Bombay High Court
Champaklal Nanabhai vs Commissioner Of Sales Tax, Maharashtra ... on 31 January, 1995
Author: D.K. Trivedi
Bench: D.K. Trivedi
JUDGMENT Dr. B.P. Saraf, J.
1. These ten references under section 61(1) of the Bombay Sales Tax Act, 1959, arise out of a common order of the Maharashtra Sales Tax Tribunal ("the Tribunal") for ten different periods in the case of the same assessee. As the facts and circumstances and issues involved are identical, the Tribunal has drawn a common statement of the case and referred the following questions of law to this Court of opinion :
"(1) Whether, on the facts and circumstances of the case and on a true and correct interpretation of the provisions of sections 35 and 57 of the Bombay Sales Tax Act, 1959, was the Tribunal justified in law (sic. in holding) that the Assistant Commissioner (Assessment) had assumed valid jurisdiction under section 57 of the Act ?
(2) Whether, on the facts and circumstances of the case and on a true and correct interpretation of the provisions of section 57 of the Bombay Sales Tax Act, 1959, was the Tribunal justified in holding that the expression 'call for and examine the record of any order passed under this Act' appearing in section 57 of the Act includes the books of account of the dealer on the basis of which returns are filed ?"
2. The assessee carries on the business of selling and supplying kirana goods, sago, dry fruits, groundnuts, copra, etc., on wholesale basis. He is registered as a dealer under the Bombay Sales Tax Act, 1959 ("the Act") as well as the Central Sales Tax Act, 1956 ("the Central Act"). During the period November 1, 1978 to October 21, 1979, he maintained books of account, records and documents, such as cash book, ledger, sale bills, purchase bills, purchase register and furnished monthly returns of his turnover to the sales tax authorities as required under the law. He was assessed for this period by the Sales Tax Officer, Jalgaon, both under the Bombay Act and the Central Act, by his orders of assessment dated February 18, 1981. He was also assessed for the subsequent period October 22, 1979 to November 7, 1980, by orders of assessment dated September 30, 1981. Subsequently, on receipt of complaints of under-assessment by misclassification of the goods, on June 3, 1982, the Sales Tax Officer, Jalgaon, visited the assessee's place of business and took possession of all books of account of the assessee for scrutiny. On such scrutiny, he did not find misclassification of any goods in the orders of assessment for the periods November 1, 1978 to October 21, 1979 and October 22, 1979 to November 7, 1980 (corresponding to samvat year 2035 and 2036 respectively). He, however, found misclassification of the goods purchased by the assessee during the period from November 8, 1980 to June 3, 1982 (samvat years 2037 and 2038) in the accounts of the assessee. As no orders of assessment had been passed for these periods, he assessed the tax due from the assessee for the above periods in the light of his above finding by order of assessment dated November 29, 1981 and on the very same day, handed over all those books of account to the Income-tax Officer, Jalgaon.
Thereafter, on receipt of a complaint regarding under-assessment of tax for the above periods, the Assistant Commissioner of Sales Tax ("revisional authority") called for the records of all the above assessments from the Sales Tax Officer. On perusal of the same, he noticed a number of improprieties and irregularities committed by the Sales Tax Officer in making the assessment for the periods under consideration which had resulted in huge under-assessment. He, therefore, issued notice under section 57(1)(a) of the Act to the assessee to show cause as to why the assessment orders for the periods specified therein should not be revised suo motu. The improprieties and irregularities observed by the Assistant Commissioner were extensively set out in the said notice. In addition, a gist of the action proposed to be taken by him in exercise of revisional power was also furnished therein. In pursuance of the above notice, the assessee appeared before the revisional authority and objected to the very initiation of proceeding for revision. He was heard. The revisional authority, however, did not find any force in the objection of the assessee. According to him, it was a fit case for exercise of power of suo motu revision. It was observed that the records clearly showed that huge imports and purchases of goods made from unregistered dealers had not been considered by the Sales Tax Officer in determining the taxable sales and assessing the tax due from the assessee. He was of the clear opinion that glaring impropriety had been committed by the Sales Tax Officer in passing the orders of assessment for the periods in question without taking into account such imports and purchases from unregistered dealers. He also noticed mis-classification of taxable imports and purchases from unregistered dealers, which too resulted in erroneous orders being passed by the Sales Tax Officer to the prejudice of Revenue. He therefore passed revisional order under section 57(1)(a) of the Act and modified the orders of assessment passed by the Sales Tax Officer for all the periods under consideration. This resulted in an additional demand for a sum of Rs. 12,29,805 on account of tax in respect of all the periods under revision. While passing the order in the revision proceedings, the revisional authority also found that the assessee had conceded that he had failed to furnish the particulars of certain transactions and furnish inaccurate particulars of certain other transactions liable to tax. He, therefore, imposed penalty upon the assessee under section 36(2)(c) of the Act after giving the assessee an opportunity of being heard. Against the above order of the Assistant Commissioner passed under section 57(1)(a) of the Act, the assessee appealed to the Deputy Commissioner (Appeals-Mofussil), Nagpur. Before the Deputy Commissioner, the assessee challenged the initiation of revision proceedings as well as the quantum of tax assessed and the additional demand raised in consequence thereof. The Deputy Commissioner did not find any fault in the assumption of revisional jurisdiction by the Assistant Commissioner as he was satisfied that under the facts and circumstances of the case, it was a fit case for initiation of proceedings for suo motu revision under section 57(1)(a) of the Act. He however, partly accepted the grievance of the assessee in regard to the quantum of tax determined in revision proceedings and gave some relief to the assessee in that regard. Some relief was also given in respect of the amount of penalty. Consequently, the appeal was partly allowed. Not satisfied with the relief given by the Deputy Commissioner, the assessee went in further appeal to the Tribunal. Before the Tribunal, the revisional order was challenged on the ground that the initiation of proceeding for revision under section 57(1)(a) of the Act was illegal and without jurisdiction. The revisional order was also challenged on the ground that it was passed on examination not only of the returns and the assessment order, but also of the books of account and documents which did not form part of the assessment records but were called for from the assessee. Both these contentions were rejected by the Tribunal. The Tribunal held that the "record of any order" includes not only records underlying the order but also the books of account maintained by the assessee and produced before the assessing authority at the time of assessment. The Tribunal also held that no material outside the record had been taken into consideration by the revisional authority while initiating revisional proceedings under section 57(1)(a) by issue of notice in form 40. The Tribunal, therefore, dismissed the appeal of the assessee. Hence, this reference at the instance of the assessee.
3. Two questions arise for our consideration. First, whether the exercise of revisional power under section 57(1)(a) of the Act is subject to fulfilment of any conditions precedent. Second, what is the scope and ambit of the power of the revisional authority. In other words, whether the revisional authority has to confine itself to the records maintained by the assessing officer or it can also examine the books of account, documents, etc., which were produced before such authority at the time of passing the order which is sought to be revised. Some ancillary issues would also require consideration. So far as the scope, content and ambit of the revisional jurisdiction is concerned it is well-settled by the decision of the Supreme Court in Ram Kanai Jamini Ranjan Pal Pvt. Ltd. v. Member, Board of Revenue [1976] 38 STC 1, that it varies from statute to statute and it is difficult to make general observations in regard thereto. It is, therefore, necessary to peruse section 57 of the Act, which confers revisional power on the Commissioner. The material part of section 57, relevant for the present purpose, is clause (a) of sub-section (1) which reads as follows :
"57. Revision. - (1) Subject to the provisions of section 56 and to any rules which may be made in this behalf, -
(a) the Commissioner may, of his own motion, call for and examine the record of any order passed (including an order passed in appeal) under this Act or the rules made thereunder by any officer or person subordinate to him and pass such order thereon as he thinks just and proper :
Provided that no notice in the prescribed form shall be served by the Commissioner under this clause after the expiry of three years from the date of the communication of the order sought to be revised, and no order in revision shall be made by him hereunder after the expiry of five years from such date."
It is obvious from a plain reading of the above section that the power of revision conferred upon the Commissioner thereunder is very wide. Unlike revisional power under the sales tax laws of various other States as also the Income-tax Act, 1961, it is not hedged with any limitation. Under section 263 of the Income-tax Act, the Commissioner may call for the records of any proceeding under that Act and pass such order thereon as the circumstances of the case justify including those specifically set out therein, only if he considers that any order passed therein by the assessing officer "is erroneous in so far as it is prejudicial to the interests of the Revenue". In some other statutes the exercise of revisional power has been restricted to rectification of any illegality or impropriety in the order or of any irregularity in the proceedings by us of expressions "for the purpose of satisfying himself as to the legality or propriety of the order passed" or "regularity of the proceedings", etc. No such controlling or qualifying expression has been used in section 57(1)(a) of the Act. As earlier stated, section 57(1)(a) is couched in very wide terms and the power of revision conferred on the authorities thereunder is not hedged with any condition or limitation. Initiation of proceedings for suo motu revision under this section by the revisional authority, therefore, cannot be challenged on the ground of non-existence of any condition precedent. Exercise of power under this section can be challenged only on the ground that it it arbitrary or mala fide, or for extraneous consideration or with a view to making fishing enquiry in the completed assessments or proceedings without any basis or justification emanating from examination of the records of the order.
4. The next question that arises for consideration is : What is the true meaning, scope and ambit of the expression "record of any order" appearing in section 57(1)(a) of the Act. The expression "record of the order" has not been defined in the Act or the Rules made thereunder. The word "record" also, finds place in section 62 of this Act, which empowers the Commissioner to rectify, on his own motion, any mistake apparent from the record. Similar expression also appears in sections 154 and 263 of the Income-tax Act, 1961, which deal with power of rectification is mistake apparent from the record and power of suo motu revision respectively. But there also, it has not been defined. This expression has however, been interpreted by the courts from time to time and it has been held that the word "record" is a word of wide import and takes within its sweep not only the order passed or papers or materials in the file of the subordinate authority, but the entire evidence and documents which were before the subordinate authority at the time of passing the order which is subject-matter of revision. Reference may be made in this connection to a decision of the Gauhati High Court in Sri Pankaj Kumar Dasgupta v. State of Tripura [1990] 79 STC 409. In that case, dealing with the expression "record" appearing in section 12 of the Tripura Sales Tax Act which empowers the authorities specified therein to rectify any mistake apparent from the records of the case, it was held :
"..... 'record' does not mean only the order which is sought to be rectified. It comprises all proceedings on which the order in question is based. The authority concerned for the purpose of exercising the power under this section may look into the entire evidence and documents on record to ascertain whether any mistake had been committed by him in passing the impugned order. He cannot, however, go beyond the records and look into fresh evidence or material which had not been on record at the time the order was passed."
5. There is no dispute in this case about the fact that the books of account, documents, etc., which were scrutinised by the revisional authority and on the basis of which the revisional order under section 57(1)(a) has been passed, were before the assessing authority at the time of passing the order of assessment. Since they were in the custody of the assessee, the revisional authority called for the same from the assessee and it was on perusal of the transactions of import and purchases contained therein that he noticed improprieties and irregularities committed by the assessing officer in making the assessment and decided to initiate proceedings for revision of the same. We do not find any infirmity in the above action of the revisional authority, the Assistant Commissioner, because we are of the clear opinion that the expression "record of any order passed under this Act or Rules made thereunder" cannot be restricted to that part of the record of the order which is kept by the assessing officer in his custody. In our opinion, it would include the entire evidence, including books of account, bills, invoices and all other documents which were before the assessing authority at the time of passing the order which is subject-matter of revision. The revisional authority is entitled to examine all that. He, however, cannot examine any material or evidence, which was not before the assessing authority at the time when the order which is sought to be revised was passed by the assessing authority. Take, for example, a case where books of account and documents which were not available to the assessing authority at the time of assessment, but detected after completion of the same, go to show that certain turnover has escaped assessment or has been assessed at a lower rate of tax. In that case, section 35 will be attracted and not section 57. It will not be open to the Commissioner in such a case to exercise his revisional powers under section 57(1)(a) of the Act to examine the materials or evidence or documents which have come to light after completion of the assessment with a view to rectifying the order of the subordinate authority. The proper remedy available to the Revenue in such a case, might be the exercise of powers of reassessment under section 35 of the Act. But, where without taking into consideration any new material or evidence, the revisional authority finds from the "records of the order" which, as stated above, would mean and include all evidence, documents, books of account, etc., which were before the assessing officer at the time of passing of the order in question, that the said order calls for interference either because it is erroneous, improper or illegal or for any other reasons, it would be open to him to exercise powers under section 57(1)(a) of the Act and to revise the order of the subordinate authority after giving an opportunity of hearing to the assessee as contemplated under sub-section (3) thereof. There is no conflict or overlapping between section 57(1)(a) and section 35. They operate in two different situations. Section 57 deals with revision of orders passed by subordinate authority by a higher authority, whereas section 35 provides for reassessment of turnover escaping assessment, under-assessment, etc. Power under section 35 can be exercised by the assessing officer himself, whereas power of revision under section 57 can be exercised by the revisional authority, who is higher in rank than the authority whose order is sought to be revised. Obviously, these two provisions operate in two different fields and in no case, the exercise of revisional authority under section 57 of the Act can trench upon the powers of the assessing authority under section 35 of the Act. It has been made clear by the Legislature itself in the proviso to sub-section (1) and sub-sections (2) and (3) of section 35, which are in the following terms :
"35 .................
(1) .................
Provided further that, where in respect of such turnover an order has already been passed in appeal or revision under this Act the Commissioner shall make a report to the appropriate appellate or revising authority under this Act, which shall thereupon after giving the dealer concerned a reasonable opportunity of being heard, pass such order as it deems fit.
(2) Nothing in sub-section (1) shall apply to any proceeding (including any notice issued) under section 57 or 62.
(3) Nothing in section 57 or 62 shall affect a proceeding under this section."
6. Having regard to the above discussion, we are of the opinion that under the facts and circumstances of the present case, the Tribunal was justified in holding that the expression "record" appearing in section 57(1)(a) of the Act includes the books of account of the dealer on the basis of which the returns had been filed by him and assessments made by the Sales Tax Officer. We are also of the opinion that in a case like the one before us, where revisional authorities on perusal of the record of the case, including the books of account, came to a conclusion that the order passed by the subordinate authority was not in accordance with law, it is open to the revisional authority to exercise the power of suo motu revision under section 57(1)(a) of the Act. Such a case would not fall under section 35 of the Act.
7. In the premises, we answer both the questions referred to us ip1 n the affirmative and in favour of the Revenue.
In the facts and circumstances of the case, there shall be no order as to costs.
9. Reference answered in the affirmative.