Superintendent of
Taxes then set aside the order of assessment dated September
30, r950, and issued a notice to the appellants on January 30,
r953, directing them to produce the necessary evidence in order
to enable him to ascertain whether the contract of sale involved
in the case came within the purview of the ExpJanation to subs. 12 of s. 2 of the Act. The appellant claimed that the Superintendent had no jurisdiction to commence any further proceeding for assessment as the notice issued to him was beyond three
years from the end of the assessment period as provided by s. rg
of the Act.
Held, that the High Court in answering the questions
refetred to it was exercising an advisory jurisdiction and could
not and did not give any direction to the sales tax authorities
to proceed to assess or not to assess the appellants to sales tax;
it merely gave its opinion that the transactions were not sales
within the meaning of s. 2, sub-s. 12 of the Act and were accordingly not taxable.
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2 S.C.R. SUPREME COURT REPORTS
41
Held,. further, that the Commissioner not having issued any
I96°
i..
notice under s. l9A of the Act or exercised his revisional autho-
-
rity under s. 31, but having merely directed the case to be Nathmal Tola.am
disposed of in accordance with the judgment of the High Court,
v.
the Superintendent of Taxes had no jurisdiction to initiate Sitperintendmt
fresh proceedings for reassessment under s. 19 after the expiry
of Taxes
of three years from the assessment period.
Commissioner of Income Tax, Bombay Presidency and Aden
and others v. Bombay Trust Corporation Ltd., (1936) L.R. 63 I. A.
408, distinguished.
CIVIL APPELLATE JURISDICTION: . Civil Appeal
No. 196 of 1958.
Appeal by special leave from the judgment and
..,.
order dated April 27, 1953, of the Assam High Court
in Civil Rule No. 66 of 1953.
Sukumar Mitter and Sukumar Ghose, for the appel.
lant.
·
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Veda Vyasa and Naunit Lal, for the respondents.
1960. October 18. The Judgment of the Court
was delivered by
SHAH J.-The appellants are dealers registered under the Assam Sales Tax Act XVII of 1947-hereinafter referred to as the Act. For the account period
April 1, 1948 to September 30, 1948, the appellants
submitted a return of their turnover which included
sales in Assam of all goods other than jute. The
Superintendent of Taxes, Dhubri, summarily assessed
the appellants under sub-s. 4 of s. 17 of the Act to pay
tax on sales of jute despatched by them to Calcutta
during the account- period. Appeals against the order
of assessment to the Assistant Commissioner of Taxes
and to the Commissioner of Taxes, Assam, proved
unsuccessful.
The appellants then applied to the
Commissioner of Taxe,s to refer certain questions arising out of the assessment to the High Court in Assam
under s. 34 of the Act. The Commissioner referred the
following questions and another to the High Court of
Judicature in Assam:
(1) Whether, in view of the aforesaid facts and
circumstances the turnover from 20,515 maunds of
Shah ].
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·Ii
6
42
SUPREME COURT REPORTS
[1961)
'960
jute mentioned under item (i) is taxable under the
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Nathmal Tolarani
W
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.
.
v.
(2)
hether, m view of the aforesaid facts a.nd
sup"intendent circumstances the turnover from 5,500 maunds of
of Tam
jute mentioned under item (ii) is taxable under the
Shali j.
Act?
(3)
Whether, in view of the aforesaid facts and
circumstances, the turnover from 25,209 ma.unds of
jute mentioned under item (iii) is ta.xa.ble under the
Act?
In respect of ea.ch of the three questions 1 to 3, the
High Court recorded the following answer :
" Not being a. ea.le within the meaning of subs. 12 of s. 2 of the Act, the consignments a.re not taxable ".
The High Court, however observed :
" As to whethes these consignments can hereafter
be assessed if they fall within the purview of the
Explanation to sub-s. 12 of s. 2, we express no opinion".
As required by s. 32(8) of the Act, the Commissioner
of Ta.xes by his order dated August 1, 1952, directed
the Superintendent of Ta.xes to dispose of the case
in accordance with the judgment of the High Court.
The Superintendent of Ta.xes thereafter issued on
January 30, 1953, the following notice to the appellants:
"In view of the Hon'ble High Court's order in
Sales-tax Reference No. 3 of 1951, the assessment
order dated 30th September, 1950, for the return
period 30th September, 1948, has been set a.side a.nd
you a.re directed to produce necessary evidence, contra.ct papers, account books, etc .................. in order
to see whether the contra.ct of sale involved in this
case come within the purview of the Explanation to
sub-s. 12 of s. 2 of the Act".
By their lettllr da.ted March 23, 1953, the a.priella.nts
called upon the Commissioner of Ta.xes to direct t.he
Superintendent of Ta.xes not to proceed with the
notice. The Commissioner having failed to direct a.s
requested, the appellant petitioned the High Court in
Assam under Art. 226 of the Constitution for a writ
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2 S.C.R. SUPREME COURT REPORTS
43
>-
prohibiting the Superintendent of Taxes from re-openI960
....
ing and proceeding with the assessment of the a.ppel- N th ~
1
lants under the Assam Sales Tax Act and for a. writ
a nia v.
0 aram
quashing the order dated August 1, 1952, passed by Superintendent
the Commissioner.
The High Court summarily disof Taxes
missed the petition. Against the order passed by the
High Court, this appeal is filed with special leave
Shah J.
under Art. 136 of the Constitution.
·
The High Court, in answering the questions submitted to it, was exercising a.n advisory jurisdiction and
could not and did not give any direction to the sales
tax authorities to proceed to assess or not to assess the
appellants to sales tax : it merely recor~ed its opinion
that the transactions referred to in the questions were
not sales within the meaning of s. 2, sub-s. 12, of the
Act a.rid were accordingly not taxable. Pursuant to
the opinion of the High Court, the Commissioner directed the Superintendent of Taxes to dispose of the case
" in accordance with " the judgment of the High
Court; but the Superintendent of Taxes thought that
he was entitled to re-open the assessment proceedings
and to assess the appellants in the light of the Expla.-
1 ., · nation to s. 2, sub-s. 12 . .In so doing, the Superintendent of Taxes, in our judgment, acted without authority. The Superintendent had ma.de the assessment, and
that assessment was confirmed in appeal by the Assista.rit Commissioner. On the questions arising out .of
that assessment, the High Court had opined that the
transactions sought to be assessed were not liable to
tax. The Superintendent of Taxes, on this opinion
was right in vacating the order of assessment.
But
-~ any further proceeding for assessment which he
sought to commence by issuing a notice requiring the
appellants to produce evidence, contra.ct papers,
account books, etc. so as to enable him to determine
whether the transactions were taxable under the Explanation to sub-s. 12 of s. 2 had to be supported by
some authority under the Act. The Superintendent
of Taxes has not referred to the authority in exercise
of which he issued this notice. It is true that under
1 • s. 19 o'f the Act, the "taxation Officer " if satisfied
upon infor~ation coming into his possession that any
44
SUPREME COURT REPORTS
. [1961)
196°
dealer has been liable to pay tax under the Act in resN
h -1 T 1
pect of any period and has failed to apply for registra.
at ma
o aram t'
d
k
h
t
· d f h'
v.
ion an to ma e t e re urn require o
1m, may at
superintendent any time within three years of the end of the aforeof Taxes
said period serve on the dealer a notice containing all
Shah ].
or any of the requirements which may be included
in a notice under sub-s. 2 of s. 16 and may proceed to
assess the dealer in respect of such period. But admittedly, the appellants were registered as dealers and
had submitted their returns : the power to reassess
could not therefore be exercised by virtue of s. 19 of
the Act. Bnder s. 19-A, the Commissioner has also
power, if satisfied upon information coming into his
possession, that any turnover in respect of sales of
any goods chargeable to tax has escaped assessment
during the return period, to serve at any time within
three years of the aforesaid period, on the dealer
liable to pay the tax in respect of such turnover a
notice containing all or any of the requirements which
may be included in a notice under sub.a. 2 of s. 16 and
may proceed to assess or reassess the dealer in respect
of such period. But the Commissioner had not issued
any such notice under s. 19A. Nor had the Commissioner in exercise of his revisional authority under
s. 31 of the Act set aside the original order of assessment. The Commissioner merely directed u'nder s. 32,
sub-s. 8, that the case be disposed of in accordance
with the judgment of the High Court, and acting
under that direction, the Superintendent of Taxes had
no power to reopen the assessment and to call upon
the appellants to produce documentary evidence with ·
a view to commence an enquiry whether the sales
involved in the case fell "within the purview of the
Explanation to s. 2 su b-s. 12 ". In any event, the
account period as has already been observed was
April 1, 1948 to September 30, 1948, and three years
from the end of that period, expired before the date
...
on which the notice was issued. Fresh proceedings
for reassessment could not be initiated by the Superintendent of Taxes under s. 19 after the expiry-of
three yea.rs from the assessment period assuming that ·'
this could be regarded as a case of failure tp apply for
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2 S.C.R. SUPREME COURT REPORTS
45
registration and to make a return required of the
1960
appellants.
Nalhmal Tola.am
In support of his contention that the Superinten.
v.
dent of Taxes had authority to proceed to reassess the superintendent
appellants in the light of the ob.servations made in the
of Taxes
judgment of the High Court, counsel for the appel.
Shah J.
lants invited our attention to the judgment of the
Privy Council in Commissioner of Income Tax,
Bombay Presidency and Aden and others v. Bombay
Trust Corporation Ltd. (1). In that case, a foreign company was assessed by the Income Tax authorities in
the name of a resident company for profits and gains
received by the latter as its agent under ss. 42(1) and
43 of the Indian Income-tax Act, 1922. In a reference
under s. 66 of the Income-tax Act, the High Court at
Bombay opined that the assessment was illegal. The
Commissioner of Income-tax thereafter sent back the
case · with a direction to set aside the assessment and
to make a fresh assessment after making such further
enquiry as the Income-tax Officer might think fit.
Acting upon that order, the Income-tax Officer required the resident company as agent of the foreign
company to produce or cause to be produced books of
account for the year of assessment and also to produce
such other evidence on which it might seek to rely in
respect of its return, and the resident company having
failed to produce the books of the foreign company,
he proceeded to make an assessment under s. 23(4) of
the InQome-tax Act, 1922. By its petition under s. 45
of the Specific Relief Act filed in the High Court at
Bombay, the resident compan,Y prayed for an order
for refund of the taxes already paid under the original
assessment, and for an order for disposal of certain
proceedings initiated by it before the Assistant Com.
missioner and the Income-tax Officer. The High Court
made an order directing refund of tax paid, and
further directing cancellation of assessment. In an
appeal preferred by the Commissioner of Income-tax
against the order of the High Court, it was observed
by the Privy Council that the Commissioner was not
-obliged to discontinue proceedings against the resident
(1) (1936) L.R. 63 I.A. 408.
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SUPREME COURT REPORTS
[1961)
z96o
company as agent of the foreign company in respect
N th
1 T 1
of the year of assessment, and it was within the juris-
• ma v.
0 •••m diction of the Commissioner under s. 33(2) of the
superintendent Income-tax Act to direct further enquiry ifhe thought
of. Taxes
such an enquiry to be reasonable and to be profitable
in the public interest.
Shah J.
The principle of this case has in our judgment no
application to the present case. The High Court at
Bombay in its advisory jurisdiction had declared the
assessment already ma.de to be.illegal. But the Commissioner was under s. 33 of the Indian Income-tax Act
invested with jurisdiction to direct further enquiry,
and he purported to exercise that jurisdiction. The
Privy Council rejected the challenge to the exercise of
that jurisdiction. In the present case, no proceedings
were started by the Commissioner of Taxes in exercise
of his revisional authority. The . Col!lmissioner of
Taxes had directed the Superintendent of Taxes
merely to dispose of the case according to the judgment of the High Court, and the Superintendent had
to carry out that order. If he was competent-and
on that question, we express no opinion-he could, if
the conditions precedent to the exercise of his jurisdiction existed, proceed to reassess the appellants. But
the proceedings for reassessment were clearly barred
because the period prescribed for reassessment had
expired. The Superintendent therefore had no power
to issue a notice calling upon the appellants to produce
evidence to enable him to start an enquiry which was
barred by the expiry of the period of limitation prescribed by the Act. In the Bombay TrU8t Oorpora.
tion case {supra), the Income-tax Officer acted- in
pursuance ofthe direction of the Commissioner lawfully
given in exercise of revisional authority and reopened
the assessment. In the present case, no such direction
has been given by an authority competent in that
behalf: and the Superintendent had no power to
reassess the income under s. 19 assuming that the
section applied to a case where the assessee though
registered had failed to include his sales in a particular
commodity in his turnover, because the period of
limitation prescribed in that behalf had expired.
...
2 S.C.R. SUPREME COURT REPORTS
47
,
The appeal must therefore be allowed and the order
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passed by the High Court set a.side. In the circum-
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f h
f 1
"ll b
d Nathmal Tolaram
stances o t e case, no use u purpose w1
e serve
by remanding the case to the High Court. We superi:;endent
accordingly direct that a. writ quashing the proceedof Tam
ings commenced by the Superintendent of Taxes,
Dhubri, by his notice dated January 30, 1953, be
Shah J.
issued.
The appellants will be entitled to their costs
of the appeal.
A ppeaJ, al,lowed.
THAKUR KESARI SINGH
v.
THE STATE OF RAJASTHAN AND OTHERS.
(JAFER IMAM, A. K. SARKAR and RAGHUBAR
DAYAL, JJ.)
Landlord and Tenant-General refusal of payment of rentNotijication by Government-Application for recovery of rent as
arrears of land revenue-Rescission of notijication-V alidity of proceeding-Procedure-Marwar Tenancy Act, z949 (XXXIX of
z949), s. 85-Rajasthan Revenue Courts (Procedure and Jurisdiction) Act, z95r (I of z95rJ, s. 2.
The Marwar Tenancy Act, r949, now repealed but which
was in force in the State of Jodhpur at the relevant period, by
s. 85 authorised the Government in case of any general refusal
by tenants to pay rent to declare by notification that such rents
might be recovered as arrears of land revenue. A notification
having been issued by the Government of Rajasthan under that
section the appellant, a jagirdar, applied to the Collector thereunder for the recovery of rents due to · him from his tenants.
The tenants also applied to the Collector stating that notice of
the said application should be served on them and they should
be given a hearing as required by the rule framed uncer the
Rajasthan Revenue Courts (Procedure arid Jurisdiction) Act,
r95r. The Collector rejected the tenants' application and passed
an order directing the recovery of the sum found to be due to:
the appellant as arrears of land revenue. The Additional Commissioner on appeal and the Board of Revenue in revision upheld
the Collector's order. But before the Board passed its order the
O&lober r9.