Andhra HC (Pre-Telangana)
Kanakadurga Binny Rice Mill, Rajampet, ... vs State Of Andhra Pradesh, Hyderabad on 24 June, 1998
Equivalent citations: 1998(4)ALD523, 1998(4)ALT641
Author: Y.V. Narayana
Bench: Y.V. Narayana
ORDER Motilal B. Naik, J.
1. This Special Appeal is filed by the assessee against the order of the Commissioner of Commercial Taxes dated 8-4-1996 in CCT's Rcf.
No.L.III(3)/878/93, which was received by the assessee on 17-5-1996.
2. The grievance of the assessee seems to be that for the assessment year 1989-90 the Assessing Authority i.e.. Commercial Tax Officer, Narasampet, completed assessment levying 2% tax on the purchase value of paddy in terms of G.O.Ms.No.606 dated 9-4-1981. The assessee is a rice mill and it is located in the scheduled area of Warangal District. According to the assessee, levying of 2% taxes on the purchase value of paddy is improper and it is entitled to certain benefits given to such type of assessees in the scheduled areas.
3. Aggrieved by the said assessment order, the matter was carried in appeal under Section 19 of the Andhra Pradesh General Sales Tax Act, 1957 (for short 'the Act') before the Appellate Deputy Commissioner, Warangal on the ground that the relevant G.Os., i.e., G.O.Ms.No.224 dated 9-3-1976, G.O.Ms.No.201 dated 7-12-1976 and G.O.Ms.No,106 dated 8-3-1976, were not considered by the assessing authority and, as such, it is not liable to pay 2% tax on the purchase value of the paddy. The learned Appellate Deputy Commissioner after considering all the relevant G.Os., and placing reliance on the earlier order passed by the Commissioner of Commercial Taxes in the case of M/s. Balaji Boiled Rice Mill, Sudimall, Warangal district, dated 10-5-1991 observed that no tax is payable by the assessee on the purchase turnover of paddy and remanded the matter to the assessing authority for consideration and passing orders afresh.
Consequent upon the direction given by the Appellate Deputy Commissioner in the appeal, the assessing authority passed orders giving effect to the appellate order exempting the turnover relating to purchase of paddy and the tax paid by the assessee pursuant to the original assessment was refunded. However, the Commissioner of Commercial Taxes by virtue of the revisional powers conferred on him under Section 20(1) of the Act suo molu revised and set aside the order passed by the Appellate Deputy Commissioner and restored the order passed by the assessing authority dated 28-3-1991 through the impugned order dated 8-4-1996. This is the order which is assailed before us in this Special Appeal on various grounds.
4. Though there are as many as six grounds urged in the appeal filed by the assessee, Dr. M.V.K. Murthy, learned Counsel for the assessee (appellant) mainly concentrated his energies on the following propositions :
(1) Whether a second revision is permissible ?
(2) Whether the impugned order is barred by limitation ? and (3) Whether revisional jurisdiction is available to the Commissioner on the order passed by the Appellate Deputy Commissioner ?
5. It is submitted by Dr. M.V.K. Murthy, learned Counsel for the assessee that the Additional Commissioner of Commercial Taxes had taken note of the order passed by the Appellate Deputy Commissioner while exercising powers under Section 20(2) of the Act, which confers such powers on him to revise the assessment made by the assessing authority if it is in his opinion that, as a result of the order of the Appellate Deputy Commissioner, the Department has suffered loss of revenue. The learned Counsel for the assessee contended that through the order dated 5-12-1995 the Additional Commissioner of Commercial Taxes has opined that the Department has not suffered any revenue loss as a result of the order passed by the Appellate Deputy Commissioner and, as such, dropped the proceedings without making further enquiry as required under Section 20 of the Act. It is thus contended that though the Additional Commissioner of Commercial Taxes had already exercised his power under Section 20(2) of the Act and dropped further enquiry, the Commissioner of Commercial Taxes again invoked the powers under Section 20(1) of the Act and passed the impugned order and that, therefore, it amounts to exercising the powers second time, which is impermissible in law. The learned Counsel contended that the second order passed by the Commissioner of Commercial Taxes on 8-4-1996 is a second revision, and such situation is not contemplated in the Act, and that, therefore, the order passed by the Commissioner of Commercial Taxes on 8-4-1996 has to be set aside. According to the learned Counsel, as provided under Section 20(3) of the Act, the orders of the subordinate authorities could be revised by the higher authorities; but such revision should be completed within a period of four years from the date of passing of the assessment order by the lower authority. According to the learned Counsel, the assessing authority passed the assessment order for the assessment year 1989-90 on 28-3-1991 and the Appellate Deputy Commissioner of Commercial Taxes on appeal passed an order on 10-4-1992. When the order passed by the Appellate Deputy Commissioner dated 10-4-1992, which was served on the assessee on the same day, is sought to be revised as per Section 20 of the Act, the period of limitation is only four years, that is to say, the order on revision by the higher authority shall be passed on or before 10-4-1992 and a copy of such order shall also be served on the assessee on or before the said date. According to the learned Counsel, the order of the Appellate Deputy Commissioner is dated 10-4-1992, which was served on the assessee on the same day, and the impugned order of the Commissioner of Commercial Taxes is dated 84-1996, but it was transmitted to the assessing authority on 13-5-1996 and was served on the asscssee on 17-5-1996 and, therefore, service of the impugned order on the assessee is beyond the period of limitation and in such circumstances the Department is not entitled to enforce the order passed by the Commissioner. It is further contended by the learned Counsel for the asscssee that though revision is provided under Section 20 of the Act, wherever the higher authorities satisfy that the order passed by the lower authority is prejudicial to the interest of the Department, but from the order passed by the Appellate Deputy Commissioner no prejudice is caused to the Department and, as such, the Commissioner of Commercial Taxes has exercised improper jurisdiction under Section 20(1) of the Act and pleaded that the exercise of power shall be held to be an improper exercise of jurisdiction. In support of his various contentions, the learned Counsel for the assessee has taken us through the decisions of the Supreme Court reported in State of Andhra Pradesh v. Ramakishtaiah and Co., (1994) 93 STC 406 and C1T v. Electro House, (1971) 82 STC 824 and the decisions of this Court in State of A.P. v. Toshiba Anand Batteries Ltd, (1995) 96 STC 664 and State of A.P. v. Business Forms Ltd, (1994) 19 APSTJ 22.
6. The learned Special Government Pleader for Taxes on the contrary justified the efforts made by the Commissioner of Commercial Taxes contending that the impugned order is proper and is in accordance with law and according to the settled propositions laid down by various Courts. While meeting the submission of learned Counsel for the assessee on the question of second revision, the learned Special Government Pleader contended that as is clear from the impugned order, the Commissioner of Commercial Taxes did not find any such order passed by the Additional Commissioner on the earlier occasion i.e., on 5-8-1995. Nevertheless it is contended by the learned Special Government Pleader that the letter addressed by the Department is only an administrative letter giving information to the concerned officers as to the returning of files relating to the assessee for various years. The learned Special Government Pleader pointed out to us while referring to the said letter that basing on the internal correspondence of various authorities, the assessee has tried to build the case finding few words here and there and contended that the Additional Commissioner of Commercial Taxes has not exercised powers under Section 20(2) of the Act and has not dropped the proceedings and the present attempt on the part of the assessee is not justifiable inasmuch as the letter only discloses the forwarding of the files. The learned Special Government Pleader also drawn our attention to para 3 at page 4 of the impugned order and contended that the finding of fact recorded by the Commissioner of Commercial Taxes in para 3 at page 4 of the impugned order fairly discloses that there was no order passed by the Additional Commissioner of Commercial Taxes as alleged by the Counsel for the assessce. The learned Special Government Pleader while meeting the submissions of the learned Counsel for the assessee on the question of limitation contended that as provided under Section 20(3) of the Act the Commissioner of Commercial Taxes has to exercise his powers, if in his opinion that the order passed by the lower authority is prejudicial to the interest of the Department, and pass orders within a period of four years from the date on which the order was served on the assessee. Thus contending, the learned Special Government Pleader stated that the Appellate Deputy Commissioner passed the order on 10-4-1992, which was served on the assessee on the same day, and the Commissioner, while exercising his revisional powers under Section 20(1) of the Act, passed the order on 8-4-1996 and a copy of the said order was served on the assessee through the assessing authority on 17-5-1996. The learned Special Government Pleader stated that either under the provision of Section 20(3) of the Act or in the decisions cited by the learned Counsel for the assessee on this point, it is not a requirement that the revisional authority (Commissioner) shall complete the entire exercise of passing the order and serving a copy of the same on the assessee within four years. It is thus contended that when the order of the Appellate Deputy Commissioner dated 10-4-1992, which was served on the assessee on the very same day, was revised by the Commissioner of Commercial Taxes on 8-4-1996, which is within the permissible time and there is no reason to hold that the order passed by the Commissioner of Commercial Taxes while exercising powers under Section 20(1) of the Act is hit by limitation. It is further contended by the learned Special Government Pleader that the Commissioner of Commercial Taxes is entitled to exercise revisional jurisdiction available to him wherever it is noticed that the order of the lower authority is prejudicial to the interest of the revenue. The learned Special Government Pleader contended that the assessing authority had levied 2% tax on the purchase value of the paddy in terms of G.O.Ms.No.606 dated 9-4-1981 for the assessment year 1989-90, which action is according to existing norms as on that date. Later on, when an anomaly was brought to the notice of the Government on the question of conferring certain benefits under various G.Os., the Government had clarified the position through Memo No.2533/S.I./82-3 dated 8-4-1983 to the effect that the paddy dealers are not entitled to claim exemption on 2% tax on the purchase value of paddy. The learned Special Government Pleader pointed out that despite the clarification issued by the Government through Memo dated 8-4-1983, the Appellate Deputy Commissioner erroneously directed the assessing authority through proceedings dated 10-4-1992 to grant the benefit of tax to the assessee as was given to M/s. Balaji Boiled Rice Mill, Sudimall, Khammam district. The learned Special Government Pleader contended that when the Commissioner of Commercial Taxes came to know about the anomalies, as pointed out by the Audit party in the report, exercised powers under Section 20(1) of the Act, while issuing a show-cause notice calling for explanation and provided an opportunity of hearing to assessee, and passed the impugned order according to law. The learned Special Government Pleader contended that as the order of the Appellate Deputy Commissioner is prejudicial to the interest of the revenue, the Commissioner of Commercial Taxes, who is competent to exercise his revisional jurisdiction, passed the order in question.
7. We have heard both the Counsel at length and given our anxious consideration to the various contentions raised by both the Counsel. In the light of the respective contentions advanced by both the Counsel, it has to be examined whether the order passed by the Commissioner of Commercial Taxes on 8-4-1996 is a second revision; whether the impugned order is barred by limitation; and whether the Commissioner of Commercial Taxes is justified in exercising his revisional powers on the order passed by the Appellate Deputy Commissioner.
8. It is strenuously contended by Dr.M.V.K. Murthy, learned Counsel for the assessee, that when the Additional Commissioner had exercised powers under Section 20(1) of the Act and satisfied that the order passed by the Appellate Deputy Commissioner is not prejudicial to the interest of the revenue and dropped the proceedings by order dated 5-12-1995, it is not open to the Commissioner of Commercial Taxes to again exercise powers under Section 20(1) of the Act and revise the order passed by the Appellate Deputy Commissioner. The learned Counsel based his submissions on the basis of the note filed proceedings and also the covering letter dated 5-12-1995 addressed by the Department to the Appellate Deputy Commissioner, Waangal Division.
9. In view of the rival contentions advanced by both the Counsel, we have perused the original records placed before us. We have also scrutinized the said records. We have also examined the finding of the Commissioner of Commercial Taxes, which is at para 3 of page 4 of the impugned order. We are afraid, the letter addressed from the office of the Commissioner of Commercial Taxes to the Appellate Deputy Commissioner on 5-12-1995 and the note file placed before us do not give us an impression to hold that the Additional Commissioner had exercised powers under Section 20(2) of the Act and dropped the proceedings. It is true that while exercising powers under Section 20 of the Act it is not necessary to issue a notice to the assessee at the threshold, but if it is in the opinion of the higher authority that the order passed by the lower authority is prejudicial to the interest of the revenue, after prima facie satisfaction, the higher authority exercising revisional jurisdiction under Section 20 of the Act is obliged to issue a notice to the affected party before passing the final orders.
10. Copies of the assessment orders passed by the lower authorities will be communicated to the higher authorities for perusal and information and when the higher authorities satisfy, prima facie, that there is no prejudice caused to the revenue, he must necessarily indicate his mind by an order that the lower authority passed the order rightly and no prejudice is caused to the revenue and no revision is needed in the said case. This is a matter of procedure and a matter of record. Having perused the record placed before us, we have not come across such a finding by the Additional Commissioner in the record nor there is any order to that effect found in the file placed before us holding that the order passed by the Appellate Deputy Commissioner is proper and is in accordance with law and needs no revision. In this context it is relevant to refer to the observation made by the Commissioner of Commercial Taxes, while passing the impugned order, which is at para 3 of page 4, which reads as follows:
"The authorised representative has also stated that the Additional Commissioner has reviewed the ADC's orders and accepted it. I do not find any such proceedings to that effect in the file....".
Thus, it is clear that there was no order passed by the Additional Commissioner of Commercial Taxes as contended by the learned Counsel for the assessee. We are, therefore, of the view that there is no order passed earlier by the Additional Commissioner of Commercial Taxes and there is only one order passed by the Commissioner of Commercial Taxes which is dated 8-4-1996. We are, therefore, not inclined to accept the contention advanced by the learned Counsel for the assessee that the order passed by the Commissioner of Commercial Taxes is a second revision.
11. Coming to the submission of the learned Counsel for the assessee that the order passed by the Commissioner of Commercial Taxes dated 8-4-1996 is belated and barred by limitation, we are afraid that this submission is also not tenable. Though the learned Counsel for the assessee has taken us through the decisions in Toshiba Anand Batteries Lid, case (supra) and Ramakishtaiah and Company's case (supra) in support of his contention that the requirement under Section 20(3) of the Act is that when a revisional authority exercised powers under sub-sections (I) and (2) of Section 20 of the Act, the said authority shall complete the entire proceedings including passing of the order and also serve a copy of the order on the assessee within four years from the date of service of the order in the revision on the assessee, we do not think that this submission is proper. The two decisions referred to by the learned Counsel for the appellant arc on the question of interpretting the provisions under Section 20(3) of the Act. In State of A.P. v. Ramakishtaiah and Co., (supra) the Supreme Court was examining the effect of service of the revisional order on the assessee after a lapse of 10 1/2 months from the date of passing of the order. In that case the revisional order was passed by the revisional authority on 16-1-1973, but it was served on the assessee on 21-11-1973, that is to say, after expiry of 10 1/2 months from the date of expiry of limitation. In that case the Supreme Court had observed that in the absence of any proper explanation by the Department on the question of serving a copy of the order passed by the revisional authority on the assessee after 10 1/2 months, it must be presumed that the order was not made on the date it purported to have been made and that it could have been made after the expiry period of four years prescribed for passing such an order in revision. While observing so, the Supreme Court set aside the order of revision under such circumstances. In State of A.I', v. Toshiba Anand Batteries Ltd. (supra) a Division Bench of this Court was also examining the implications under Section 20(3) of the Act. While following the decision of the Supreme Court in Ramakishtaiah and Company's case (supra) the Division Bench made a passing observation saying that all proceedings, including service of order on the affected party, shall be completed within the limitation period of four years provided for completing such an enquiry under Section 20(3) of the Act. Emphasis was laid by the learned Counsel on the observation made by the Division Bench in the said case. We are afraid that this observations may not lend any assistance to the assessee. As discussed above, in Ramakishtaiah and Company's case (supra) the Supreme Court while dealing with the provisions of Section 20(3) of the Act had clarified the position and set aside the order only on the ground that there was abnormal delay of 10 1/2 months in serving the order on the assessee and observed that in the absence of any proper explanation for such delay in serving the copy, the Court must presume that the order was not made on the date it purported to have been made and that it could have been made after expiry of the period of four years prescribed for passing such an order in revision. In this case the order of the Appellate Deputy Commissioner is dated 10-4-1992, which was served on the assessee on the same day. The order of the Commissioner of Commercial Taxes under Section 20(1) of the Act is dated 8-4-1996, which was served on the assessee through the assessing authority on 17-5-1995; therefore, there is a delay of about five weeks in serving the copy of the order on the assessee from the date of passing of the said order. This delay of five weeks cannot be said as an abnormal delay and it cannot be held that the proceedings are vitiated on account of belated service on the assessee. Section 20(1) of the Act empowers the Commissioner to revise the order of assessment passed by the lower authorities. However, under Section 20(3) of the Act the requirement is that such a revision shall be exercised by the Commissioner within a period not exceeding four years from the date on which the order was served on the dealer (assessee). Since the abnormal delay in completing the process would defeat the interest of the assessee, the Legislature prescribed the period of four years for completing the said process. It is nowhere found in the provision of the Act that even the service of a copy of the order be effected within the four years period. Therefore, it is sufficient if the orders are finally passed within the said period of four years and there is no illegality if the order is passed on the last date of the limitation period as contemplated under the Act. The only precaution which is required to be taken is that such an order passed by the revisional authority while exercising the powers under Section 20(1) and (2) of the Act shall be served on the affected party within a reasonable time. If the order is served within the reasonable time, it cannot be said that the order passed by the revisional authority would get vitiated. As observed by the Supreme Court in State of Andhra Pradesh v. Ramakishtaiah and Company's case (supra), in the absence of any proper explanation offered by the Department on the belated service of copy of the rcvisional order after 10 1/2 months the proceedings get vitiated. In this case, as indicated above, there was no abnormal delay and the delay is only five weeks. This delay of five weeks cannot be said to be an abnormal delay and it cannot be held that the order of revision passed by the Commissioner would get vitiated. Therefore, we reject the second submission made by the learned Counsel for the assessee with regard to the limitation.
12. Coming to the last limb of submission made on behalf of the assessee that by the order passed by the Appellate Deputy Commissioner, Warangal, dated 10-4-1992 no prejudice is caused to the revenue requiring exercise of revisional power by the Commissioner of Commercial Taxes under Section 20 of the Act, we are afraid this submission cannot be accepted. Though the learned Counsel for the assessee cited the decision of a Division Bench of this Court in State of A.P. v. Business Forms Ltd. (supra) in support of his above contention, the facts in the said decision are not akin to the facts of the present case. The revisional powers are to be exercised by the higher authority on the order passed by the lower authority if, in the opinion of the higher authority, the order passed by the lower authority is prejudicial to the interest of the revenue. In this case, no doubt, the order passed by the Appellate Deputy Commissioner is in the nature of remand, but the specific direction given by the Appellate Deputy Commissioner through his order dated 104-1992 has an element of directing the assessing authority to grant exemption to the assessee on the basis of exemption granted by the Commissioner in M/s. Balaji Boiled Rice Mill's case. It is seen that the benefits which were earlier available to the dealers were clarified by the Government through Memo dated 8-4-1983. In the light of the said Memo, the direction given by the Appellate Deputy Commissioner while remanding the matter to the assessing authority would necessarily amounts to affecting the revenue of the Department. We are, therefore, inclined to say that the revisional powers exercised by the Commissioner of Commercial Taxes is justified as, in our opinion, there is a tendency to cause loss of revenue to the Department.
13. As discussed above, the assesses has not been able to make out a case before us requiring our interference. Hence, we see no merits in the submissions made by the learned Counsel for the assessee. The Special Appeal is accordingly dismissed. No costs.