# STATE OF MADRAS v. LATEEF HAMID & CO

- **Citation:** [1972] 1 S.C.R. 577
- **Court:** Supreme Court of India
- **Decided:** 1971-09-02
- **Case number:** ; Civil Appeal No. 2186 of 1968
- **Bench:** K. S. Hegde, Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-madras-v-lateef-hamid-co-5398
- **Pages:** 12

## Headnote

577
Madras General Sales Tax Act 1 of 1959 s. 31-Sect'ion conferring
power on ~4ppeilate Assistant
Commissioner to enhance
assessnzentPower to enhance assessrnent under Madras General Sales Tax Act, 1939
exercisable by Co1nmercial Tax Officer-Appellate Assistant Commissioner
hearing appeal under s. 31 of 1959 Act whether can exercise power of
enhancement in respect of assess1nent year 1958~59 which lVas
governed
by 1939 Act-Whether any right or privilege of assessee under 1939 Act
affected if polver of enhancement exercised by Appellate Assistant Conzmissioner under s. 31 of 1959 Act.
The appellant was a dealer in hides and skins at Madras. Up to March
31, 1959 sales tax on dealers in the State of Madras was leviable under
the Madras General Sales Tax Act, 1939.
The appellant's turnover for
the assessment year 1958-59 thus stood charged with liability to pay tax
as leviable under the 1939 Act The 1939 Act
was repealed
by
the
Madras General Sales Tax Act, 1959 which came into force on April 1,
1959. The appellant was assessed for the year 1958-59 on March 24,
1961.
By an order dated August 16, 1962 the Appellate Assistant Commissioner while disposing of the appeal against the said assessment order
enhanced the assessment undt!r power conferred on him by s. 31 of the
1959 Act.
The Tribunal accepted the contention of the assessee that the
Appellate Assistant Commissioner had no power to enhance the assessment. The High Court in revision held that since under the 1939 Act
the appellate authority while exercising its appellate po'>vers had no power
to enhance the assessment and the said immunity or protection was
a
vested right in the assessee, the same n<?t having been taken away either
cx1Jrcssly or by necessary implication by the 1959 Act, the Appellate
Assistant Commissioner could not have enhanc:ed the assessment.
It
further held that the immunity or protection was a right or privilege
protected by s. 61 (I) of the 1959 Act as amended in 1963,
which
an1cnd.1nent was retrospective in its operation.
In appeal to this Court
by certificate~
HELD: (i) In the matter of assessment the purpose of the 1939
a.
well as the 1959 Act is identical.
That purpose was and is to see that
neither ihe assessee is over assessed nor the State is deprh·cd of
the
Revenue to which it is entitled.
Under the 1939
Act
an
aggrieved
assessee could first appeal to the Appellate Authority and then to
the
Tribunal.
Further he could on questions of law go up in revision
to
the High Court.
Rule 13(1) of the Madras General Sales Tax Rules.
1939 prescrib~d that subject to the provision.s of s, 11 any person aggrieved by any ong1nal o·rder passed by the Assistant Commercial Tax Officer
may appeal to the Commercial Tax Officer of the District.
Thus
the
Commercial Tax Officer had both the powers of the appellate authorit1
as well as the special powers conferred on him under s, 12(1)
of the
1939 Act.
By the exercise of those two powers he could have confirmecJ,
altered, amended or enhanced the assessment made.
Under the 1959 Act
!he_ Appellate. Assistant Commission~r who primarily took .over the quasiJUd1cial funct10ns of the Commercial Tax
Officer was conferred
with
power not only to confirm, vary, or annul
the asspssme.it but also
the
po\vcr to enhance the assessment.
The power conferred on him under
3-USup.C,1.172
578
SUPREME COURT REPORTS
(1972] l S.C.R.
s. 31 of the 1959 Act combines to an extent both the appellate power as
well as the special power the Commercial Tax Officer had under s. 11 and
s. 12(1) of the 1939 Act.
Hence the changes effected by the 1959 Act
in the machinery sections do not touch the substance of the matter. The
1959 A.:t merely simplified the procedure without touching the Substance
<>f the right of the parties. [582C-583A]
No assessee has any vested right in 'the procedure p'rescribed under
the 1939 Act.
So long as the new procedure laid down in the 1959 Act
does not interfere with any of his vested rights, an assessee has no right
to cl

## Text

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STATE OF MADRAS
v.
LATEEF HAMID & CO.
September 2, 1971
[K. S. HEGDE AND A. N, GROVER, JJ.]
577
Madras General Sales Tax Act 1 of 1959 s. 31-Sect'ion conferring
power on ~4ppeilate Assistant
Commissioner to enhance
assessnzentPower to enhance assessrnent under Madras General Sales Tax Act, 1939
exercisable by Co1nmercial Tax Officer-Appellate Assistant Commissioner
hearing appeal under s. 31 of 1959 Act whether can exercise power of
enhancement in respect of assess1nent year 1958~59 which lVas
governed
by 1939 Act-Whether any right or privilege of assessee under 1939 Act
affected if polver of enhancement exercised by Appellate Assistant Conzmissioner under s. 31 of 1959 Act.
The appellant was a dealer in hides and skins at Madras. Up to March
31, 1959 sales tax on dealers in the State of Madras was leviable under
the Madras General Sales Tax Act, 1939.
The appellant's turnover for
the assessment year 1958-59 thus stood charged with liability to pay tax
as leviable under the 1939 Act The 1939 Act
was repealed
by
the
Madras General Sales Tax Act, 1959 which came into force on April 1,
1959. The appellant was assessed for the year 1958-59 on March 24,
1961.
By an order dated August 16, 1962 the Appellate Assistant Commissioner while disposing of the appeal against the said assessment order
enhanced the assessment undt!r power conferred on him by s. 31 of the
1959 Act.
The Tribunal accepted the contention of the assessee that the
Appellate Assistant Commissioner had no power to enhance the assessment. The High Court in revision held that since under the 1939 Act
the appellate authority while exercising its appellate po'>vers had no power
to enhance the assessment and the said immunity or protection was
a
vested right in the assessee, the same n<?t having been taken away either
cx1Jrcssly or by necessary implication by the 1959 Act, the Appellate
Assistant Commissioner could not have enhanc:ed the assessment.
It
further held that the immunity or protection was a right or privilege
protected by s. 61 (I) of the 1959 Act as amended in 1963,
which
an1cnd.1nent was retrospective in its operation.
In appeal to this Court
by certificate~
HELD: (i) In the matter of assessment the purpose of the 1939
a.
well as the 1959 Act is identical.
That purpose was and is to see that
neither ihe assessee is over assessed nor the State is deprh·cd of
the
Revenue to which it is entitled.
Under the 1939
Act
an
aggrieved
assessee could first appeal to the Appellate Authority and then to
the
Tribunal.
Further he could on questions of law go up in revision
to
the High Court.
Rule 13(1) of the Madras General Sales Tax Rules.
1939 prescrib~d that subject to the provision.s of s, 11 any person aggrieved by any ong1nal o·rder passed by the Assistant Commercial Tax Officer
may appeal to the Commercial Tax Officer of the District.
Thus
the
Commercial Tax Officer had both the powers of the appellate authorit1
as well as the special powers conferred on him under s, 12(1)
of the
1939 Act.
By the exercise of those two powers he could have confirmecJ,
altered, amended or enhanced the assessment made.
Under the 1959 Act
!he_ Appellate. Assistant Commission~r who primarily took .over the quasiJUd1cial funct10ns of the Commercial Tax
Officer was conferred
with
power not only to confirm, vary, or annul
the asspssme.it but also
the
po\vcr to enhance the assessment.
The power conferred on him under
3-USup.C,1.172
578
SUPREME COURT REPORTS
(1972] l S.C.R.
s. 31 of the 1959 Act combines to an extent both the appellate power as
well as the special power the Commercial Tax Officer had under s. 11 and
s. 12(1) of the 1939 Act.
Hence the changes effected by the 1959 Act
in the machinery sections do not touch the substance of the matter. The
1959 A.:t merely simplified the procedure without touching the Substance
<>f the right of the parties. [582C-583A]
No assessee has any vested right in 'the procedure p'rescribed under
the 1939 Act.
So long as the new procedure laid down in the 1959 Act
does not interfere with any of his vested rights, an assessee has no right
to claim that his case must be dealt with under the provisions of the re·
pealed Act. It is well settled that the new procedure prescribed by law
_governs all pending cases.
The assessee in the present case filed its appeal
under s. 31 of the 1959 Act and not under s. 11 of the 1939 Act. Its
right of appeal under the 1959 Act does not take away in any manne-r
.any ot its vested rights under the 1939 Act f,585 B-C]
The appeal must accordingly be allowed.
Deputy Conimissioner of Commercial Tax, Madras Division v. N. Balasundaram & Co. 14, S.T.C. 996, disapproved.
Observations contra in Deputy Commissioner of Commercial Taxes,
Madras Division v. Sri S. Swami & Co., 13 S.T.C. 468, held incorrect.
[Since it was held that no vested right of the assessee was in'fringed
.by the provisions of the 1959 Act the Court did not find it necessary to
.consider the meaning of the words 'any right privilege ..... accrued ..... •
under the Act' ins. 61(1)(ii)(c) of the Act or to examine the scope o[
s. 61(2) thereof.]
CIVIL APPELLATE JURISDICTION ; Civil Appeal No. 2186 of
1968.
Appeal from the judgment and order dated July 3, 1967 of the
Madras High Court in Tax Case No. 250 of 1964 (Revision No.
172).
S. T. Desai and A. V. Rangam, for the appellant.
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R. K. P. Shankardass, R. Vasudeva Pillai, P. Keshava Pillai
F
<1ind Rajiv Sawhney, for the respondent.
The Judgment of the Court was delivered by
Hegde, J.
This appeal by certificate aris~s from the decision
·Of the High Court of Madras. It raises two questions for decision
ri~. (I) whether the High Court was right in its opinion that the
Appellate Assistant Commissioner of Commercial Taxes
was
incompetent to enhance the assessment of the assessee, the respon-
.clent herein and (2) whether the High Court was justified in
holding that the additional exemptions granted by the Tribunal
were justified by the evidence Oii record.
There is no merit in the second contention. Therefore it will
be convenient to dispose it of even before going to the facts of
the case. The assessing officer as well as the Appella!e Assistant
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MADRAS v. LATEEF (Hegde, !.)
579
Commissioner of Commercial Taxes disallowed the two exemptions asked for by the assessee on the ground that there was interpolation in the relative documents covering the turnover. The
Tribunal reversed that finding of those authorities and allowed
the exemptions asked for. It appears from the order of the Tribunal that it proceeded on the basis that there was no interpolation. This finding of the Tribunal is essentially a finding of fact
and hence we will not be justified in intei;f ering with that finding
and more so as the High Court has declined to interfere with that
finding.
This takes us to the real controversy in the appeal namely
whether the Appellate Assistant Commissioner had power to
enhance the assessment of the assessee. The assessee is a dealer
in Hides and Skins at Madras. We are concerned herein with its
assessment for the year 1958-59. That assessment was made on
March 24, 1961. · By his order dated August 16, 1962, the
Appellate Assistant Commissioner enhanced the assessment
of
the assessee while disposing of the appeal by the assessee. Until
March 31, 1956, sales tax was being levied on dealers in the State
of Madras under the provisions of the Madras Sales Tax Act,
1939 (to be hereinafter referred to as the "1939 Act"). The
assessee's turnover for the year 1958-59 stood charged with the
liability to pay tax as leviable under the 1939 Act. The
~939
Act was repealed by the Madras General Sales Tax Act, 1959
(to be hereinafter referred to as the "1959 Act"). That Act
came into force on April 1, 1959. As seen earlier the assessee
was assessed after that Act came into force. The assessee filed
its appeal under s. 31 of that Act and the Appellate Assisstant
Commissioner dealt with that appeal under that provision.
Aggrieved by that order, the assessee took up the matter in
appeal to Tribunal. The Tribunal following the decision of the
Madras High Court in Deputy Commissioner of Commercial
Taxes, Madras Division v. Sri Swami and Company.(') accepted
the contention of the assessee. As against that decision, the State
of Madras went up in revision to the High Court under s. 3 8 of
the 1959 Act. That petition was dismissed. Hence this appeal.
The High Court has opined that under the 1939 Act, the
appellate authority while exercising its appellate powers could not
have enhanced the assessment of the assessee. · That was an
immunity or protection afforded to the assessee under the 1939
Act. Such an immunity or protection was a vested right of the
assessee. The same having not been taken away either expre~!y
or by necessary implication by the provisions of the 1959 Act,
the Appellate Assistant Commissioner could not have. enhanced
(!) 13, S.T.C. 468.
580
SUPREME COURT REPORTS
(1972] l S.C.R.
the assessment.
It further held that that immunity or protection
of the assessee is protected bys. 66(1) of the 1959 Act as
amended in 1963, which amendment was retrospective in its
operation.
The turnover of the assessee during the year 1958-59 became
charged with liability to pay sales-tax .under the 1939 Act as and
when the assessee effected sales and the total sales-tax .liability of
the assessee for that year became fixed under the same Act on
March 31, 1959.
Hence the charging section in the 1959 Act
is not relevant for determining the liability of the assessee. Herein
we have only to consider the effect of the change in the machinery provisions.
Before enhancing the asesssment the Appellate
Assistant Comissioner had given opportunity to the assessee to
show cause against the proposed enhancement.
The Appellate
Assistant Commissioner rejected the contention of the assessee that
he had no power to enhance the assessment, as the power to enhance assessment conferred on him by s. 31 of the 1959 Act was
inapplicable to the proceedings before him.
We shall now examine the relevant provisions of the 1939
Act and the 1959 Act. We shall first take up the material provision> in the 1939 Act.
s.~ction 2(a-2) defines the expression
"assessing authority" as meaning any person authorised by the
State Government to make any assessment under the Act.
The
expression "Commercial Tax Officer" is defined in s. 2(a-3) as
meaning any person appointed to be a Commercial Tax Officer
under s. 2-B. The Deputy Commissioner is defined in s. 2 (b-1)
as meaning any person appointed to be a Deputy Commissic•ner
of Commercial Taxes under s. 2-B.
Section 2-B empowers the
State Government to make appointments of
as
many Deputy
Commisisoners of Commercial Taxes and Commercial Tax
'.)fficers as they think fit for the purpose of performing the func-
;ions respectively conferred on them by or under the Act.
The
expression "Appellate Tribunal" is defined in s. 2(a-2) as meaning the Tribunal appointed under s. 2-A, which empowered the
Government to appoint a Tribunal consisting of three members
to exercise the functions conferred on the Appellate Tribunal by
or under the Act.
Section 11
provided for appeal by the
assessee objecting to an assessment made on him under s. 9 (2)
within the prescribed period. Section 9 prescribed the procedure
to be followed by the assessing authority.
Section 12 ( 1) conferred certain special powers on the Commercial Tax Officer. Ito
said that "the Commercial Tax Officer may
!i) suo mo to or
(ii) in cases in which an appeal does not lie to him
under section 11, on application, call for and
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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 legality
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."
5 81
The application under s. 12( 1 )(ii) could have been made
even by the assessing authority.
It may also be remembered
!hat the Commercial Tax Officer was one of the authorities
charged with th~ duty to see that no taxable turnover went untaxed.
The power under s. 12 ( 1) could have been exercised
within three years from the date the assessee was served with
assessment order. Power under s. 12(1)(ii) could have been
exercised by the Commercial Tax Officer simultaneously with the
exercise of his appellate powers under s. 11 ( 1).
Section 12(2) conferred special powers on the Deputy Commisisoner to call for and examine any order or proceeding recorded under the provisions of the Act satisfying himself as to the
legality or propriety of that order or as to the regularity of such
proceeding and may pass such order with respect thereto as he
thinks fit.
This power he could have exercised within four years
from the date on which the assessment order was communicated
to the assessee.
Section 12-A provided for an appeal by an assessee objecting
to an order relating to his assessment passed by the Commercial
Tax Officer whether on appeal under s. 11 or under s. 12, sub-s.
(1) or by the Deputy Commissioner under s. 12, sub-s. (2)
subject to certain conditions with which we are not concernw in
this case. The assessee as well as the Deputy Commissioner were
conferred with power to move the High Court under s.
12-B
within the prescribed period against the order of the Appellate
Tribunal on the ground that that order either decided enoneously
a question of la~ or it failed to decide the question of law arising
for decision.
This takes us to the relevant provisions in the
1959 Act..
Therein again 'the assessing authority" is defined in s. 2 ( c)
as
meaning any person authorised by the Government or by any
authority empowered by them to make assessment u~der the Act.
Acrainst the order of assessment made by the assessmir authonty
a; anneal by any person objecting to the assessment lies to the
Anpellate Assistant Commissioner appointed un~er s. 28, sub:s.
(3). Section 3 l empowers the Appellate Assistant Comm1s-
582
SUPREME COURT REPORTS
[1972] l S.C.il.
sioner to confirm, reduce, enhance or annul the assessment. The
power to e:nhance the assessment was conferred on the Appe'late
Authority for the first time by the 1959 Act. Under this Act also
the Deputy Commissioner's power to suo moto revise the order
of assessment is retained, subject to certain conditions.
Any
person objecting to the order made by the Appellate Assistant
Commissioner under s. 31 ( 3) or against the order made by the
Deputy Commissioner under s. 31 ( 1) can appeal to the Appellate Tribunal. Under s. 38 the assessee or the Deputy Commissioner can take up a revision to the High Court either on the
ground that the Tribunal has decided a question of law errcneousJy or it has failed to decide a question of law arising for deci,,ion.
In the matter of assessment, the purpose of the 1939 as well
as the 1959 Act is identical. That purpose was and is to see that
neither the assessee is over-assessed nor the State is deprived of
the .Revenue to which it is entitled. Under the 1939 Act,
an
aggrieved assessee could first appeal to the Appellate Authority
and then to Tribunal. Further he could on questions of law go
up in revision to the High Court.
To protect the interest of the
State, special powers were conferred on the Commercial Tax
Officer as well as the Deputy Commissioner of Commercial Taxes.
If the Deputy Commissioner was not satisfied with the decision of
the Tribunal on questions of law, he could have gone up in revision to the High Court. Under the 1959 Act, the procedure was
simplified to some extent.
The Appellate
Assistant
Commissioner who primarily took over the quasi-judicial functions of the
Commercial Tax Officer was conferred with power not only to
confirm, vary or annual the assessment but also the power to enhance the assessment. The power conferred on him ·under s. 31
of the 1959 Act combines to an extent both the appellate power
as well as the special power the Commercial Tax Officer had
under s. 11 and 12(1) of the 1939 Act. Hence the changes
effected by the 1959 Act in the machinery provisions
do not
touch the substance of the matter. Even as regards the time
withi.n which the enhancement of assessment can be made the
change excepting in exceptional cases is in favour of the assessees.
The Commercial Tax Officer could have exercised his special
powers under s. 12 ( 1) of the 1939 Act within three years from rhe
date the assessment order was served on the assessee.
Under the
1959 Act. he ca•1 enha.nce the assessment only during the pendency
of the appeal and not thereafter. Herein we are not concerned with
the special powers of the Deputy Commissioner nor with the
powers of the Tribunal or the High Court. In our opinion there
is no basis for saying that the provisions of the 1959 Act relating
to the determination of the assessment are more onerous than
those in the 1939 Act. The 1959 Act in our opinion merely
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MADRAS V, LATEEF (Hegde, J.)
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simplified the procedure without touching the substance of the
right of the parties. No benefit that was available to an assessee
as regards the procedure, was taken away by the 1959 Act, if
we ignore the remote possibility of an appeal pending before an
Appellate Assistant Commissioner for more than three years and
that authority failing to exercise· his power to enhance the tax
within that period. The assessee before us cannot even have the
benefit of such a contingency because the order of assessment in
this case was made on March 24, 1961 and the appellate order
was passed on August 16, 1962. In this case it cannot be said
that any vested right of the assessee had been in fact affected by
the 1959 Act.
Now we shall go to s. 61 of the 1959 Act on the basis of
which the Tribunal and the High Court have upheld the contention of the assessee. Section 61 ( 1) to the extent material for onr
purpose reads :
"61 ( 1). ( i) The Madras General Sales Tax Act,
1939 (Madras Act IX of 1939), (hereinafter in this
section referred to as the said Act) , is hereby repealed.
(ii) T!ie repeal of the said Act by clause (i) shall
not affect-
( a) anything done or any offence committed, or any
fine or penalty incurred or any proceedings
begun before the commencement of this Act; or
(b) the previous operation of the said Act or anything duly done or suffered thereunder; or
( c) any right, privilege, obligation or liability acquired, accrue or incurred under the said Act or;
( d) any fine, penalty, forfeiture. or punishment incurred in respect of any offence,
committed
against the said Act; or
( e) any investigation, legal proceeding or remedy
in respect of any such right, privilege, obligation, liability, fine, penalty, forfeiture or punishment as aforesaid;
and any such investigation, legal proceeding or remedy
may bi: instituted, continued or enforced and any such
fine, penalty, forfeiture or punishment may be imposed,
as if this Act had not been passed.
(iii) Subject to the provisions of clause (ii), anything done or any action taken including any appointment made, notification, notice or ord~r issued, rule,
form or regulation framed, certificate, licence or permit
584
SUPREME COURT REPORTS
[1972] l
S.C.R.
granted, under the said Act shall be deemed to have
been done or taken under the corresponding provision
of this Act and shall continue in force accordingly, unless and until, superseded by anything done or any
action taken under this Act.
(2) Notwithstanding anything contained in sub-s.
( 1) any application, appeal, revision of other proceeding made or preferred to any officer or authority under
the said Act and pending at the commencement of this
Act, shall after such commencement, be transferred to
and disposed of by the officer or authority who would
have had jurisdiction· to
entertain such
application,
appeal, revision or other proceeding under this Act
if it had been in force on the date on which
any
application, appeal, revision or other proceeding was
made or preferred.
The rules framed under the 1939 Act (the Madras General
Sales Tax Rules, 1939), provide for the appointment of Assistant
Commercial Tax Officers and the Deputy Commercial Tax
Officers. By his order dated September 15, 1939, in exercise o{
the powers conferred on him by cl. (a) of s. 2 and sub-ss. 1 and
2 of s. 14 of the 1939 Act, the Governor of Madras authorised
the Assistant Commercial Tax Officers to exercise the powers of
the assessing authority in the case of dealers whose turnover does
not exceed Rs. 20,000/- and Deputy Commercial Tax Officers
to exercise the powers of an assessing authority in the case of
dealers whose turnover exceeds Rs. 20,000/-.
It is not necessary
to refer to the exceptional cases for which provision is made in
the provisos to cl. (1) of that order.
Rule 13 (1) of the Rules
prescribed that subject to the provisions of s. 11 any person aggrieved by any original order of an assessing authority may appeal to
the Commercial Tax Officer of the District.
The proviso to that
section permits the Board of Revenue to transfer an appeal pending
before a
Commercial Tax Officer to another Commercial Tax
Officer for reasons to be recorded in writing. But the usual appellate authority is the Commercial Tax Officer of the District. Hence
the Commercial Tax Officer had both the powers of the appellate
authority as well as the special powers conferred on him under
s. 12(1) of the 1939 Act.
By the exercise of those two powers.
he could have confirmed, altered, amended or enhanced
the
assessment made.
The power conferred on the appellate authority under the 1959 Act. is not wider than that the Commercial
Tax Officer had under the 1939 Act. Hence the 1959 Act doe~
not adversely affect in any manner the right of appeal an assessee
had under the 1939 Act.
If one probes into the grievance of
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the assessee before us, it would be obvious that it is wholly imaginary.
No assessee has any vested right in the procedure pre.scribed under the 1939 Act. So long as the new procedure laid
down in the 1959 Act does not interfere with any of his vested
rights, an assessee has no right to claim that his case m_ust be
dealt with under the provisions of the repealed Act. It 1s well
B
settled that the new procedure prescribed by law governs all pending cases.
As seen earlier, the assessee filed its
appeal under
s. 31 of the 1959 Act and not under s. 11 of the 1939 A~t. But
that is a minor aspect. What is of the essence is !hat his nght of
appeal under the 1959 Act does not take away m any manner
any of his vested rights under the 1939 Act.
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In view of what we have said hereinbefore, it is not necessary
for us to consider the meaning of the words "any right, privilege
.......... accrued ............ under the Act" in
s. 61 (1)
(ii) ( c). We repeat that no right of the assessee was
infringed
by the provisions of the 1959 Act. In this view, it is not necessary to examine the scope of s. 61 (2) of the 1'959 Act about
which there was considerable argument before us.
The decision under appeal is based on the earlier two decisions of that High Court i.e. in Deputy Commissioner Commercial Taxes, Madras Division v. Sri Swami & Co.(1) and Deputy
Commissioner of Commercial Taxes, Madras Division v. M. Ba/asundaram and Co. (2 ).
Hence it is necessary to examine the
correctness of those decisions.
In Swami & Co.'s case (supra)
the assessee was assessed by the Deputy Commercial Tax Officer
for its turnover for the year 1955-56 under the 1939 Act. The
order or assessment was passed on December 15, 1956.
The
assessee filed an appeal before the Commercial Tax Officer on
February 15, 1957. During the pendency of the appeal, the 1959
Act came into force on April l, 1959. Thereafter the appeal was
transferred to the Appellate Assistant Commissioner. The Appel-
, late Assistant Commissioner reduced the turnover of the assessee
to certain extent. Not being satisfied with the order of the
Appellate Assistant Commissioner, the assessee preferred a further appeal to the Appellate Tribunal.
In the course of the
hearing of the appeal by the Tribunal, the State representative
filed a petition seeking enhancement of the turnover of the assessee
on .certain grounds. The Tribunal rejected that plea holding that
the assessee had a vested right to have his appeal disposed of
under the provisions of the 1939 Act.
It may be noted that
under the 1939 Act, only an assessee could have appealed to
the Tribunal against the order of the Appellate Assistant Com-
(2) 14. S.T.C. 996.
586
SUPREME COURT REPORTS
[1972] l ~.C.R.
sioner but under the 1959 Act both the assessee as well as the
Deputy Conunissioner can appeal against his order.
Aggrieved
by the order of the Tnbunal, the :Deputy Commissioner took up
the matter i11 revision to the High Court.
The High Court
allowed the revision petition.
It held that the Tribunal went
wrong in holding that the petition filed by the State representative for enhancement of the assessment was not maintainable. In
the course of its judgment the High Court observed :
"The immunity or protection which
the assessee
had under the 1939 Act so as to save the assessment
made by the Deputy Commercial Tax Officer, the primary assessing authority, from being enhanced by the
exercise of the appellate power by the Commercial Tax
Officer, is a vested right, which cannot be interfered
with or in any way impaired having regard to the specific provision of s. 61 ( 1) of the Madras Act I of 1959.
The order of the Appellate Assistant Commissioner only
reduced the turnover to the benefit of the assessee, and it
is clear that there was no violation of the vested right
of the assessee by reason of the said order. The order
of the Appellate Assistant Commissioner was passed
after the coming into force of the 1959 Act and on that
date the assessee had no vested right to prevent an enhancement of his assessment by the future
appellate
authority, namely the Tribunal.
The Tribunal entertai.ned an appeal at the instance of the assessee only
under the new Act as the order appealed against was
one passed after the coming into force of the new Act,
and by a Tribunal which functioned under the new Act.
It is impossible for the assessee to maintain the posifon
that any order of the Appellate Tribunal enhancing the
assessment made by the Appellate Assistant Commissioner would amount to deprivation of their vested
rights or violation of the provisions of section 61 (1) of
the 1959 Act."
These observations appear to us to be somewhat incongruous. As seen earlier under the 1939 Act, the Revenue could not
have anpealed either against the order of the assessing authority
or against that of the ·-apnellate authority. If the ~on-exi~ience
of the right of appeal on the part of the Department 1s considered
as an immunity or protection and if that immunity or protection
is con~idered as a vested right, the assessce will have that right
both at the stage of the aopeal to the A_ppellate Assistant. Commission~r as well as at the stage of the appeal to the Tnbunal.
It is difficult to follow how the High Court was able to make a
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MADRAS v. LATEEF (Hegde, J.)
587
dichotomy as between the powers of the Appellate Assistant
Commissioner and that of the Tribunal in that regard. If the:
newly constituted Tribunal were clothed with wider and larger
powers as opined by the High Court, the same would be the case
with the Appellate Assistant Commissioner. In our opinion, the
true test to be applied to the case was whether in fact any vested
right of the assessee had been taken away under the 1959 Act
because of the enlargement of the powers of the first appellate
authority or that of the Tribunal. As seen earlier, no real right
of the assessee was infringed by the 1959 Act because of the
enlargement of the powers of those authorities.
This takes us to the decision in Balasundaram & Co's case
(supra). This case was decided by the same bench which decided Swami & Co's case.
Therein the assessee was assessed to sales
tax under the 1939 Act. During the pendency of its appeal to
the Commercial Tax Officer, the 1959 Act came into force.
Its
appeal was transferred to the Appellate Assistant Commissioner
who enhanced the assessment.
But on a further
appeal,
the
Tribunal came to the conclusion that the Appellate Assistant
Commissioner had no jurisdiction to enhance the
assessment.
As against that order, the
Deputy
Commissioner of Commercial Taxes went up in revision to the High Court.
The
High Court held that the assessee had a vested right at the time
when the 19 59 Act came into force to prevent the Commercial Tax
Oilicer from enhancing the assessment in the course of the appeal
preferred by him.
However, there was always the peril of the
, Commercial Tax Officer, who was also the revising authority,
·revising the assessment to his prejudice in exercise of his revisional
power, but that peril effectively disappeared when under the 1959
Act, the revisional power was conferred upon the Deputy Commissioner of Commercial Taxes and not upon the Appellate
Assistant Commissioner. Therefore the interference by the Appellate Assistant Commissioner with the assessment order passed by
the Deputy Commercial Tax Officer to the prejudice of the
assessee in the purported exercise of his appellate power, was
clearly violative of the assessee's vested rights. In our opinion this
decision proceeded on a wrong basis. The question before the
High Court was whether there was a vested right in the assessee
not to have his assessment enhanced, under the 1939 Act and
whether that vested right had been in any manner infringed by
the 1959 Act. As seen earlier he had no such vested right under
. the 1939 Act.
The fact that a different procedure is prescribed
under the 1959 Act for enhancing the assessment cannot be said
to be an infringement of a vested right. No one can have a vested
right in a mere procedure. We are of opinion that Balasundaram's
case (supra) was wrongly decided and some of the observations
588
SUPREME COURT REPORTS
[ l 972J 1 S.C.R.
in Swami & Co's case '(supra) are not correct though the decision in that case is not open to question.
A
Mr. S. T. Desai, learned Counsel for the Revenue
placed
strong reliance on the decision of a Division Bench of the Kerala
High Court in Velukutty v. Kera/a Sales Tax Appellate Tribunal,
Trivandrum and Ors.( 1 )
Therein, interpreting a provision similar
to s. 61(2) of the Act, the High Court carne to the conclusion .B
that the clause "be transferred to and disposed of by the officer
or authority who would have had jurisdiction to entertain such
application, appeal, revision or other proceeding under this Act,
if it had been in force on the date on which any application.
appeal, revision or other proceeding was made or preferred" conferred power on the appellate authority to enhance assessment.
C
The correctness of this conclusion was contested by Mr. Shankar-
·dass, learned Counsel for the assessee.
According to him that
clause merely provided for transference of the appeals pending
before the authorities under the 1939 Act to the authorities under
the 1959 Act without enlarging their powers.
In view of our
conclusion that no vested right of the assessee had been interfered
D
with, it is not necessary for us to go into this controversy.
For the reasons mentioned above, this
appeal is
allowed,
orders of the High Court as well as that of the Tribunal are set
aside and the case is remitted to
the Tribunal for disposal
according to law. In the circumstances of the case we direct the
parties to bear their own costs both in this Court as well as in
E
the High Court.
G.C.
Appeal allowed.
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(!) 20 S.T.C. 28.