# Roop Chand v. State of Punjab

- **Citation:** [1963] Supp. 1 S.C.R. 563
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Case number:** Civil Appeal No. 621 of 1961
- **Bench:** L. Kapur, J.C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/roop-chand-v-state-of-punjab-2729
- **Pages:** 10

## Headnote

Sale8 Tax-Escaped turno11er-[.'8ue of notice by lkputy
Oommissioner-Jurisdiction_:_Rules, if ultra
vires-Madras
General Sale8 Tax Act, 19.19 (Madras lX of 1939), ss. 9 (1), 9(2).
12 (2), 19 (1), 19 (2) (!)-:Madras General SaleR Tax Rules,
rr. 17 (1), 17A (JA), 17 (3A).
The Deputy Commercial Tax Officer imposed sales tax
under the Madras General Sales Tax Act, 1939, on the respon·
dent for the assessment year and the appeal taken against the
assessment order was dismissed. Thereafter
the Deputy
Commissioner of Commercial Taxes issued a notice proposing
to determine the escaped turnover for the period of asse<.sment
and in pursuance of this notice he determined the revised turnover. On the dismissal of the appeal filed by the respondent
before the Sales Tax Appellate Tribunal he filed a revMon
petition before the High Court. The High Court allowed the
revision petition on the ground that the notice by the Deputy
Commi.,ioner of Commercial Taxes was issued without jurisdiction.
The State appealed to the Supreme Court with special
leave. The main questions in the appeal were whether the
notice was issued without jurisdiction and whether the rules
under which the notice was issued were ultra vires the Act.
Held, that the power of the Deputy Commissioner to assess
escaped turnover under r. 17 (3A) framed under s. 19 of the
Act docs not arise out of the revisional jurisdiction exercised
under s. 12 (2) of the Act.
The Deputy Commissioner fa therefore not bound to restrict himself to the examination of the
1962
Roop Chand
v.
State of Punjab
Kapur, J.
1962
Octab1r, 11.
1962
State of Ktrala
v.
Shr i M. Appukutty
Kapur, J.
564 SUPREME COURT REPORTS [1963] SUPP.
evidence already on record.
Section 9 does not deal ·with
escaped turnover but is a provision fm determination of the
turnol'er of a dealer in the firnt instance.
Rule 17 deals with a
separate and independent jurisdiction in regard to determining
and taxing escaped turnovers.
There is no conflict bet\veen
s. 12 (2) and rr. 17 (I), 17 (IA) and 17 (3A). Therefore the
notice was not issued without jurisdiction, nor was r. 17 (I)
ultra vires the substantive provisions of the Act.
King Emperor v. 8i7math Banerji, (1945) L. R. 72 I. A.
241, followed.
State of Madras v. Lonis Dreyfus & On. LU., (1955) 6
S. T. C. 318, distinguished.
Crvu, APPELLATE JuRismoTION : Civil Appeal
No. 621 of 1961.
Appeal by special leave from the judgment and
order dated September 25, 1958, of the Kerala High
Court in Tax Revision Case No. 11of1957.
S. 'I'. Demi and V. A. 8. .Mithammed, for the
appellant.
'I.'. V. R. 'I'ataclwri, for the respondent.
1962. October 11. TheJudgment of the Court
was delivered by
KAPUR, J.-In this appeal by special leave
against the judgment and order of the High Court of
Kerala the appellant is the State of Kerala and the
respondent is the assessee. The appeal arises out of
proceedings under the Madras General Sales Tax
Act, 1939, (Madras Act No. IX of 1939) read with
the rules made under s. 19 of that Act. In this judgment the former will be referred to as the Act and
the latter as the rules.
The area of Kozhikode was
originally within the State of Madras, but by the·
States Reorganisation Act was transferred to the
State of Kerala.
The Madras General Sales Tax
Act, 4mvever, continued to apply.
7
•
I S.C.R.
SUPREME COURT REPORTS
565
The assessment period for the purposes of the
turnover in dispute is 1952-53.
By an order dated
March 27, 1954 the Deputy Commercial Tax Officer,
Kozhikode, imposed sales tax on the respondent on a
net turnover of Rs. 12,56,178-14-0 and the appeal
taken against that order to the Commercial Tax
Officer was dismissed.
On March 15, 1956 a notice
was issued by the Deputy Commissioner of Commercial Taxes against the assessee proposing to determine
the escaped turnover for the period of assessment.
By an order dated March 31, 1956, the Deputy Commissioner determined the revised turnover. An appeal
was taken against that order to the Sales Tax Appellate Trib

## Text

l S.C.R.
SUPREME COURT REPORTS
563
petition is without force and is dismissed with costs.
BY CoFRT :-In view of the majority opinion
the \Vrit Petition is allowed with costs.
STATE OFKERALA
v.
SHRI M. APPUKUTTY
(]. L. KAPUR and J.C. SHAH, JJ.)
Sale8 Tax-Escaped turno11er-[.'8ue of notice by lkputy
Oommissioner-Jurisdiction_:_Rules, if ultra
vires-Madras
General Sale8 Tax Act, 19.19 (Madras lX of 1939), ss. 9 (1), 9(2).
12 (2), 19 (1), 19 (2) (!)-:Madras General SaleR Tax Rules,
rr. 17 (1), 17A (JA), 17 (3A).
The Deputy Commercial Tax Officer imposed sales tax
under the Madras General Sales Tax Act, 1939, on the respon·
dent for the assessment year and the appeal taken against the
assessment order was dismissed. Thereafter
the Deputy
Commissioner of Commercial Taxes issued a notice proposing
to determine the escaped turnover for the period of asse<.sment
and in pursuance of this notice he determined the revised turnover. On the dismissal of the appeal filed by the respondent
before the Sales Tax Appellate Tribunal he filed a revMon
petition before the High Court. The High Court allowed the
revision petition on the ground that the notice by the Deputy
Commi.,ioner of Commercial Taxes was issued without jurisdiction.
The State appealed to the Supreme Court with special
leave. The main questions in the appeal were whether the
notice was issued without jurisdiction and whether the rules
under which the notice was issued were ultra vires the Act.
Held, that the power of the Deputy Commissioner to assess
escaped turnover under r. 17 (3A) framed under s. 19 of the
Act docs not arise out of the revisional jurisdiction exercised
under s. 12 (2) of the Act.
The Deputy Commissioner fa therefore not bound to restrict himself to the examination of the
1962
Roop Chand
v.
State of Punjab
Kapur, J.
1962
Octab1r, 11.
1962
State of Ktrala
v.
Shr i M. Appukutty
Kapur, J.
564 SUPREME COURT REPORTS [1963] SUPP.
evidence already on record.
Section 9 does not deal ·with
escaped turnover but is a provision fm determination of the
turnol'er of a dealer in the firnt instance.
Rule 17 deals with a
separate and independent jurisdiction in regard to determining
and taxing escaped turnovers.
There is no conflict bet\veen
s. 12 (2) and rr. 17 (I), 17 (IA) and 17 (3A). Therefore the
notice was not issued without jurisdiction, nor was r. 17 (I)
ultra vires the substantive provisions of the Act.
King Emperor v. 8i7math Banerji, (1945) L. R. 72 I. A.
241, followed.
State of Madras v. Lonis Dreyfus & On. LU., (1955) 6
S. T. C. 318, distinguished.
Crvu, APPELLATE JuRismoTION : Civil Appeal
No. 621 of 1961.
Appeal by special leave from the judgment and
order dated September 25, 1958, of the Kerala High
Court in Tax Revision Case No. 11of1957.
S. 'I'. Demi and V. A. 8. .Mithammed, for the
appellant.
'I.'. V. R. 'I'ataclwri, for the respondent.
1962. October 11. TheJudgment of the Court
was delivered by
KAPUR, J.-In this appeal by special leave
against the judgment and order of the High Court of
Kerala the appellant is the State of Kerala and the
respondent is the assessee. The appeal arises out of
proceedings under the Madras General Sales Tax
Act, 1939, (Madras Act No. IX of 1939) read with
the rules made under s. 19 of that Act. In this judgment the former will be referred to as the Act and
the latter as the rules.
The area of Kozhikode was
originally within the State of Madras, but by the·
States Reorganisation Act was transferred to the
State of Kerala.
The Madras General Sales Tax
Act, 4mvever, continued to apply.
7
•
I S.C.R.
SUPREME COURT REPORTS
565
The assessment period for the purposes of the
turnover in dispute is 1952-53.
By an order dated
March 27, 1954 the Deputy Commercial Tax Officer,
Kozhikode, imposed sales tax on the respondent on a
net turnover of Rs. 12,56,178-14-0 and the appeal
taken against that order to the Commercial Tax
Officer was dismissed.
On March 15, 1956 a notice
was issued by the Deputy Commissioner of Commercial Taxes against the assessee proposing to determine
the escaped turnover for the period of assessment.
By an order dated March 31, 1956, the Deputy Commissioner determined the revised turnover. An appeal
was taken against that order to the Sales Tax Appellate Tribunal, Trivandrum, but that appeal was
dismissed on March 23, 1957. Against that order a
revision was taken to the Kerala High Court and by
its judgment dated September 25, 1958 the High
Court set aside the order of the Deputy Commissioner
on the ground that the notice issued by the Deputy
Commissioner of Commercial Taxes was
without
jurisdiction and the order of the appellate tribunal
was therefore erroneous. Another question which
had been raised before the High Court that the rule
under which the Deputy Commissioner purported to
act was ultra vires the Act was not decided because
of the decision on the first question i.e. of jurisdiction.
Against that judgment and order the State of Kerala
has come in appeal by special leave to this court.
In appeal, before us, two main contentions have
been raised: One on behalf of the appellant-the
State of Kerala-that the notice issued by the Deputy
Commissioner was not without jurisdiction and the
High Court's opinion on that point is erroneous; and
the second on behalf of the respondent assessee that
if the notice was not without jurisdiction then the
rule under which the notice was issued was ultra
vires as it was beyond the substantive provisions of
the Act.
For this purpose it is necessary to refer to
some of the relevant provisions of the Act and the
1962
Stat. of Kuala
v.
Slri.M. Aftpuh·,.·,
Kapor, J.
1962
Statt of Ii-era/a
v.
Shri M. Appukutty
K.;..r,J.
566 SUPREME COURT REPORTS [1963] SUPP.
rules.
The procedure to be followed and the power
of assesement of the Assessing Authority is contained
ins. 9 of the Act and we need only quote sub-ss. l
and 2 of that section which read as under:-
"IJ (I) Every dealer whose turnover is ten thousand rupees or more in a year shall
submit such return or returns relating to
his turnover in such manner and wiihin
such periods as may be prescribed.
(2) (a) If the assessing authority is satisfied that
any return submitted under sub-section
I 1) is correct and complete, he shall assess
the dealer on the basis thereof.
(b) If no return is submitted by the dealer
under sub-section ( 1) before the date
prescribed or specified in that behalf or
1f the return submitted by him appears
to the assessing authority to be incorrect
or incomplete, the assessing authority
shall assess the dealer to the best of his
judgment.
Provided ........................... "
Section 11 deals with appeals and s. 12 with the power
of the Sales tax authorities to pass orders in revision.
One of the arguments relating to ultra vires was based
on sub-s. 2 of s. 12 of the Act. That sub-section is
as follows:-
"S. 12 (1) The Commercial Tax Officer may-
(1') ..............................
(1'1') ..............................
(2) The Deputy Commissioner may-
{i) suo motu or
' '
I
•
'"""
•·
l S.C.R.
SUPREME COURT REPORTS
567
(ii) in respect of a11 order passed or
proceeding recorded by the Com -
mercial Tax Of!icer under sub-section ( l) or any otl1cr provision of
this Act and against '' hich no appeal has been preferred to the Appellants Tribunal under s. 12-A on
application, call for and examine
the record of any order passed or
proceeding recorded under the provisions of this Act by any Officer
subordinate to him, for the purpose
of satisfying himself as to the lcgalitv or propriety of such order, or as
to· the regularity of such proceeding
and may pass such order with respect thereto as he thinks fit".
Section 12-A provides for appl'als to the Appellate
Tribunal ands. 12-B for revision to the High Court.
Section 19 gives power to the Government to make
rules and the relevant provisions of that section are
19 (1) and 19 (2) (f).
They are as under:-
"19 (1) The State Government may make rules
to carry out the purposes of this Act".
(2) In particular and without prejudice to
the generality of foregoing power such
rules may provide for-
(f) the assessment to tax under this Act of
any turnover which has escaped assessment and the period within which such
assessment may be made, not exceeding
three years;"
Under the rule making power conferred bys. I!J rules
h~ve been frame~ and we are concerned in this appeal
with rr. 17 (I), l 1 (I A) and 17 (ilA).
They read as
under;-
·
/9&2
Stat~ oj.li.irala
v.
Shri M •.
~ppukullJ
J(apu.r, J.
1962
Statt of Kerala
v.
Sl1ri M. Appukut(1
Kapur, J.
568 SUPREME COURT REPORTS [1963] SUPP.
"l 7 ( 1) If for any reason the whole or any part
of the turnover of business of a dealer or
licensee has escaped assessment to the tax
in any year or if the licence fee has esca··
ped levy in any year, the assessing authority or licensing authority, as the case
may be, (subject to the provisions) in
sub-rule (1-A) may, at any time within
three years next succeeding that which
the tax or licence fee relates (determine
to the best of his judgment the turnover
which has escaped assessment and assess
the tax payable in such turnover) or levy
the licence fee after issuing a notice to
the dealer or licencee and after making
such enquiry as he considers necessary".
"17 (IA) Where in respect of the turnover referred
to in sub-rule 1 an order has already
been passed under section 11 or 12 the
assessing authority shall make a report
to the appropriate appellate or revising
authority, as the case may be, which
shall thereupon after giving the dealer
concerned
reasonable opportunity of
being heard, pass such orders as it deems
fit".
"17 (3A) The powers conferred by sub-rules I and
3 on assessing authority or licensing authority may also be exercised by the appellate authority referred to in section 11; or
as the case may be, by the revising authority referred to in section 12, at any time
within a period of three
years next
succeeding that which the tax, or as the
case may be, the licence fee
relates
provided that such authority shall give
the dealer concerned a reasonable opportunity of being heard before passing
orders under this sub-rule".
1 S.C.R. SUPREME COURT REPORTS
569
We shall first take up the question of jurisdiction raised by the appellant. The tribunal held
that the powers conferred on the Deputy Commissioner
of Commercial Taxes under s. 12(2) and r. l 7(3A)
are distinct powers and action taken under r. 17(3A)
was not without jurisdiction.
This finding
was
reversed by the High Court. Now s. 12(2) confers
on the Deputy Commissioner the power suo rnotu or
on an application to call for and examine the record of
the proceedings of any officer subordinate to the
Deputy Commissioner for the purpose of satisfying
himself as to the legality or propriety of such order
and he can pass such order with respect thereto as he
thinks fit.
The respondent's argument was, and that
argument was accepted by the High Court, that this
provision contains the totality of the powers of the
Deputy Commsssioner and the power to assess escaped
turnover is merely incidental to the power of revision
and may be exercised only when revisional jurisdiction under s. 12(2) is invoked under that section and
the record is sent for suo rnotu or on application and
the legality or propriety of the order made by the
Subordinate Officer is scrutinized. Therefore the
Deputy Commissioner was not in the absence of any
substantive proceeding for exercise of revisional powers
competent to assess escaped turnover. But the power
to assess escaped turnover does not arise out of the
r~vi~ional jurisdiction. In. ~xercising revisional j urisd1ct10n the Deputy Comm1ss10ner would be restricted
to the examination of the record for determining
whether the order of assessment was according to law.
Rule 17 confers power to asse~s escaped turnover which
may normally be exercised on matters dehors !he
record of assessment proceedings before the Deputy
Commercial Tax Officer.
It is true that the substantive provisions of the Act do not expressly deal with
the power and procedure for assessment of escaped
turnover. the legislature has left it to be dealt with by
statutory rules to be framed under s. 19, and r. 17
h.as been framed thereunder. Rule 17(1) and (3A)
1962
State of Ktrala
v.
Shri M. Appukuttv
r.;ur, J.
State tJ.f Keral•
v.
Shri M . .Ap;ukullJ
570 SUPREME COURT REPORTS [I~] SYPl>.
~x facie properly fall under s. l9(2)(f).
In any event
as was said by the Privy Council in ]( ing Ji)mperor v.
Sibnath Bane1ji( 1) the rule making power is conferred
by suJ-s. (I) of that section and the function of subs. ( 2) is merely illustrative and the rules which are
referred to in sub-s. 2 are authorised by and made
under sub-s. I. The provisions of sub-s. 2 are not
restrictive of sub-s. ( 1) as expressly stated in the
words "without prejudice to the generality of the
foregoing power" with which sub-s. (2) begins and
which words are similar to the words of sub-s. (2) of
s. 2 of the Defence of India Act which the Privy
Council was considering.
Now sub-s. l of s. HI of
the Act provides that "the State Government may
make rules to carry out the purposes of this Act" and
the long title of the Act is an Act to provide for the
levy of general tax on the sale of goods in the State of
Madras. Therefore in our opinion r. 17 and the
various clauses thereof made under s. 19 are not
beyond the rule making power of the State Government as contained in s. 19.
The first sub-rule of r. 17 provides that the
assessing authority may subject to sub-r. IA at any
time within three years next succeeding that to
which the tax relates determine the turnover which
has escaped assessment and assess the tax payable on
such turnover. That is the power of the assessing
authority.
Sub-rule l A deals with those cases where an
order has already
been passed by the appellate
authority under s. 11 or by a revising authority under
s. 12.
In those cases the assessing authority has to
make a report to the appropriate appellate or revising
authority and that authority can, after giving the dealer concerned reasonable opportunity of being heard
pass such orders as it thinks fit.
There is then a third
case and that is where there has been no appeal or
revision under ss. 11 and 12 of the Act ancl therefore
(1) (1945) L. R. 72 I. A. 241.
1 S.C.R.
SUPREME COURT REPORTS
571
•o order of the appellate authority or of revisional
authority as contemplated in s. 12(2) of the Act and
in those cases the appellate authority or the revising
authority as the case may be has, under sub-r.(3A),
the same power as the assessing authority had under
sub-r. 1 of r. 17. In the present case after an appeal
to the Commercial Tax Officer there was no further
proceeding and therefore the D~puty Commissioner
who is the revising authority acted under r. 17 (3A)
and issued a notice which, according to that sub-rule
he had power to issue and then determined the escaped
turnover. We have already held that r. 17 is a valid
rule under s. 19 of tli.e Act. Sub-rule 3A of r. 17 on
its plain construction confers jurisdiction on the revis·
ing authority to issue the notice which it did issue
ud in our opinion, and we say so with respect, the
judgment of the High Court is, to that extent, erroneous and it cannot be said that the notice was without
jurisdiction. Tnerefore the impugned order was not
incorrect.
The respondent then argued that r. 17 is u!tr11
vfres of the provisions of the Act and he put his argu -
me'nt like this; that the power to assess is given to the
assessing authority under s. 9(1) & (2) which has bee11
quoted above. The assessing authority is defined in
s. 2(a-2) to mean any person authorised by the State
to make any assessment under this Act. Therefore
the assessment of escaped turnover can only be done,
if at all, by an "assessing authority" and not by a
revising authority as he has not been authorised by
the State Government. The answer to this is ins. 2B.
That section authorises the State Government to
appoint as many Deputy Commissioners of Commercial Taxes as it thinks fit for the purpose of performing the functions conferred on them under the Act
and such officers shall perform their functions within
such local limit as the State Government in this behalf may assign to them. Rule 17 confel'S on the
Deputy Commissioners the power to determine and
11,2
St•l1 of K 1ralo
v.
Shri M. A~,,U..1!1
K•;ur,J.
1962
Stit1 (lj K1rala
v.
Shri M. Appukully
Kapur, J.
572 SUPREME COURT REPORTS [1963] SUPP.
tax escaped turnovers in cases where revisions have
been
taken to them (sub-r. IA) and also where
revisions have not been taken to them (sub-r. 3A).
Provisions of s. 9(1) and (2) therefore are no bar to
the exercise of power of assessing escaped turnovers.
Moreover s. 9 does not deal with escaped turnovers
but is a provision for the determination of the turnover of a dealer in the first instance nor can it be
said that r. 17 is in conflict with s. 12(2). That
section deals with another state of affairs and another
jurisdiction i.e. where the Deputy Commissioner suo
motu or on an application made calls for the record
and determines the legality or propriety of an order
made by one of the subordinate officers. It cannot
be said in view of r. 17 that the power of revision by
the Deputy Commissioners is limited to powers under
s. 12(2). Rule 17 deals with a separate and independent jurisdiction in regard to the tletermining and
taxing escaped turnovers. The provisions of s. 12(2)
are in no way in conflict with the powers conferred
under r. 17(1), l 7(1A) and l 7(3A).
The further argument that sub-r. 3A is confined
to cases where the revision filed under s. 12(2) is pending ii. not supported by the language of that rule.
Our attention was drawn to the judgment of the
Madras High Court in the State of Madras v. Louis
Dreyfus cf: Go. Ltd.(') But that case does not deal
with r. 3A which came into force later.
In our opinion the order of the High Court is
erroneous and must be set aside. The appeal is allowed with costs.
Appeal allowed.
(I) (1955) 6 S. T. C. 318, 328.