Karnataka High Court
Karmadi Stone Cutting And Polishing vs Joint Commissioner Of Commercial Taxes ... on 27 November, 1987
Equivalent citations: [1988]68STC345(KAR)
ORDER S.R. Rajasekhara Murthy, J.
1. The petitioner is a registered dealer under the Karnataka Sales Tax Act ("the Act"). The assessment was completed by the Commercial Tax Officer, Hubli, accepting the returns under section 12(2) of the Act.
2. By Act No. 10 of 1983, which came into force with effect from 1st April, 1983, section 22-A of the Act was amended by conferring the power of revision on the Joint Commissioner also. The definition of "Commissioner" in section 2(g) was also amended inserting "Joint Commissioner" after the word "Commissioner".
3. A notice was issued by the Joint Commissioner, the respondent in the writ petition, in exercise of his powers conferred under section 22-A(1) of the Act read with section 9(2) of the Central Sales Tax Act proposing to set aside the assessment order dated 20th August, 1985 in the petitioner's case for the year 1981-82 and to remand the case to the Assistant Commissioner of Commercial Tax (Assessments) to make a fresh assessment in accordance with law and in the light of the notice. This notice dated 8th September, 1987, marked as annexure-A in the writ petition.
4. This notice is challenged by the petitioner on several grounds.
5. The argument of Sri B. V. Katageri, the learned counsel for the petitioner, is that the Joint Commissioner was vested with powers of revision under section 22-A with effect from 1st April, 1983 and that therefore he has no jurisdiction to interfere with any orders made prior to the said date.
6. The assessment relates to the year 1981-82 and the return was filed during the year 1982. Therefore, the authority to revise the assessment, in respect of the assessment for the year 1981-82, is the Commissioner only and not the Joint Commissioner, is the argument of Sri Katageri and that he is not competent to exercise revisional power in respect of any matter relating to the period prior to 1st April, 1983.
7. The learned counsel's argument is that the career of the case should be governed, until it is finally determined under the Act, by the law that was in force on the date of the return and the return having been filed in this case during the year 1982, only the Commissioner can exercise the power of revision and not the Joint Commissioner.
8. In support of this proposition Sri Katageri has relied upon the decision of the Supreme Court in the case of Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh and in particular at paragraph 11 of the said judgment.
9. He has also relied upon the decisions of the Supreme Court in the case of Garikapati Veeraya v. N. Subbiah Choudhry and in the case of Daulat Ram Mehnidratta v. Lt. Governor, Delhi .
10. Sri Dattu, learned Government Pleader, repelling the petitioner's argument, has relied upon the decisions of the Andhra Pradesh High Court in the case of Nevatia Private Ltd., Warangal v. State of Andhra Pradesh [1971] 28 STC 555 and of the Karnataka and Allahabad High Courts reported in the cases of Sha Vajeshankar Vasudeva and Company v. Assistant Commissioner of Commercial Taxes (Assessments), Mangalore-1 and Commissioner of Sales Tax v. Shyam Lal Dina Nath [1974] 34 STC 257 and 263 respectively.
11. Therefore, it is necessary to advert to the facts and the ratio of the Supreme Court in Hoosein Kasam Dada's case on which very strong reliance is placed by the learned counsel and few facts of that case would be relevant to notice, in order to appreciate his contention.
12. The appellant Hoosein Dada was an assessee under the C.P. and Berar Sales Tax Act. Against an order of assessment dated 8th April, 1950, the assessee filed an appeal before the Sales Tax Commissioner, Madhya Pradesh, under section 22(1) of the Central Provinces and Berar Sales Tax Act. The said appeal was not accompanied by any proof of payment of tax in respect of which the appeal had been preferred. There was an amendment to section 22 of the C.P. and Berar Act with effect from 25th November, 1949, under which a condition was imposed in section 22 which made it mandatory for any appellant to deposit the entire assessed tax along with the memorandum of appeal. The assessee's contention was that it was governed by the proviso to section 22(1) of the Act, as it stood when the assessment proceedings were started, i.e., before the amendment to the said provision, on 25th November, 1949. Being unsuccessful before the Board of Revenue, the petitioner moved the High Court of Madhya Pradesh under articles 226 and 227 of the Constitution. On the dismissal of the petition by the High Court, the matter was taken to the Supreme Court.
13. The point that was considered by the Supreme Court in the said appeal related to the right of appeal of the assessee, whether it should be governed by the law that would be applicable to the date on which the assessment was made or the amended law which came into force after the date of assessment. The amendment imposed the restriction on the assessee to deposit the disputed tax along with the appeal. It was contended on behalf of the assessee that the right of appeal of the assessee was a substantive right and that therefore the provision under which he can file an appeal would be the unamended law in that case. Upholding this contention, the Supreme Court held that the appellant's appeal could not have been rejected on the ground that it was not accompanied by proof of payment of the assessed tax and further held that the unamended law would be applicable to the assessee's case. The contention, urged on behalf of the State of M.P. that the right of appeal was a matter of procedure, was rejected. The Supreme Court in paragraph 8 of its judgment summed up the ratio as follows :
"..... a right of appeal is not merely a matter of procedure. It is a matter of substantive right. This right of appeal from the decision of an inferior tribunal to a superior tribunal becomes vested in a party when proceedings are first initiated in, and before a decision is given by, the inferior court. Such a vested right cannot be taken away except by express enactment or necessary intendment. An intention to interfere with or to impair or imperil such a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication."
14. In this view of the matter the Supreme Court allowed the assessee's appeal and directed the Commissioner to admit the appeal without insisting on any deposit. Their Lordships while discussing the reasons and the principles applicable to the facts of the case, referred to some decided cases. They are : (i) Delhi Cloth and General Mills Co. Ltd. v. Income-tax Commissioner, Delhi AIR 1927 PC 242 in which the Privy Council adopted the reason given by the Full Bench of the Lahore High Court in Kirpa Singh v. Rasalldar Ajaipal Singh AIR 1928 Lah 627 at paragraph 4.
(ii) Sardar Ali v. Dalimuddin AIR 1928 Cal 640 (FB).
(iii) Nagendra Nath Bose v. Mon Mohan Singha Roy AIR 1932 Cal 100 (FB) and decisions of other High Courts.
15. Deriving the support from the enunciation made by the several decisions referred to above, the Supreme Court has held that the right of appeal was not merely a matter of procedure but was a vested right which inhered in a party from the commencement of the action in the court of first instance and such right cannot be taken away except by an express provision or by necessary implication.
16. In Garikapati Veeraya's case , the Supreme Court was dealing with a case of a suit filed before the Constitution. The Supreme Court held that the right of appeal was not a mere matter of procedure but a substantive right. It has further held that that right of appeal was governed by law that was in existence on the date of the institution of the suit and that law was preserved to the parties thereto till the rest of the career of the suit. The Supreme Court relied upon the leading cases on the subject in Colonial Sugar Refining Company Limited v. Irving [1905] AC 369 and extracted from the judgment of the Privy Council which is again reproduced below (see at page 372) :
"As regards the general principles applicable to the case there was no controversy. On the one hand, it was not disputed that if the matter in question be a matter of procedure only, the petition is well-founded. On the other hand, if it be more than a matter of procedure, if it touches a right in existence at the passing of the Act, it was conceded that, in accordance with a long line of authorities extending from the time of Lord Coke to the present day, the appellants would be entitled to succeed. The Judiciary Act is not retrospective by express enactment or by necessary intendment. And therefore the only question is, Was the appeal to His Majesty in Council a right vested in the appellants at the date of the passing of the Act, or was it a mere matter of procedure ? It seems to their Lordships that the question does not admit of doubt. To deprive a suitor in a pending action of an appeal to a superior tribunal which belonged to him as of right is a very different thing from regulating procedure. In principle, their Lordships see no difference between abolishing an appeal altogether and transferring the appeal to a new tribunal. In either case there is an interference with existing rights contrary to the well-known general principle that statutes are not to be held to act retrospectively unless a clear intention to that effect is manifested."
17. The other decision relied upon by the learned counsel is Daulat Ram Mehnidratta v. Lt. Governor, Delhi and the particular paragraph is at 12. That was a case arising under the Delhi Co-operative Societies Act and does not bear on the point which arises in this case.
18. In support of his contention, the learned Government Pleader relied upon the decision of the Andhra Pradesh High Court in the case of Nevatia Private Ltd., Warangal v. State of Andhra Pradesh [1971] 28 STC 555. The High Court was dealing with the exercise of revisional jurisdiction under the Hyderabad General Sales Tax Act. Their Lordships held that :
"...... no person has a right to say that he shall be heard only by a particular forum, so long as his vested rights are not affected or taken away by the provisions of the new Act. As to which authority should exercise revisional jurisdiction is purely procedural and, therefore, the Deputy Commissioner, notwithstanding the fact that the assessment proceedings commenced even before the coming into force of the Andhra Pradesh General Sales Tax Act, is competent to act under section 20(2) of the Act."
19. It was further held as to which authority should exercise revisional jurisdiction is purely procedural and therefore, the Deputy Commissioner under the Andhra Pradesh General Sales Tax Act had power to exercise revisional jurisdiction in cases where the assessment proceedings had commenced under the Hyderabad General Sales Tax Act.
20. The next decision is of the Karnataka High Court in the case of Sha Vajeshankar Vasudeva and Company v. Assistant Commissioner of Commercial Taxes (Assessments), Mangalore [1974] 34 STC 257. His Lordship Venkataramiah, J. (as he then was), dealing with the power of rectification under section 25-A of the Karnataka Sales Tax Act, repelled the contention of the assessee that the order of rectification passed beyond the period of five years was not bad, on the ground that the power of rectification to be exercised under section 25-A is not lost if the notice of rectify is issued at any time before the period of 5 years had not expired and any order of rectification passed beyond that period, is not illegal.
21. The other decision relied upon by the Government Pleader is of the Allahabad High Court in the case of Commissioner of Sales Tax v. Shyam Lal Dina Nath [1974] 34 STC 263. Their Lordships were dealing with the power of revising authority under the U.P. Sales Tax Act. This decision has no direct relevance with the present case.
22. The argument of the learned counsel for the petitioner finds an answer in the very same decisions relied upon by him, namely, Hoosein Kasam Dada's case and Garikapati Veeraya's case . The ratio of the two decisions do not support the contention of the petitioner and the observations of the Supreme Court were made with reference to the right of appeal, and it was held that it is not a mere matter of procedure but it is a substantive right. Any subsequent amendment interfering with the said right of appeal, as held by the Supreme Court, impairs the vested right which was governed by the law on the date of the assessment order, in Hoosein Kasam Dada's case and on the date of institution of the suit, in Garikapati Veeraya's case .
23. Therefore, keeping in view the ratio of the Supreme Court in these two decisions, it would be for the petitioner to prove that the power of revision conferred on the Commissioner/Joint Commissioner under section 22-A is a vested right of the assessee under the Act. In my opinion, the petitioner has not succeeded in persuading me to take a view that the power of revision under section 22-A of the Act in any manner spells out or contains a vested right of the assessee.
24. From the scheme of the Karnataka Sales Tax Act and as could be seen from other fiscal statutes, who should be the authority to assess and within what time and the authorities to revise any assessment and the limitation for exercise of such power, are all matters of procedure and they constitute the machinery provisions for the purpose of administration of the Act. It would be necessary, in order to repel the contention of the learned counsel for the petitioner, to refer briefly, to the facts of the present case.
25. The assessee filed his return during the year 1982. The assessing authority who had the jurisdiction to assess the petitioner is the designated officer authorised by the Commissioner in exercise of his power under section 3-A(1) of the Karnataka Sales Tax Act. This provision must be read with rule 5 which defines the pecuniary jurisdiction of the assessing officers. If the contention of Sri Katageri is accepted, he has vested right to be assessed only by the assessing authority, who had power to assess him on the date of the filing of the returns. This runs contrary to the very scheme of the Act under which the assessment can be entrusted to such officers or class of officer depending upon the pecuniary jurisdiction or territorial jurisdiction or by any special order made by the Commissioner as is under section 3-B of the Karnataka Sales Tax Act.
26. Adverting to the provisions of section 22-A, it confers power of revision on the Commissioner or Joint Commissioner to revise any order passed by any officer under the Act, if it is found prejudicial to the interests of the Revenue. The only limitation for exercise of that power is, it shall not be exercised beyond the period of four years from the date of the order sought to be revised subject to the explanation. Therefore, the power of revision vested in the Commissioner/Joint Commissioner is a suo motu power to call for and examine the record of any proceedings under the Act and make any order and pass an order enhancing, cancelling or modifying the assessment order or direct a fresh assessment. This power cannot be equated with the right of appeal and the power of revision to be exercised by the Commissioner, much less a vested right.
27. What are the substantive rights, and what are matters of procedure and in a case of taxing statute, what are the machinery provisions which are meant to be exercised for purposes of administration of the Act, are all well-settled. Therefore, the contention of the petitioner has to be rejected as wholly unsustainable.
28. Therefore, there is no substance in any of the contentions advanced by the petitioner in the writ petition and they are liable to be rejected. It is ordered accordingly.
29. Sri Dattu, High Court Government Pleader is permitted to file his memo of appearance in two weeks.
30. Writ petition dismissed.