# STATE OF MADRAS v. P. M. BATCHA & COMPANY

- **Citation:** [1967] 3 S.C.R. 617
- **Court:** Supreme Court of India
- **Decided:** 1967-04-12
- **Case number:** Civil Appeal No. 578 of 1966
- **Bench:** J. C. Shah, S. M. Sikri, V. Ramaswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-madras-v-p-m-batcha-company-4092
- **Pages:** 5

## Headnote

Madras General Sales Tax Act, 1939, ss. S a11d 11; Madras General
Sales fox Act, 1959, s. 32-'Nil' assessment made b,v Commercial Tax
Officer 11nder s. 5 of 1939 Act-Order no1 communicated to 1MsesseeChange of judic~ai view reRardin11 MXinR
provi'iions-Power of Depury
Commissioner of Commercial Taxes under s. 32 of 1959 Act to revise
order of 'Nir asseisment-Assessee's
whtther
had right to fil1 apptMI
against 'Nil' assessment under s. 11 of 1939 Act-Effect of such right on
powers of Dtputy Commissioner 11nder s. 32.
The respondent firm carried on· business in hides and skins in Madras.
For the assessment year 1953·54 they applied for a licence under s. S
of the Madras General Sales Tax Act, 1939. The Commercial Tax Offi·
cer relying on a judgment of the Madras High Court held that the res·
pondent was not liable to tax and made a 'Nil' assessment. The order
was however not commu11icated to the respondent. . The afores<1.id jud2ment of the Madras High Court was later reversed by this Court. The
Deputy Commissioner of Commercial Taxes Madras, being of the view
t1tat the- nrder of 'nil' a!sessment relating to 1953-54 was
illegal com ..
menced proceedings under s. 32 of the Madras General Sales Tax Act,
1959 and thereafter assessed
the re•pondent. The Sales Tax Tribunal
confirmed the order of Commercial Tax Officer. The High Court in revision held that since the Commercial Tax Officer had not communicated
his order to the assessee the time for appeal had not expired and therefore the Deputy Commissioner had no power. to revise the order under
s. 32 of the Act of 1939. The State appealed.
HELD : In the present case no tax was assessed, not even the taxable
turnover was determined. No aooeal conld h('!···fore lie under s. 11 of
the Act of 1939 against the order of 'Nil' assessment. There was thus
no bar against the exercise of jurisdiction of the Deputy Commissioner
under s. 32(1) to commence proceedings of re·assessment.
[6210]
Ml s. M.A. Noor Mohamed & Company v. State of Madras & Anr.,
A.I.R. 1957 Mad. 33 and State of Madras & Anr. v. Mis. M. A. Noor
Mohamtd & Company, A.I.R. 1960 S.C. 1254, referred to.
S. B .. Periasanii Nadar and Company v. State of Madras, 13 S.T.C.
328, approved.

## Text

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STATE OF MADRAS
v.
P. M. BATCHA & COMPANY
April 12, 1967
{J. C. SHAH, S. M. SIKRI AND V. RAMASWAMI, JJ.]
Madras General Sales Tax Act, 1939, ss. S a11d 11; Madras General
Sales fox Act, 1959, s. 32-'Nil' assessment made b,v Commercial Tax
Officer 11nder s. 5 of 1939 Act-Order no1 communicated to 1MsesseeChange of judic~ai view reRardin11 MXinR
provi'iions-Power of Depury
Commissioner of Commercial Taxes under s. 32 of 1959 Act to revise
order of 'Nir asseisment-Assessee's
whtther
had right to fil1 apptMI
against 'Nil' assessment under s. 11 of 1939 Act-Effect of such right on
powers of Dtputy Commissioner 11nder s. 32.
The respondent firm carried on· business in hides and skins in Madras.
For the assessment year 1953·54 they applied for a licence under s. S
of the Madras General Sales Tax Act, 1939. The Commercial Tax Offi·
cer relying on a judgment of the Madras High Court held that the res·
pondent was not liable to tax and made a 'Nil' assessment. The order
was however not commu11icated to the respondent. . The afores<1.id jud2ment of the Madras High Court was later reversed by this Court. The
Deputy Commissioner of Commercial Taxes Madras, being of the view
t1tat the- nrder of 'nil' a!sessment relating to 1953-54 was
illegal com ..
menced proceedings under s. 32 of the Madras General Sales Tax Act,
1959 and thereafter assessed
the re•pondent. The Sales Tax Tribunal
confirmed the order of Commercial Tax Officer. The High Court in revision held that since the Commercial Tax Officer had not communicated
his order to the assessee the time for appeal had not expired and therefore the Deputy Commissioner had no power. to revise the order under
s. 32 of the Act of 1939. The State appealed.
HELD : In the present case no tax was assessed, not even the taxable
turnover was determined. No aooeal conld h('!···fore lie under s. 11 of
the Act of 1939 against the order of 'Nil' assessment. There was thus
no bar against the exercise of jurisdiction of the Deputy Commissioner
under s. 32(1) to commence proceedings of re·assessment.
[6210]
Ml s. M.A. Noor Mohamed & Company v. State of Madras & Anr.,
A.I.R. 1957 Mad. 33 and State of Madras & Anr. v. Mis. M. A. Noor
Mohamtd & Company, A.I.R. 1960 S.C. 1254, referred to.
S. B .. Periasanii Nadar and Company v. State of Madras, 13 S.T.C.
328, approved.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 578 of
1966.
Appeal by special leave from the judgment and order dated
August 31, 1964 of the Madras High Court in Tax Case No. 127
of 1963 (Revision No. 83).
P. Ram Reddy and A. V. Rangam, for the appellant.
R. Ganapathy Iyer, for the respondent.
.() 1 8
SUPREME COURT REPORTS
[1967] 3 S.C.R.
The Judgment of the Court was deliver-ed by
Shah, J.
The respondents are a firm carrying on business in
hides and skins in me State of Madras and is registered as a
"dealer" under the Madras General Sales Tax Act 9 of
1939.
For the assessment year 1953-54 the respondents applied for a
licence under s. 5 of the Madras General Sales Tax Act and provisionally paid a sum of Rs. 450 towards licence fee. The respondents were directed to pay an additional amount of Rs.
400.
The respondents declined to pay the additional amount and informed the as~essing authority that the transactions c~rried on
by them were of the nature of export of hides and skins and no
:sales-tax was payable on goods exported to places outside India.
The Commercial Tax Officer scrutinised the accounts of the
respondent for the year 1953-54 and by order dated March 29,
1957 determined their turnover from purchases of hides and skins
from dealers outside the State and from dealers within the· State
both tanned and untanned and of sales of tanned hides and skins
-0n behalf of resident and non-resident principals.
B1!ti following
the j11dgment of the Madras High Court in Messrs. M. A. Noor
Mohamed & Company v. The State of Madras and Another(1).
the Commercial Tax Offiper held that the respondents were exempt from tax and no licence fee for the year 1953-54 was
payable.
He, therefore, declared that there was no demand
under s. 8(B) (2) of the Act, that the tax due for the year was
nil and that a notice in Form 'C' be issued for refund of Rs. 450
paid by the respondents.
No intimation of this order was given to the respondents.
The judgment of the Madras High Court in
M. A. Noor
Mohamed's case(') was carried in appeal to this Court and this
Court reversed the judgment : see State of Madras & Another v.
M/s. M.A. Noor Mohammed & Company('). In the meantime
the Madras General Sales Tax Act 9 of 1939 was repealed and
was replaced by the Madras General Sales Tax Act .1 of 1959.
The Deputy Commissioner of Commercial Taxes, Madras, being
of th1' view that the "order of nil assessment" dated March 29,
1957 was illegal and that the respondents were liable to pay sales·
tax on their turnover of hides and skins for the year 1953-5-4,
commenced proceeding under s. 32 of the Madras General Sale~
Tax Act 1 of 1959 and issued a notice to the respondents calling
upon them to file their objections, if. any,
to the proposal to
revise the "order of nil assessment".
The Deputy Commissioner
rejected the contention of the respondents that he had no juris-
-diction to revise the assessment and determined the turnover of
the respondents at Rs. 11,25,000 odd.
The Sales Tax Appellate
--·
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(1) A.l.R. !957 Mad. 33.
(2) A.T.R. 1960 S.C. 1254.
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MADRAS v. BATCHA & CO. (Shah, J.)
619
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Tribunal substantially confirmed the order of the Deputy Com·
missioner.
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The High Court in exercise of their revisionaJ jurisdiction
under s. 38 of Act 1 of 1959 set aside the order of the Tribunal
holdmg that it was obligatory upon the Commercial Tax Officer
to communicate the order dated March 29, 1957 : if it was not
so communicated the time to appeal against the order cannot be
deemed to have expired and the Deputy Commissioner had no
jurisdiction under s. 32 of the Madras General Sales Tax Act l
of 1959 to revise the order.
In recording their conclusions the
learned Judges followed the judgment in The State of Madras v.
M/s A. M. Safi1tlla & Company(') in which the rule was stated
as follows :
"To sum up in the case of an assessment completed
and signed by the Officer, but not communicated to the
assessee, our conclusions are as follows :
" (a) The order of assessment can be communicated
to the assessee without any time limit, but no
liability would arise till communication;
(b) The limitation for the assessee to prefer either
an appeal. or a revision would commence to run
only after the order is communicated to him;
( c) The time for exercising powers of revision would
commence to run from the date of the order itself
and there cannot be an enlarged period of
limitation merely because the Department takes
its own time to communicate the order."
In our judgment, the order of the High Court cannot be sm·
tained.
The Commercial Tax Officer commenced proceeding in
the manner provided by s. 9 of Act 9 of 1939 for assessment of
sales-tax due by the respondents, but ultimately held that no tax
was due by the respondents.
Section l l of the Act provided that
an assessee objecting to an assessment made on him under s. 9
sub-s. (2) may within thirty days from the date on which he
was served with ~otice of the assessment, appeal to such authority
as may be prescnbed.
Rule 15 of the rules framed by the Governor of Madras under
the M~dras General Sales Tax Act required the dealers in hides
a.nd skins to ;ubmit a return in Form A-4 to the assessing authority on or be,ore the 25th day of every month.
The Commercial
Tax Officer had to process the return submitted by the dealer.
If no return was submitted in respect of any month or if the
retwm was submitted without payment of the full amount of tax,
or the return was otherwise defective the Commercial Tax Officer
could determine the turnover to the' best of his judgment. Rule
620
SUPREME COURT REPORTS
[1967) 3 S.C.R.
16 dealt with the levy of tax on hides and skins.
There was no
provision in the Act or the Rules framed by the State Government which required that an order made under s. 9 shall, before
it may be regarded as validity made, be communicated to the
dealer.
An appeal lay under s. 11 by an assessee objecting to an
assessment made on him under s. 9(2). Sin9e the assessment was
"nil", no question of the respondents objecting to the ai;sessment
arose, and no appeal could be contemplated to be filed by them.
We agree with the view of the Madras High Court in S. B.
Periasami Nadar and Company v.
The State of Madras(') at
p. 333 that:
"In a case where the assessee is not levied with tax,
there is no rule which compels the assessing authority
to inform the assessee that the tax levied against him
is nil.
The word "assessment" may have a wide connotation including several aspects
of the assessment
proceedings.
But however wide the significance of the expression
"assessment" -may be, it is impossible to hold that an
assessment is. incomplete or invalid in the absence of the
order of
assessment being served upon the assessee.
Once the competent authority makes an
ass~sment
under the Madras General Sales Tax Act after scrutinising the return submitted by the assessee, and after
giving the assessee a reasonable opportunity of proving
the correctness and completeness of any return submitted by him it is complete and valid."
It is true that when proceedings for re-assessment .were commenced, Act 9 of 1939 stood repealed and was .replaced by
Madras Act 1 of 1959, and the authority which the Deputy
Commissioner could exercise was under s. 32 ( 1) which read as
follows :
"The Deputy Commissioner may, of his own motion,
call for and examine an order passed or proceeding
recorded by' the appropriate authority under section 4-A,
section 12, section 14, section 15, or sub-sections (1)
and (2) of section 16 and may make such inquiry or
cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he
thinks fit."
Sub-section ( 2) provided, insofar as it is material :
"The Deputy Commissioner shall not pass any order
under sub-section ( 1) if-
( I) 13 S.T.C. 328.
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MADRAS V. BATCHA & CO. (Shah, J,)
621
(a) the time for appeal against the order has not
expired;"
There was, however, no assessment of tax against the respondents.
There could be no appeal against the order of "nil assessment" under s. 11 of Act 1 of 1959, and no bar to·the jurisdiction
of the Deputy Commissioner under sub-s. ( 1) of s,, 32 of the Act
could arise. The High Court was, in our judgment, in error in
llolding that .because "the order of nil assessment" was not communicated, the respondent could not appeal against that order,
and the time for appealing against that order had not expired
within the meaning of sub-s. (2) of s. 32 of Act 1 of 1959. We
arc unable also to agree with the High Court that in an appeal
under s. 11 of Act 9 of 1939 an assessec may object to a mere
statement setting out the sales and purchases during the coune
of his business, or even his turnover. An appeal lies against the
wcssmcnt of tax.
In the present case, no tax was assessed :
not even the taxable turnover was determined. No appeal, in
our judgment, could lie under s. 11 of Act 9 of 1939 against the
order of "nil assessment''.
There was therefore no bar against
the exercise of jurisdiction of the Deputy Commissioner under
a. 32( 1) to commence proceedings for re-assessment.
01:11'. attention was invited to s. 31 ( 1) of Act 1 of 1959, which
confers a right of appeal upon any person who objects to an
order. passed· by the appropriate authority under various sections
includ,ing s. 4A, s. 12, s. 14 and others.
But if no appeal lay
against the-0rder of "nil assessment" under's. 11 of Act 9 of 1939,
it is difficult to appreciate how an appeal could still be filed by
the respondents against that order under Act 1 of 1959 which
came into force two years after the order.
'
It is unneceHary in that view to consider the alternative argument .advanced by counsel for the State that it was open to the
~uty Commissioner to revise the order of "nil assessment"
Ulidbr the power reserved to him to· revise a "proceeding recorded".
The order passed by the High Court is set aside, and the order
passed bv the Sales Tax Tribunal restored, with costs in this Court
and the High Court.
G.C.
Appeal allowed.