A. Vinayagamurthy Nadar vs Joint Commissioner-Ii (Commercial ... on 30 July, 1991

[Cites 11, Cited by 1]

Madras High Court

A. Vinayagamurthy Nadar vs Joint Commissioner-Ii (Commercial ... on 30 July, 1991

Equivalent citations: (S) :

Bench: A.S. Anand

JUDGMENT
 

 Kanakaraj, J.

1. The appellant was finally assessed on a total and taxable turnover of Rs. 57,38,454.88 and Rs. 49,03,802.48, respectively for the year 1973-74 in and by an order dated December 24, 1974. Subsequently the assessing authority found that the assessee had collected surcharge of Rs. 866 and excess tax of Rs. 575 on the sales of certain declared goods in contravention of section 22(1) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called "the Act"). Accordingly, the assessing officer by an order dated August 23, 1976, levied a penalty of Rs. 2,034 under section 22(2) of the Act being 1 1/2 times the excess collection. On appeal, the Appellate Assistant Commissioner set aside the levy of penalty. The erstwhile Board of Revenue by a notice dated December 15, 1978, invoking the power under section 34 of the Act, asked the assessee to show cause as to why the order of the Appellate Assistant Commissioner should not be set aside and as to why the order of the assessing officer should not be restored. The appellant filed his objections on February 26, 1979 and February 9, 1980. Final orders on the suo motu proceedings, however, came to be passed by the Joint Commissioner in his proceedings dated July 21, 1981, holding that the levy of penalty was perfectly justified and that the levy of penalty on the collection of surcharge was also legal as per the judgment of this Court in Tax Case No. 156 of 1980 dated February 6, 1980.

2. In challenging the order of the Joint Commissioner by way of this tax case appeal, Mr. R. Venkatraman, raises three contentions : (1) Whether the Joint Commissioner had authority and power under section 34 of the Act on the date he passed orders, namely, on July 21, 1981, inasmuch as power was conferred on the Joint Commissioner only by virtue of Tamil Nadu Act 22 of 1982. (2) The collection of tax at 3 1/2 per cent on the sales of mustard was tacitly approved by the assessing officer in his assessment order dated December 24, 1974 and, therefore, there was no case made out for levying penalty. (3) The levy of penalty for the collection of surcharge is not authorised under section 22(2) of the Act.

3. The issue relating to jurisdiction has to be necessarily decided first. The argument of Mr. Venkatraman is that it is only under Tamil Nadu Act 22 of 1982 that the power to invoke suo motu revision under section 34 of the Act was conferred on the Joint Commissioner. The Tamil Nadu Act 22 of 1982 came into force only on November 1, 1982. Therefore, prior to this date the Joint Commissioner had no jurisdiction to exercise power under section 34 of the Act. The Tamil Nadu General Sales Tax Act being a special enactment and a complete code by itself, unless the power springs from the Act, the Joint Commissioner cannot seek help or draw power from any other statute. He also refers to section 2(f) and section 28 of the Act and argues that the post of Joint Commissioner of Commercial Taxes was itself created for the purpose of the Act only by Tamil Nadu Act 78 of 1986 with effect from January 1, 1987.

4. Per contra, counsel for the Revenue refers to the Tamil Nadu Board of Revenue Abolition Act, 1980, and the notification issued under clause (iv) of sub-section (1) of section 4 of the said Act. This notification issued under Government Order G.O.Ms. No. 2675, Revenue, dated December 1, 1980, reads as follows :

"In exercise of the powers conferred by clause (iv) of sub-section (1) of section 4 of the Tamil Nadu Board of Revenue Abolition Act, 1980 (Tamil Nadu Act 36 of 1980), the Governor of Tamil Nadu hereby authorises the Joint Commissioner of Commercial Taxes to exercise the jurisdiction and powers vested in, and duties performed by, the Board of Revenue/Member of the Board of Revenue under the provisions of the Act and the Rules specified in the Table below, on and from December 1, 1980."

THE TABLE Name of the Act/Rules Provisions (1) (2)

1. The Tamil Nadu General Sections 34, 35 and 37(1). Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959)

2. Tamil Nadu General Sales Rules 28(2), 28-A, 30(1)(b) and Tax Rules, 1959. and 32(4).

3. Special Rules for the Tamil Annexure II Nadu Ministerial Service. Commercial Taxes Department, item I."

Therefore, argues, the counsel for the Revenue, that on July 21, 1981, the Joint Commissioner did have power to exercise the suo motu power of revision under section 34 of the Act. But, Mr. R. Venkatraman, persisted in his argument that the Tamil Nadu Board of Revenue Abolition Act, 1980, certainly cannot confer jurisdiction on the Joint Commissioner to exercise power under section 34 of the Act. In other words the argument is that the power must spring from the Act itself and not from any other source. We have examined this argument in detail with reference to the relevant provisions. The Board of Revenue is not an authority defined under the Tamil Nadu General Sales Tax Act. Even so, section 34 as it originally stood empowered the Board of Revenue to exercise suo motu powers. The Board of Revenue was constituted under the Board of Regulation, 1803 and the Madras Board of Revenue Act, 1894. It generally comprises three members and they were empowered to exercise powers singly or as a Bench. Several enactments in the State of Tamil Nadu had named the Board of Revenue as the authority to exercise certain powers conferred under such enactments. When the Government decided to abolish the institution of the Board of Revenue, the Legislature had necessarily to make suitable provision for entrusting the powers exercised by the Board of Revenue and the Members of the Board of Revenue under various enactments to other appropriate authorities. This is precisely what has been done by the Tamil Nadu Board of Revenue Abolition Act, 1980. Therefore, it follows that the Tamil Nadu General Sales Tax Act has to be read along with the notification issued under section 4(1) of the Tamil Nadu Board of Revenue Abolition Act, 1980. It is necessary to notice some of the relevant provisions of the said Abolition Act. They are extracted below :

"Section 4. Powers of Board of Revenue and Member of Board of Revenue to be exercised by Government or appropriate authority. - (1) The jurisdiction and powers vested in and duties performed by the Board of Revenue or any Member of the Board of Revenue immediately before the date of the commencement of this Act, by or under any law, shall be vested in, and performed by -

(i) the Government; or

(ii) the Commissioner; or

(iii) any officer not below the rank of Additional Secretary to Government; or

(iv) any other officer not below the rank of District Collector, as may be specified by the Government, by notification in this behalf in respect of such matters, and with effect from such date, as may be specified therein.

(2) The Government may, in like manner, modify or cancel any authorisation made under sub-section (1).

Explanation. - For the purpose of this section, the jurisdiction and powers vested in, and the duties performed by any Member of the Board of Revenue shall include the jurisdiction and powers vested in and the duties performed by such Member either in the capacity of the Member of the Board of Revenue as such, or by virtue of an authorisation made by or under any law.

Section 8. Act to override other laws. - The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any law for the time being in force.

Section 10. Construction of references to 'Board of Revenue' or 'Member of Board of Revenue' or 'Standing Orders of Board of Revenue'. - (1) In the application of any law, any reference to the Board of Revenue or Member of the Board of Revenue shall, unless the context otherwise requires, be deemed to be a reference to the Government or the appropriate authority specified in the notification under sub-section (1) of section 4.

(2) The 'Standing Orders of the Board of Revenue' as in force on the date of the commencement of this Act shall, on and from the said date, be called 'Revenue Standing Orders' and continue in force until altered, amended or rescinded by the Commissioner or the Government, as the case may be.

Section 12. Repeal. - (1) The Tamil Nadu Board of Revenue Regulation, 1803 (Tamil Nadu Regulation I of 1803), the Tamil Nadu Revenue Commissioner Act, 1849 (Central Act X of 1849) and the Tamil Nadu Board of Revenue Act, 1894 (Tamil Nadu Act I of 1894), are hereby repealed.

(2) Notwithstanding such repeal, -

(i) any application, appeal, revision or other proceeding pending before the Board of Revenue or any Member of the Board of Revenue under any law for the time being in force on the date of the commencement of this Act shall stand transferred to the Government or the appropriate authority specified in the notification under sub-section (1) of section 4;

(ii) anything done or any action or proceeding taken under any law for the time being in force, including any order passed or decision given by the Board of Revenue or any Member of Board of Revenue before the date of the commencement of this Act shall be deemed to have been done, taken, passed or given by the Government or the appropriate authority."

5. The notification which we have extracted earlier, with particular reference to the Tamil Nadu General Sales Tax Act, has transferred the jurisdiction or the power of the Board of Revenue or any Member of the Board of Revenue exercised by them immediately before the commencement of the Abolition Act (November 5, 1980) to the Joint Commissioner. The doubt and apprehension expressed by the learned counsel for the petitioner that the power must spring forth from the Tamil Nadu General Sales Tax Act stand clarified and removed by section 10 of the Act. It is made clear under section 10 that in the application of the Tamil Nadu General Sales Tax Act any reference to the Board of Revenue or Member of the Board of Revenue shall be deemed to be a reference to the appropriate authority (Joint Commissioner) specified in notification under sub-section (1) of section 4. We, therefore, reject the contention of Mr. R. Venkatraman, that the Joint Commissioner had no authority to exercise power under section 34 of the Act. We hold that on and from December 1, 1980, as per G.O.Ms. No. 2675, dated December 1, 1980, the Joint Commissioner of Commercial Taxes has jurisdiction to exercise power under section 34 of the Act.

6. As a second limb of the above argument learned counsel for the appellant submitted that the notice having been issued by the Board of Revenue on December 15, 1978, final order could not have been passed by the Joint Commissioner on July 21, 1981. This argument is squarely met by section 12(2) of the Tamil Nadu Board of Revenue Abolition Act quoted above. The contention relating to the jurisdiction of the Joint Commissioner is therefore answered in favour of the Revenue and against the assessee.

7. Mr. R. Venkatraman then turned our attention to the merits of the case and relies on State of Tamil Nadu v. Jaya Pharmacy [1984] 57 STC 164 (Mad.). The contention is that inasmuch as the assessing officer himself had treated the item mustard as being taxable at 3 1/2 per cent, it is a case of mutual mistake and, therefore, penalty cannot be levied. In other words, the collection of tax at 3 1/2 per cent on mustard was reflected in the return and accounts of the assessee and the same had been accepted by the assessing officer by his order dated December 24, 1974. The facts of the case in State of Tamil Nadu v. Jaya Pharmacy [1984] 57 STC 164 (Mad.) are clearly distinguishable. That was a case where the assessee had collected tax at 30 per cent on sales of arishtams and subsequently at 8 per cent treating the same as drugs. When the assessee pleaded that the goods are taxable only at 4 per cent, the assessing authority did not accept the contention and consequently the assessee had to go up to the Tribunal to get a ruling in his favour. In these circumstances the court came to the conclusion that both the assessee as well as the assessing authority were under a mutual mistake. Therefore, it was held that section 22(2) of the Act was not attracted. In the present case the assessee claimed that sales of mustard are taxable at 3 1/2 per cent and the return was accepted by the assessing authority. Later the assessing authority found that the collection at 3 1/2 per cent was illegal and the rate was only 3 per cent, and therefore proceeded to levy penalty under section 22(2) of the Act. In this case, the assessing authority himself had realised the mistake in accepting the return of the assessee and, therefore, there is no question of any mutual mistake. Section 22(2) of the Act leaves no option to the assessing authority once he comes to the conclusion that the dealer had collected any amount by way of tax or purported to be by way of tax in contravention of sub-section (1), but to impose a penalty not exceeding 1 1/2 times the amount collected. We, therefore, confirm the order of the Joint Commissioner on this aspect of the case.

8. The last contention that penalty cannot be levied for the collection of surcharge has been negatived by this Court in T.C. No. 156 of 1980, dated February 6, 1980 (S. Rajaraman v. State of Tamil Nadu). Therefore that contention does not survive any longer.

9. We find that all the arguments of the learned counsel for the appellant fails and the tax case (appeal) consequently is dismissed. There will, however, be no order as to costs.

10. Appeal dismissed.

BACKWARD REFERENCE :

FORWARD REFERENCE :

REFERENCES :

[Referred] 1984 57 STC 164 MAD ACTS & SECTIONS REFERENCE :

TAMIL NADU GENERAL SALES TAX ACT, 1959 Section 2(f) Section 4 Section 8 Section 10 Section 12 Section 22(1) Section 22(2) Section 28 Section 34 Section 35 Section 37(1) NOTIFICATIONS REFERENCE :

DATE : 30-07-1991 EQUIVALENT CITATION(S) :

1993-(090)-STC -0562 -MAD CATCHNOTE :

HEADNOTE :

JUDGE(S) :

A S Anand Kanakaraj TEXT :

A. VINAYAGAMURTHY NADAR v. JOINT COMMISSIONER-II (COMMERCIAL TAXES), CHEPAUK, MADRAS. Tax Case No. 1308 of 1981 (Appeal No. 51 of 1981), decided on July 30, 1991.

R. Venkatraman, for the appellant.

Haja Naziruddin, Government Advocate (Taxes), for the respondent.

JUDGMENT The judgment of the Court was delivered by KANAKARAJ, J. - The appellant was finally assessed on a total and taxable turnover of Rs. 57,38,454.88 and Rs. 49,03,802.48, respectively for the year 1973-74 in and by an order dated December 24, 1974. Subsequently the assessing authority found that the assessee had collected surcharge of Rs. 866 and excess tax of Rs. 575 on the sales of certain declared goods in contravention of section 22(1) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called "the Act"). Accordingly, the assessing officer by an order dated August 23, 1976, levied a penalty of Rs. 2,034 under section 22(2) of the Act being 1 1/2 times the excess collection. On appeal, the Appellate Assistant Commissioner set aside the levy of penalty. The erstwhile Board of Revenue by a notice dated December 15, 1978, invoking the power under section 34 of the Act, asked the assessee to show cause as to why the order of the Appellate Assistant Commissioner should not be set aside and as to why the order of the assessing officer should not be restored. The appellant filed his objections on February 26, 1979 and February 9, 1980. Final orders on the suo motu proceedings, however, came to be passed by the Joint Commissioner in his proceedings dated July 21, 1981, holding that the levy of penalty was perfectly justified and that the levy of penalty on the collection of surcharge was also legal as per the judgment of this Court in Tax Case No. 156 of 1980 dated February 6, 1980.

2. In challenging the order of the Joint Commissioner by way of this tax case appeal, Mr. R. Venkatraman, raises three contentions : (1) Whether the Joint Commissioner had authority and power under section 34 of the Act on the date he passed orders, namely, on July 21, 1981, inasmuch as power was conferred on the Joint Commissioner only by virtue of Tamil Nadu Act 22 of 1982. (2) The collection of tax at 3 1/2 per cent on the sales of mustard was tacitly approved by the assessing officer in his assessment order dated December 24, 1974 and, therefore, there was no case made out for levying penalty. (3) The levy of penalty for the collection of surcharge is not authorised under section 22(2) of the Act.

3. The issue relating to jurisdiction has to be necessarily decided first. The argument of Mr. Venkatraman is that it is only under Tamil Nadu Act 22 of 1982 that the power to invoke suo motu revision under section 34 of the Act was conferred on the Joint Commissioner. The Tamil Nadu Act 22 of 1982 came into force only on November 1, 1982. Therefore, prior to this date the Joint Commissioner had no jurisdiction to exercise power under section 34 of the Act. The Tamil Nadu General Sales Tax Act being a special enactment and a complete code by itself, unless the power springs from the Act, the Joint Commissioner cannot seek help or draw power from any other statute. He also refers to section 2(f) and section 28 of the Act and argues that the post of Joint Commissioner of Commercial Taxes was itself created for the purpose of the Act only by Tamil Nadu Act 78 of 1986 with effect from January 1, 1987.