# SWASTIK OIL MILLS LTD v. II. H. Ml_;!\SHI. l>F:PliT\' COMMISSIO~ER OF SALES TAX _,/' BOMBA\' '

- **Citation:** [1968] 2 S.C.R. 492
- **Court:** Supreme Court of India
- **Decided:** 1967-11-29
- **Bench:** J. C. Shah, V. Ramaswami 11:>0 V. 8Hargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/swastik-oil-mills-ltd-v-ii-h-ml-shi-l-f-plit-commissio-er-of-sales-tax-bomba-4225
- **Pages:** 13

## Headnote

. Revisional power~-suo motu exercise of-limitntivns-if further inquiry 10 gather add1tionol maleria/ permiisib/e.
Bombay Salt.! Tax Act, 5 of 1946, Act 3 of 1953, s. 31, Ac1 51of1959,
ss. 57, 77(l)(a), 71(3)-Scope o/.
The appellant was registered as a <l"'1ler under the ,·arious Sales Tax
Acts in force in Bombay fro. · time to time i.e. Bombay Acts 5 of 1946.
3 of 1953 and 51 of 1959. ln the course of us assessment' to sale<; ia,
for the periods from !st April, 1948 to 31st March, 1950, and from 1st
April 1950 to 31st March, 1951, the appellant claimed c'cmption from
tax. inter n/ia, in respect of certain despatches of ~ooJs from ils -head
office in Bombay to its branches in other States.
The Sales Tax Officer
rejected thec;c claims but, in appeal, the Assistant Collector accepted the
claim in re..,pect of the despatches 10 various branches though he rcjl~ted
'1II other Claims for exemption.
lie also directed a rcfuncl of rhe excc~s
rax collected from the appellants.
While revision petitions tiled hy the
appellant
a~ainst these orders were pending, a notice was issued ttl him
on January 7. 1963 by the Deputy Commissioner of Sale' Ta' in Form
XXJV under s. 31 of the Bombay Sales Ta. Act, 1953. intimatin~ the
appellant that he proposed to revise suo motu the orders passed hy the
Assistant CoUcctor in so far as he had allowed deduction in re<,,pcct of
1he entire goods despatched to the appellants'
branches
outside Maharashtra hecause, in so doing, he had overlooked certain provision!\ of Jaw
\Vhich \\'ere specified in the notic.e.
The appellant filed a petition under
Art. 226 of the Constitution seeking to quash the notice dated 7th January, 1963 but his petition was dismissed by tho High Court.
In the appeal to this Court it was contended on behalf of the oppellant.
inter alia (i) that in exercise of ~I! revisional powers, the Deputy CommiS<ioner, whether acting under the Sales Ta< Act of 1946. or oi 1953.
or of 1959 could onlv proceed to take action on the basis of the m:ucrial
alreadv pre
1sent on thC: record and \\'a~ not entitled to act on conjrcrurr or
10 in~!itute any enquiry so as to include additional material nor to jud!le
the correctness of the order sou~ht to be re\ised; (ii) that the notice:- in
4u\!'\tio:1 \Ycts issued on 7th January. 1963. \\'hC'Tl the Act of 1959 h;1d already come into force and the Act of 1953 had heen rercalecl:
'\O
1hat
any revisional jurisdiction could only be exercised by the Deput\' Commissioner under the Act of 1959 and not under the Act of 1953: as the
power ender s. 57 of the Act of 1959 could only be exercised within
five vears from the date of the order sought to be revised; the notice
i5'ucd hv the Dcputv Commissioner was time barred; and (iii) that the
proce~~:;igo;; to he insiituted were barred bv time. hecausc limitation of a
reasonable time: wi1hin which the revisional powers are to he e."{erci~ed
must he implied in the statute itself.
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SWAST!K OIL MILLS V. COMMR. s. TAX (Bhargava, J.) 493
HELD : The proceedings initiated by the
Depu~y Commissioner of
Sales Tax against the appellant were not incompeteot and the High Court
was right in refusing the writ sought by the appellant.
\
(i) Whenever a power is conferredi on an authority to revise an
order, it is entitled to examine the correctness, legality and propriety of
the order and to pass such suitable orders as it may think fit in the circumstances of the particular case.
The proceedings for revision, if started
suo tnotu, must not be based on a mere conjecture and there should be
some ground for invoking the revisional powers.
Once these powers are
invoked. the actual interference must be based on sufficient grounds and,
if it is considered necessary that some additional enquiry should be made
to arrive at a proper and just decision, there can be no bar to the revitsiog authority holding or directing a further enquiry and thereafter admitting additional nrnterial. [496 A-CJ
Th,• State u/ Kera/a v. K. M. Ch

## Text

SWASTIK OIL MILLS LTD.
v.
II. H. Ml_;!\SHI. l>F:PliT\' COMMISSIO~ER OF SALES TAX
_,/'
BOMBA\'
'
November 29, 1967
B
[J. C. SHAH, V. RAMASWAMI 11:>0 V. 8HARGAVA, JJ.J
. Revisional power~-suo motu exercise of-limitntivns-if further inquiry 10 gather add1tionol maleria/ permiisib/e.
Bombay Salt.! Tax Act, 5 of 1946, Act 3 of 1953, s. 31, Ac1 51of1959,
ss. 57, 77(l)(a), 71(3)-Scope o/.
The appellant was registered as a <l"'1ler under the ,·arious Sales Tax
Acts in force in Bombay fro. · time to time i.e. Bombay Acts 5 of 1946.
3 of 1953 and 51 of 1959. ln the course of us assessment' to sale<; ia,
for the periods from !st April, 1948 to 31st March, 1950, and from 1st
April 1950 to 31st March, 1951, the appellant claimed c'cmption from
tax. inter n/ia, in respect of certain despatches of ~ooJs from ils -head
office in Bombay to its branches in other States.
The Sales Tax Officer
rejected thec;c claims but, in appeal, the Assistant Collector accepted the
claim in re..,pect of the despatches 10 various branches though he rcjl~ted
'1II other Claims for exemption.
lie also directed a rcfuncl of rhe excc~s
rax collected from the appellants.
While revision petitions tiled hy the
appellant
a~ainst these orders were pending, a notice was issued ttl him
on January 7. 1963 by the Deputy Commissioner of Sale' Ta' in Form
XXJV under s. 31 of the Bombay Sales Ta. Act, 1953. intimatin~ the
appellant that he proposed to revise suo motu the orders passed hy the
Assistant CoUcctor in so far as he had allowed deduction in re<,,pcct of
1he entire goods despatched to the appellants'
branches
outside Maharashtra hecause, in so doing, he had overlooked certain provision!\ of Jaw
\Vhich \\'ere specified in the notic.e.
The appellant filed a petition under
Art. 226 of the Constitution seeking to quash the notice dated 7th January, 1963 but his petition was dismissed by tho High Court.
In the appeal to this Court it was contended on behalf of the oppellant.
inter alia (i) that in exercise of ~I! revisional powers, the Deputy CommiS<ioner, whether acting under the Sales Ta< Act of 1946. or oi 1953.
or of 1959 could onlv proceed to take action on the basis of the m:ucrial
alreadv pre
1sent on thC: record and \\'a~ not entitled to act on conjrcrurr or
10 in~!itute any enquiry so as to include additional material nor to jud!le
the correctness of the order sou~ht to be re\ised; (ii) that the notice:- in
4u\!'\tio:1 \Ycts issued on 7th January. 1963. \\'hC'Tl the Act of 1959 h;1d already come into force and the Act of 1953 had heen rercalecl:
'\O
1hat
any revisional jurisdiction could only be exercised by the Deput\' Commissioner under the Act of 1959 and not under the Act of 1953: as the
power ender s. 57 of the Act of 1959 could only be exercised within
five vears from the date of the order sought to be revised; the notice
i5'ucd hv the Dcputv Commissioner was time barred; and (iii) that the
proce~~:;igo;; to he insiituted were barred bv time. hecausc limitation of a
reasonable time: wi1hin which the revisional powers are to he e."{erci~ed
must he implied in the statute itself.
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SWAST!K OIL MILLS V. COMMR. s. TAX (Bhargava, J.) 493
HELD : The proceedings initiated by the
Depu~y Commissioner of
Sales Tax against the appellant were not incompeteot and the High Court
was right in refusing the writ sought by the appellant.
\
(i) Whenever a power is conferredi on an authority to revise an
order, it is entitled to examine the correctness, legality and propriety of
the order and to pass such suitable orders as it may think fit in the circumstances of the particular case.
The proceedings for revision, if started
suo tnotu, must not be based on a mere conjecture and there should be
some ground for invoking the revisional powers.
Once these powers are
invoked. the actual interference must be based on sufficient grounds and,
if it is considered necessary that some additional enquiry should be made
to arrive at a proper and just decision, there can be no bar to the revitsiog authority holding or directing a further enquiry and thereafter admitting additional nrnterial. [496 A-CJ
Th,• State u/ Kera/a v. K. M. Cheria Abdulla and Company, [1965] 1
S.C.R. 601, explained and followed.
State of Anclhra Pradesh v. T. G. Lakslunaiah Setty & Sons, 12 S.T.C.
663; disapprovecl.
In the present case. the notice issued by the Deputy Commissioner. on
!he face of it. disclosed the reasons which led him to take proceedings
for exercising hi<.; revisional powers suo motu, and it- could not be said
on those facts
th~lt he was acting merely on conjecture.
There was no
reason to think that, when proceeding witll his inquiry, he would nor
keep within the lin1itations indicated by this Court in
K.
M.
Cheria
Abdulla·s case.
(ii) The effect of s. 77(1) (a) of the Act of 1959' is to continue in
force the Act of 1953 as m,n as the Act of 1946 to the extent to which
they were in force when !he Act of 1959' came into force for the purposes of levy. assessm·ent, reassessment and collectio·n of sales~tax. Furthermore, by virtue of s. 7(e) of the Bombay General Clauses Act, 1904,
which was made applicable to the repeal of the .Act of 1953 by s. 77(3)
of the 1959 Act, any Jegal proceeding in resoect of levy, imposition or
recovery of tax is to continue and any fresh investigation, legal proceeding or remedy could be instituted as if there had been no repeal by the
Act of 1959.
Consequently, the repeal of the Act of 1953 did not in
any way affect the power of the Deputy C.Ommissioner to institute proceedings for revision suo motu against the appellate order of the Assi'ltant
Collector which had hecn na5sed in exercise of his power under the
Act of 1946. f499 C-500 BJ
Although the Deputy Commissioner, In seeking to cxerci"e revisionat
powers should have proceeded under s. 22 of the Act of 1946 and not
under s. 31 of the 1'°53 Act, this fact was immaterial as the provisions
of the two Sections were similar. [500 'D-E]
(ili) Section 22 of the Act of 1946 ands. 31 of the Act of 1953 do not
lay down any pcricxl of limitation for the exercise of the power of revision
hy a· .Deputy Commissioner suo motu. and no such limitation could be
read in the two Acts. f500 Gl
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The State of Orissa v. Debaki Debi and Others.
15
S.T.C.
153.
Commissioner of Income-tax, Bomba,v City I v. Narsee Nngsee & Co., 31
l.T.R. 164, Manordas Kalidas v. V. V. · Tatke, 11
S.T.C,
87.
Bisesar
House v. State of Bombay, 9 S.T.C. 654, distinguished.
494
SUPREME COURT REPORTS
[1968] 2 S.C.R.
Maharaj Kumnr Kamal Singh v. CJ.T., Bihar and Orissa, 35. l.T.R.
A
1, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 637 ol
1967.
Appeal from the judgment and order dated January 27, 1966
of the Bombay High Court in Misc.
Application No. 112 of
B
1963.
S. T. Desai, G. L. Sanghi, B. Datta and 0. C. Mathur, for the
appellant.
R. M. Ha:amavis, S. P: Nayar, and R. H. Dhebar, for the
respondent;.
The Judgment of the Court was delivered by
Bhargava, J.
The Swastik Oil Mills Ltd., appellant, carries
on business of manufacturing vegetable oils, soaps
and
other
product. and selling them in India as well as exporting them outside India.
Jt was registered as a dealer under the various SaJe,
Tax Acts in force in Bombay.
The first of these Acts was the
Bombay Sales Tax Act 5 of i 946, which was replaced by th .·
Bombay Sales Tax Act 3 of 1953.
The third and the latest Act
now in force in Bombay is the Bombay Sales Tax Act 51 of 1959.
The appellant was assessed to sales tax on its turnover for the
periods from 1st April, 1948 to 31st March, 1950, and from ls1
April, 1950 to 31st March, 1951 on the basis of Relums of turnover submined by it.
In these Returns, the appellant claimed
exemption from tax in respect
of the
turnover
reprcsentin~
the despatches or. transfer of goods from its Head Office Bombay.
to its various Depots or Branches in o•her Stales in India, and
also exemption in respect of sales which were allcccd
to have
taken place in the course of inter-State trade after 26th January.
1950.
The Sales Tax Officer in his order of assessment dated
2nd January, 1954 rejected both these claims.
The appellant
went up in appeal before the Assistant Collector of Sales Tax.
who, in his appellate order dated 29th October. 1956, accepted
the claim of the appellant in respect of the despatches to its various
Depots or Branches in other States in India, but disallowed the
claim in respect of the alleged inter-State sales.
As a result of
partially allowing the claim of the appellant, the Assistant Collector
reduced the tax imposed by a sum of·Rs. 19,240-15-6 for the period
between 1st Aoril, 1948 to 31st March, 1950. and Rs. 97,208/-
for the second period between 1st April, 1950 to 31st March.
195 I. and directed refund of these amounts to the appellant. The
revisions filed by the appellant against the rejection of its claim
in respect- of inter-State sales were still pending,
when. on 7th
· January, 1963, a notice was iSllued by the Deputy Commissioner
of Sales Tax, ~ombay City Division, in Form XXIV under
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SWAST!K OIL MILLS 1'. COMMR. s. TAX (Bhargava, J.)
495
section 31 of the Bombay Sales Tax Act, 1953, intimating the
appellant that he proposed to revise suo motu the appellate orders
passed by the Assistant Collector of Sales Tax insofar as he had
allowed deduction in respect of the entire goods despatched to
its Branches in other States outside Maharashtra, because, in so
doing, he had overlooked the provisions contained in proviso (b)
to sub-clause (ii) of Rule 1 under sub-section (3) of section 6
of the Bombay Sales Tax Act, 1946 as amended by the Bombay
Sales 'T'ax Amendment Act 48 of 1949.
On receipt of this notice,
the appellant put in appearance before the Deputy Commissioner,
who is the respop.dent in this appeal, and raised several objections against the proposed revisional proceedings, making a request
that the proceedings be dropped:
Since the respondent did not
accept this request, the appellant filed a petition under Article 226
of the Constitution in the High Court of Bombay challenging the
notice dated 7th January, 1963, with the prayer that the notice be
quashed and the respondent be restrained from taking any action
against the appellant in pursuance thereof.
The petition was
<lismissed by the High Court and, now, on certificate granted by
that Cou(t, the appellant has come up
in this appeal to this
Court.
In this appeal, Mr. S. T. Desai, appearing on behalf of the
appellant, urged the same objections against the notice which were
the basis of the prayer for writ in the High Court, and we proceed
to deal with them in the order in which he has put them forward
before us in his submissions.
The first point urged by learned
counsel was that, in exercise of the revisional powers, the Deputy
Commissioner of Sales Tax, whether acting under the Sales Tax
Act of 1946, or of 1953, or of 1959, could only proceed to take
action on the basis of the material" already present on the record
and was not entitled to act on conjecture or to institute any enquiry so as to include additional material in order to .ii:dge ·the
correctness of the order sought to be revised.
In support of this
proposition, learned counsel referred us to a decision of the
Andhra Pradesh High Court in State of Andhra Pradesh v. T. G.
Lakshmaiah Setty & Sons.(').
In that case, the Deputy Commissioner, in exercising the revisional jurisdiction, . was found by
the High Court to have based his assessment on guess-work, and
the Court held that "this conjecture could not be a justification
for seeking to revise the order of the .assessing authority. If the
Deputy Commissioner could, on the material· before him, find data
for revising the assessment, it was open to him to do so.
It must
be made clear that he has no jurisdiction to tra\,'el · beyond the
record that is available to the assessing authority and the basis
should be found on the record already in existence."
We are
unable to accept this principle laid down by that High Court as
(I) 12 S.T.C. 66!.
SUPREME COURT REPORTS
(1968] 2 S.C.R.
correct.
Whenever a power is conferred on an authority to revise an order, the authority is entitled to examine the cclrrectness,
Jegaiity and propriety of the order and to pass such suitable orders
as the authority may think fit in the circumstances of the particular
ca<c before it.
When exercising such powers. there is no reason
why the authority should not be entitled to hold an enquiry or
1.lircct an enquiry to be held and, for that purpose, admit additional material.
The proceedings for revision, if started s1w motu,
must not, of course, be based on a mere conjecture and there
should be some ground for invoking the revisional powers. Once
those powers are invoked, the actual interference must be basllCI
on sufficient grounds and, if it is considered necessary that some
'1d<.litional enquiry should be made to arrive at a proper and just
decision. there can be no bar to the revising authority holdinj!
a further enquiry or directing such an enquiry to be held by
some other appropriate authority.
This principle has been clearly
recognised by this Court in The State of Kera/a v. K. M. Cheria
Abdulla and Company(').
In that case. sub-section (2) of s. 12
of the Mauras General Sales Tax Act, .1939, which came up for
interpretation, empowered the Deputy Commissioner, suo mollt
or under certain circumstances on an application, to call for and
examine the record of any order pussed or proceeding recorded
under the provisions of that 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 to
pass such order with
respect thereto
as he thought fit.
This
Court held:-
"There is no doubt that the revising authority may
only call for the record of the order or the proceeding,
and the record alone may be scrutinised for ascertaining
the legality or propriety of an order or regularity of
the proceeding.
But there is nothing in the Act that
for passing an order in exercise of his revisional jurisdiction. if the revising authority is satisfied that the subordinate officer has committed an illegality or i..'llpropriety in the order or irregularity in the proceeding, he
cannot make or direct any further enquiry."
It wa.' further held :-
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"It is, therefore, not right baldly to propound that,
in passing an order in the exercise of his
revisional
jurisdiction, the Deputy Commissioner must, in all
cases, be restricted to the record maintained by the
officer subordinate to him, and can never make enquiry
H
outside that record."
(I) (l965) IS C.R. 6·'11.
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SWAST!K OIL MILLS v. COMMR. s. TAX (Bhargava, J.)
497
While thus explaining the scope of the revisional power, the Court
also indicated the limitations within which such power can be
exercised, holding :-
"It would not invest the revising authority with
power to launch upon enquiries at large so as either to
trench upon the powers which are expressly reserved
by the Act or by the Rules to other authorities or to
ignore the limitations inherent in the exercise of those
powers.
For instance,
the power to reassess escaped
turnover is primarily vested by rule 17 in the assessing
officer and is to be exercised subject to certain limitations, and the revising authority will not be competent to
make an enquiry for reasssssing a taxpayer.
Similarly,
the power to make a best judgment assessment is vested
by section 9(2) (b) in the assessing authority and has
to be exercised in the manner provided. It would not
be open to the revising authority to assume that power."
(p. 887).
In the present case, the notice issued by the Deputy Commissioner of Sales Tax, on the face of it, discloses the reasons which
led him to take proceedings for exercising his revisional powers
suo motu, and it cannot be said on those facts that he was acting
merely on conjecture.
The Deputy Commissioner has not yet
proceeded further under the notice to make the assessment.
We
have no doubt that. when the Deputy Commissioner does make
an enquiry, if any, for the purpose of exercising his
revisional
powers, he will keep within the limitations indicated by this Court
in the case cited above.
The notice cannot be quashed or the
proceedings restrained merely on the ground that the Deputy
Commissioner may have to hold some enquirfus in order to properly exercise his revisional jurisdiction.
Mr. Desai on behalf of
the appellant emphasised the circurnstance, that ins. 12(2) of the
Madras General Sales Tax Act, which was considered by this
Court, the Deputy Commissioner's power was expressed by stating
that he may pass such order as he thinks fit, while no such words
occur in the corresponding provisions in the Bombay Sales Tax
Acts with which we are cbncerned, but we do not think that this
circumstance makes any difference.
A revising authority necessarily has the power to make such order as, in the opinion of that
authority, the case calls for when the authority is satisfied that it
is an appropriate case for interference in exercise of revisional
powers.
In fact, in s. 12(2) of the Madras General Sales Tax
Act, the Deputy Commissioner, when exercising his powers, was
to call for the record of the order or proceeding ·before passing
any order which he thought fit, so that there was an expression
used which could have been interpreted as limiting his powers to
the examination of the record only without holding any further
•
498
SUPREME COURT REPORTS
[I 968] 2 S.CR.
enquiry, and, yet, tbs Court held that the Deputy Commissioner
could not be restricted to the record and was empowered to make
an enquiry outside that record. In the provisions relating to revisions in the three Bombay Sales Tax Acts, there arc no such words
indicating any limitation; and that would be an additional reason
for holding that there can be no bar to an appropriate enquiry
being held by the Deputy Commissioner when seeking to cxerci5e
his revisional powers s110 motu.
The next point urged by learned counsel was that the notice
in question was issued on the 7tll January, 1963, when the Act of
1959 had already come into force and the Act of 1953 had been
repealed, so that if any revisional jurisdiction could be exercised
by the Deputy Commissioner, it could only be under the Act of
1959 and not under the Act of 1953. On this basis, advantage
was sought to be taken of the circumstance that, umler :he Act of
1959, the revisional powers conferred by s. 57 can be exercised
within five years from the date of the order sought 10 be revised
and, at the relevant time in 1963, could only be. exercised within
two years from the date of that order. · The order sought to be
revised was passed on 29th October, 1956, so that the notice to
exercise revisional powers was being issued more than 6 years
after that order had been passed.
It appears to us that this submission is adequately met by the provisions contained in s. 77 of
the Act' of 1959.
The Act of 1953 was repealed by s. 76 of the
Act of 1959 and then s. 77 lays down :
"(!) Notwithstanding the repeal by s. 76 of any of
the laws referred to therein,-
( a) those laws (including any earlier law continued
in force under any provisions thereof), and all rules,
regulations, orders,
notifications, fonns
and
notices
issued under those laws and in force immediately b~
fore the appointed day shall, subject to the provisions
of s. 42 continue to have effect for the purposes of the
levy, assessment, reassessment, collection, refund . or
set-off of any tax, or the granting of a draw-back in
respect thereof, or the imposition of any penalty, which
levy, .isscssment. reassessment, collection, refund, setoff, draw-back or penalty relates to any period before
the .ippointed day, ·or for any other purpose whatsoever
connected with or incidental to any of the purposes
nforesaid;
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SWASTIK OIL MILLS V. COMMR. s. TAX (Bhargava, J.) 499
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( 3) Without prejudice to the provisions coutained
in the foregoing ·sub-sections and section thereto, section 7 of the Bombay General Clauses Act, 1904, shall
apply in relation to the repeal of any of the laws referred to in section 7 6 as if the law so repealed had been
an enactment within the meaning of section 7 oE that
B
Act."
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(We have only quoted the portions of s. 77 with which we are
concerned) .
The effect.of s. 77(1)(a) is to continue in force the Bombay
Sales Tax Act of 1953 as well as the Bombay Sales Tax Act of
1946 to the extent to which they were in force when this Act of
1959 came into force for the purposes mentioned in that clause.
These purposes included levy, assessment, reassessment and collection of sales-tax, so that the proceedings ·against the appellant.
which had been initiated under the Act of 1946, continued to be
governed by the provisions of that Act.
Section 7 of the Bombay
General Clauses Act I of 1904, which was made applicable by
s. 77(3) to the repeal of the Act of 1953, includes the folloWin.~
provisions:-
"Where this Act, or any Bombay Act,
or Maharashtra Act, made after the commencement of lhis Act,
repeals any enactment hitherto made or hereafter to be
made, then, unless a different intention appears, the
repeal shall not-
( c) affect any right, privilege, obligation or liability
acquired, accrued or incurred under any enactment so
repealed; or
( e) affect any investigation,
legal proceeding or
remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture
or punishment
as
aforesaid, and any such investigation, legal proceeding
or remedy may be instituted, continued or enforced, and
any such penalcy, forfeiture or punishment may be
imposed, as if the repealing Act had not been passed."
Very clearly, the repeal of the Act of 1953 by the Act of 1959
did not affect the rights and liabilities of the assessee to tax under
the Act of 19$3 or the Act of t 946 in respect of the turnover
which became ·liable to sales-tax under the Act of 1946.
The
effect of clause ( e) of s. 7 of the Bombay General Clauses Act
500
SUPREME COURT REJ>ORT5
[ 196~] 2 S.C.R.
further is that any legal proceeding in respect of levy, imposition
or recovery of that tax is to continue and any fresh investigation.
legal proceeding or remedy could be instituted as if there had
been no repeal by the Act of 1959. Consequently, the repeal of
1he Act of 1953 did not in any way affect the power of the Deputy
Commissioner to institute proceedings
for
revision suo motu
against the appellate ord~r of the Assistant Collector which had
been passed in exercise of his powers under the Act of 1946.
It
is true. as urged by Mr. Desai in the alternative, that, in fact, the
proceedings should have been taken not under s. 31 of the Act
of 1953, but under s. 22 of the Act of 1946.
This is so. because
when the Act of 1946 was repealed by the Act of 1953, similar
provisions were made in the Act of 1953 to continue in force the
provisions of the Act of 1946 in respect of rights and liabilities
which may have accrued or have been incurred under the Act of
1946.
Section 48 (2) and s. 49 (I) clearly contained provisions
indicating that, in respect of a liability to tax under the Act of
1946, the rights and liabilities of the asscssee had to be determined
in accordance with the provisions of the Act of 1946 and all legal
proceedings or remedies in respect thereof had also to be taken
under the same Act.
Consequen!ly, the Deputy Commissioner.
in seeking to exercise revisional powers aj!ainst the order of the
Assistant Collector passed und. • the Act of 1946, had to proceed
under s. 22 of the
Act of 1946.
That, however, is not at all
111aterial, because the provisions of s. ~2 of the Act of 1946 arc
quite similar to those of s. 3.1 of the Act of 1953.
The mere
inco·rect mention of s. 31 of the Act of I 953 in the notice is
immaterial.
The Deputy Commissioner has the jurisdiction and
power to revise the order under ~. 22 of the Act of 1946 and.
consequently. the proceedings initiated by him arc not without
jurisdiction.
The last submission made by Mr. Desai was that, if it be held
1hat the revisional powers arc sought to be exercised under the
Act of 1946, it should be held that the proceedings sought to be
instituted are harred by time, because limitation of a reasonable
t imc, within which the rcvisional powers are to be exercised, must
be implied in the statute itself.
Section 22 of the Act of 1946
and s. 31 of the Act of 1953 do not Jav down any limitation for
exercise of the power of revision by a Deputy Commissioner suo
moru, and we are not prepared to accept that any such limitation
must be necessarily read in the two Acts.
In support of his oroposition that such a limitation must he read by us, Mr. Desai
referred to the decision of this Court in
the State of Orissa v.
Debaki Debi a11d Others(').
That case, however, has no releYancc at all. because. in the Orissa Sales Tax Act. there was a
proviso in general terms laying down that no order "assessing the
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amount of tax shall be passed after the lapse of 36 mo~f:bs from
the expiry of the period", and it was held th~t th1.s pro~1s101;1 was.
in substance, not a real proviso to the section m which 1t was
placed but was in fact, a period of limitation prescribed for all
orders' of assess:Uent m'ade under any other' provision of the Act.
In the Bombay Sales Tax Acts of 1946 and 1953, there is no such
general provision prescribing a period of limitation for making an
assessment and, even though the effect of the order of the Dy.
Comin.issioner passed in revision may be to bring about an assessment to tax of turnover which was set aside by the Assistant Collector in appeal, such an assessment· does hot come under any
provision relating to limitation.
· The decision of the Bombay High Court in Commissio"er of
Income-tax, Bombay City I v. Nar~ee Nagsee & Co.(') is also
similarly inapplicable.
In that case, section 11 of the Business
Profits Tax Act, 194 7, which had no limitation prescribed for an
order of assessment, was held to be governed
by the 4 years'
period of limitation which was prescribed under s. 14 for issue
of a notice for reassessment.
The decision in that case turned
on the fact that, if" proceeding for reassessment could not. be started after the expiry of four years from the end of the chargeable
accounting period concerned, it would be totally unreasonable to
hold that the first assessment of tax can be made after the expiry
of that period.
The case before us relates to exercise of revisional
powers and does not deal with the question of the first assessment
to be made when the Return is initially filed by an assessee.
In
fact, when a revisional power is to be exercised, we think that the
only limitations, to which that power is subject, are those indicated
by this Court in K. M. Cheria Abdulla & Co's(') case. These limitations are that the revising authority should not trench upon the
powers which are expressly reserved by the Acts or by the Rules
to other authority and should not ignore the limitations inherent
in the exercise of those powers.
Jn the present case, the Deputy
Commissioner, when seeking to exercise his revisional powers, is
clearly not encroaching upon the powers reserved to other authorities.
Under the Act of 1946, the first assessment is made by
the Sales-Tax Officer under s. 11. If information comes into his
possession that any turnover in respect of sales or supplies of any
goods chargeable to tax has escaped assessment in any year or
has been under-assessed or assessed at a lower rate or any deductions have been wrongly made therefrom, proceedings
can be
taken afresh under s. 1 lA. On the face. of it, if a first assessment
order is made under s. 11· and any turnover escapes assessment,
the appropriate provision, under which action is to be taken for
H
· assessing that turnover to tax, is s. 1 lA. There is, however, no
provision. under which the power now sought to be exercised by
(I) 31I.T.R.164:
(2) [1965] 1 S.C.R. 601.
502
SUPREME COURT REPORTS
[I %8] 2 S.C.R
the Deputy Commissioner in the case before .us could have been
exercised by any other authority.
In this case, as we have indicated earlier. the first assessment of tax was made by the Sale.s
Tax Officer, and the turnover now in question was assessed to tax
by him.
Having once assessed that turnover to tax, he could
not initiate a fresh proceeding in respect of it under s. I IA. The
assessment made by him was set aside in appeal by the Assistant
Collector and it is this order of the Assistant Collector which is
sought to be revised by the Deputy Commissioner.
This is,
therefore, not a case where the powers are being exercised for the
purpose of asse.ssing or reassessing
an escaped turnover.
The
case is one where the revisional powers are sought to be exercised
to correct what appears to be a., incorrect order passed in appeal
by the Assistant Collector, and, for such a purpose, proceedings
could not possibly have beeri taken under s. I IA.
In exercisin)!
his revisional powers. therefore. the Deputy Commissioner is not
encroaching upon the jurisdiction of any other authority specially
entrusted with taking such. proceedings.
In this connection, Mr. Desai relied on a decision
of
the
Bombay High Court in Manordas Ka/idas v. V. V. Tatke('). The
decision in that case also related to this very Act of 1946, but the
point to be kept in view is that in that case, the revisional power
was sought to be exercised in respect of the original assessment
order passed by the Sales Tax Officer under s. 11 of the Act. It
was in these circumstances that the Bombay High Court,
after
referring to its two decisions in Bisesar House v. State <>f Bombay('), and Commr. of Income-tax v. Narsee Navec & Co.(')
held:-
"In neither of those two cases, revisional powers were
sought to be exercised, but the principle of those case>o
must, in our judgment, apply for the same reasons to
the exercise of revisional jurisdiction, and that jurisdiction must be exercised within a reasonable period, and
the yard-stick of reasonableness will
be
the period
prescribed for re-assessment."
It appears that. in view of the fact that proceedings for re-~
ment could have been taken under s. 11 A .in that case and, instead.
revisional powers were sought to be exercised, that Court held
that the exercise of such revisional powers must be J!Ovemcd hy
the same limitation which applied to the exercise of power of reassessment.
Jn fact, the correct principle that should have been
applied in that case is the principle mentioned by us earlier laid
down in K. M. Cheria Abdulla & Co.('). The revision should
have been held to be incomretent on the ground that the power
(I) 11 S.T.C. 87.
(J) 31 l.T.R. 16~.
(2) 9 S.T.C. 654.
(4) 1196~) 1 S.C.R. Ml.
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was sought to be exercised for assessment of escaped wmover
which had not 'been assessed at all at the initial stage of assessment under s. 11 and proceedings under s. l lA could have been
competently initiated for br!nging that turnover to tax. Instead,
the Court eqpated the proceeding in revision with the proceeding
for reassessment and applied the 4-year period of limitation which
was prescribed only for reassessment and not for exercise of revisional power.
In our opinion, the ultimate decision in that case
was perfectly correct, but we are unable to affirm the view that
1he revisional power is governed by any period of limitation laid
down in s. 1 lA for proceedings for re-assessment of escaped turnover.
Reference, in this connection, was also made to a decision of
this Court in Maharaj Kumar Kamal Singh v. Commissioner of
Income-tax, Bihar and Orissa('), in which the Court dealt with
a case of an assessee whose income to the extent of Rs. 93,604/-
representing interest on arrears of rent was omitted to be brought
to assessment by the Income-tax Officer. Subsequently, in another
case, the Privy Council held that interest on arrears of rent payable in respect of agricultural land was not agricultural income
and, consequently. the Income-tax Officer initiated reassessment
proceedings under s. 34(1 )(b) of the Income-tax Act. The drcumstance relied upon by learned counsel for the appellant was
that the omission by the Income-tax Officer to bring to assessment
that interest was patt of an order made 'by him after his initial
assessment order had been set aside by the Appellate Assistant
Commissioner who directed a fresh assessment, allowing the appeal
against that order.
In that case, it was held that the escaped
income could be brought to tax under s. 34 ·of the Income Tax
Act; and, on the basis of this decision, it was urged that, similarly,
in the present case,· the turnover now sought to be brought to
tax in exercise of revisional powers could be re-assessed under
s. l lA. This argument ignores the circumstance that, in that'
case, the last order, under which the income from interest had
been exempted from tax, was an order made by the Income Tax
Officer himself, though after the assessment proceedings had been
remanded to him by the Appellate Assistant Commissioner. Since
the income had escaped assessment under an order passed by the
I,ncome-tax Officer himself, he could competently take proceedings
under section 34.
In the case before us, the t11rnover of the
assessee now sought to be taxed in the revislonal proceedings did
not escape lia'bility to tax under the orders of the Sales-tax Officer
~nd, on the other hand. was actually taxed by him, which imposition of tax was sc;t aside in appeal.
Consequently, the Sales Tax
Officer could not possibly take proceedings under s. 11 A in respect of that turnover.
II) 351.T.R: I.
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SUPREME COURT REPORTS
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For these reasons, we hold that the proceedings initiated by
the Deputy Commissioner of Sales Tax against the appellant are
not incompetent and the High Court was right in refusing the writ
sought by the appellant.
The appeal fails and is dismissed with
costs.
R.K.P.S.
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