Shah Khimji Shamji v. The State of Bombay — 1951 DIGILAW 146 (BOM)

Judgment Bhise, (President) and Hansotia, (Member) 1. The applicant is the proprietor of a shop going by the name of Popular Provision Stores at Dana Building, Khetvadi Back Road, Bombay. He applied for registration under Section 8 of the Bombay Sales Tax Act and was granted a certificate of registration on 14th December, 1948. The Sales Tax Officer concerned found that his turnover had exceeded Rs. 30,000 in 1946-47. He therefore, fixed his liability for payment of sales tax with effect from 1st June, 1947, and after issuing notice to him in Form No. XIV, assessed the tax payable by him for the period 1st June, 1947, to 13th December, 1948, at Rs. 1,528-11-0 and further imposed on him a penalty of Rs. 137-8-0 under Section 12(3A) of the Act. The Sales Tax Officer passed order to this effect on 1st May, 1950. 2. The applicant did not appeal against the order of the Sales Tax Officer to the Assistant Commissioner (now Assistant Collector) of Sales Tax under Section 21 of the Bombay Sales Tax Act, which as it then stood, would have required the payment of the sales tax and penalty as a condition precedent to the maintainability of the appeal; but instead he applied for revision of the order under Section 22 of the Bombay Sales Tax Act to the Deputy Commissioner (now Collector) of Sales Tax without paying the assessed sales tax or penalty. The Deputy Commissioner in view of Order No. 114 dated 22nd November, 1946, as subsequently amended, transferred the applicants application for revision to the Assistant Commissioner of Sales Tax. The latter Officer by his order dated 31st July, 1950, rejected the application on the ground that the applicant had "not paid the outstanding amount of tax with penalty ........ as the application for revision was irregular under sub-rule (2) of Rule 48 of the Bombay Sales Tax Rules, 1946, read with clause (5) of Form XXV presented under Section 22 of the Bombay Sales Tax Act, 1946". 3. Against the order of the Assistant Commissioner the applicant filed an appeal before the Collector of Sales Tax who confirmed the order of the Assistant Commissioner and rejected the appeal. The applicant has now filed the present application for revision before this Tribunal. 4. It is necessary to mention at the outset that the applicant had paid a court-fee of Re. The applicant has now filed the present application for revision before this Tribunal. 4. It is necessary to mention at the outset that the applicant had paid a court-fee of Re. 1 on this application, though in effect it was one for revision of an order of assessment with penalty which had passed through an appeal and therefore subject to payment of court fees-under Rule 52(i) of the Bombay Sales Tax Rules. The requisite court-fees under that sub-rule have now been paid. 5. The sole questions in the case are (i) whether an application for revision can lie in the first instance and (ii) of so, whether it was necessary that the amount of tax with penalty should have been paid before filing the application. 6. Revisions are governed by Section 22 of the Bombay Sales Tax Act. The portion of this section (clause 1) which is material for the decision of this case runs as follows : "(1) Subject to such rules as may be prescribed and for reasons to be recorded in writing the Commissioner (now Collector) may upon application ..... revise any order passed under this Act or the Rules thereunder, by a person appointed under Section 3 to assist him provided that no application under this sub-section shall be entertained, if it is not made within a period of four months from the date of the order ......" 7. The only material rule in the Bombay Sales Tax Rules to which reference was made is Rule No. 48 which as it stands at present runs as follows :- "48. Application for revision - (1) No application for revision of any order of assessment with or without penalty, passed in an appeal shall be entertained by any authority unless it is satisfied that the tax with penalty, if any, in respect of which the application is made has been paid. (2) Where an application for revision is made against an order of assessment either with or without penalty, the application shall as far as may be made in accordance with Form XXV." 8. Reading the section and Rule No. 48 it is clear that we have got a complete set of provisions governing revisions, and that it is unnecessary to refer to any other provisions of the Act. 9. Reading the section and Rule No. 48 it is clear that we have got a complete set of provisions governing revisions, and that it is unnecessary to refer to any other provisions of the Act. 9. It is plain from the two that the right of seeking revision of any order including, of course, the order of assessment and penalty is subject only to the rules that may be prescribed by Government. As we have already stated Rule 48 is the only rule prescribed. Para 1 of it does not apply because the revision now in question (before the Assistant Collector) is not of an order passed in an appeal, where it is obligatory that the revising authority should be satisfied that the tax with penalty if any has been paid. 10. The learned Advocate-General, however, contended that sub-rule (2) of Rule No. 48 read with Form No. XXV which is referred to in the sub-rule makes it obligatory for the applicant to pay the tax and the penalty. Vide Para 5 of it. We must say with due deference that this argument does not appear to us to be correct. Form No. XXV which is relied on is a form of application for all kinds of revisions including the one falling within the purview of Rule 48(1). It is next worthy of note that sub-rule (2) lays down that the application shall as far as may be made in accordance with Form No. XXV. The words which we have underlined, make it clear that there is no obligation to fill in every item in the form or comply with the implied requirements of it, unless it is laid down in the Act or the Rules duly framed. This is further clarified by the note at the end of the Form (page 60 of the Bombay Sales Tax Rules as amended upto 1950) which is as follows :- "Strike out whichever is not required." All this makes it abundantly clear that the applicant can strike out the inapplicable portion and that if the Act or the Rules framed thereunder do not make the payment of tax with penalty, if any, obligatory the applicant is entitled to disregard and strike out para 5 of the form. 11. 11. We may also be permitted to point out that in our judgment a form prescribed would be the last place for incorporating an important condition like the prepayment of tax and penalty, without a corresponding provision in the Act or the Rules. We invited the learned Advocate-General to give us a parallel instance supporting the contention of Government in this respect. He was, however, unable to refer us to any. 12. Reference was made to Section 21 of the Act which refers to appeals and it was argued (i) that an appeal is that normal remedy for a party aggrieved by any order of the Sales Tax Authorities (ii) that the sequence of Section 21 and Section 22 indicated the same thing, and (iii) that clause (3) of the section shows that an appeal ought to precede a revision. 13. It is certainly true that if an appeal be permissible, it ought to precede a revision and that Section 22 relating to revision follows the one relating to appeals, but we are humbly of opinion that in the absence of a specific provision to that effect, a party cannot be deprived of his right to seek either remedy at his choice. No doubt there is sub-section (3) in Section 21 which declares that orders in appeal are final subject to the provisions of Section 22 and Section 23 (i.e., revision and reference to the High Court). This provision only implies that after orders in appeals there can only be revisions; but there is no rule laid down anywhere that a party having a remedy of appeal cannot apply for revision before getting a decision of the appellate authority. The provisions of Sections 21 and 22, if read, as they stand, appear to provide two remedies; and a party having two remedies permissible to him can certainly choose the more convenient and less costly out of them. The question with which we are really concerned in this case is whether a party desirous of challenging the order of the Sales Tax Officer before a higher officer should be deprived of his remedy merely because he is unable to pay the heavy sum of the assessed tax and penalty. The question with which we are really concerned in this case is whether a party desirous of challenging the order of the Sales Tax Officer before a higher officer should be deprived of his remedy merely because he is unable to pay the heavy sum of the assessed tax and penalty. After all the rule about prepayment is intended to lighten the task of the tax collector; but, on the other hand, we cannot forget that a wrong and excessive assessment, if beyond the reach of a dealer, will deprive him of the legitimate remedy of representing his case before higher authorities. In the circumstances we think we should put a construction on the pertinent provisions so as not to put undue obstructions in the way of the parties concerned. 14. It was argued, that Section 21 indicates that the intention of the Legislature is to insist on a party seeking to appeal or for revision paying up the tax and penalty before he is permitted to have the remedy. The intention of the Legislature is to be gathered from the language used by it, and the fact remains that in Section 22 the condition of prepayment specially mentioned in Section 21 is not repeated. This indicates that for reasons known to it, the Legislature did not intend that way. We may assume from the frame of Rule 48 in that manner that the Government too (to whom the Legislature delegated the power of prescribing rules on the subject) has not chosen to put the condition except where the revision is sought of an appellate order. Where the intention to make the condition apply to all revisions it would have omitted the words "passed in an appeal" from Rule No. 48(1). 15. Considering the arguments advanced on either side we think that the questions mentioned in para 5 above ought to be answered in favour of the applicant. 16. We will also note here that when this application for revision was presented to the Deputy Commissioner of Sales Tax he did not consider that there was anything wrong in the application and transferred it for disposal to the Assistant Commissioner. This indicates that the view which he then took was that the application was not bad on any preliminary ground. 17. This indicates that the view which he then took was that the application was not bad on any preliminary ground. 17. We shall next refer to the question whether the Deputy Commissioner was correct in transferring the application for disposal to the Assistant Commissioner. It appears from Notification No. 114 dated 22nd November, 1946, of the Commissioner of Sales Tax that in exercise of the powers under Section 16 of the Act he delegated the power to entertain revisions to the Assistant Commissioner; but that does not take away the power of the Commissioner or the Deputy Commissioner to entertain the applications. The power of these three officers to entertain revisions were concurrent, and parties could approach any of them for relief. In the case of appeals, power has been given to the Commissioner and the Deputy Commissioner by Rule 44(5) of the Bombay Sales Tax Rules to transfer appeals to the Assistant Commissioner, but we do not find any such power given in the case of revision applications. In the circumstances we feel very doubtful whether the Deputy Commissioner could transfer this revision. We think he should hear the application himself and pass suitable orders. 18. We must say that we were rather surprised to see that powers of revision should have been delegated to Assistant Commissioners. These powers are usually exercised by the highest officer. We may mention, e.g., that under the Income-tax Act the powers of revision vest in the Commissioner and in not inferior officer. In civil matters they are exercised only by the High Court under Section 115 of the Civil Procedure Code. In the circumstances, we desired to know how this power came to be delegated. 19. We were referred on the point to the Notification of the Commissioner of Sales Tax No. 114 dated 22nd November, 1946. That notification did not refer to any order of Government on the subject. The learned Government Solicitor however showed us certain papers from which we found that Government had consented to the delegation. We think that very probably in those initial stages the implications of the delegation were not clear. We also understand that the delegation of powers under Section 22 was initially considered necessary to facilitate the cancellation of certificates already issued. It was very probably for this reason that Government agreed. We think that very probably in those initial stages the implications of the delegation were not clear. We also understand that the delegation of powers under Section 22 was initially considered necessary to facilitate the cancellation of certificates already issued. It was very probably for this reason that Government agreed. We next found that the first Circular of the Commissioner dated 22nd November, 1946, conferred revisional powers on Assistant Commissioners upto a subject matter of Rs. 1,250 only. As time advanced it seems the powers of Assistant Commissioners to hear appeals have expanded and the limit for revisions seems to have gone up to Rs. 2,500 for each quarter. We may, however, be permitted to express our opinion that revisional powers ought to vest only in the highest officer of the Department and the Tribunal and ought not to be delegated to Assistant Collectors. 20. There is one other point which we wish to bring to the notice of Government. When the Deputy Commissioner of Sales Tax transferred the revision application in this case to the Assistant Commissioner of Sales Tax the order passed by the latter had to be taken before the Collector with the result that the aggrieved party had to face one more appeal or revision with its necessary consequence of more expense and delay. Had the Collector decided the revision himself these would have been saved. We would finally say that the sections and the rules relating to appeals and revisions require to be modified, made more precise and brought in a line with provisions about appeals and revisions in the Indian Income-tax Act. 21. As the Collector or the Assistant Collector has not heard this revision on merits, we have no alternative but to remand it. VAKIL (Member) 22. I agree. I should only add the following observations. 23. Section 16 of the Act empowers the Commissioner (now the Collector) to delegate any of his powers and duties to his subordinate officers appointed under Section 3 to assist him. This power is to be exercised by his order in writing "subject to such conditions and restrictions as the State Government may, by general or special order, impose". The Order No. 114 of the Commissioner (Collector) and its subsequent amendments as published in the Bombay Government Gazette contain no reference to any general or special order of Government imposing any conditions or restrictions. The Order No. 114 of the Commissioner (Collector) and its subsequent amendments as published in the Bombay Government Gazette contain no reference to any general or special order of Government imposing any conditions or restrictions. I think the publication is defective and ought to contain some reference or indication of the prior Government orders. Moreover, judicial powers of the Collector by way of appeal or revision cannot be transferred to any officer of by way of appeal or revision cannot be transferred to any officer of subordinate jurisdiction. Even Rule 44, clause 5, which empowers the Collector to transfer appeals shows that the transfers can be made to officer of co-ordinate jurisdiction or in exceptional cases to officers of superior jurisdiction but not to officers of inferior or subordinate jurisdiction. The revisional powers of the Collector and of the Tribunal under the Sales Tax Act are very wide and unrestricted, though discretionary. Reference regarding delegation of judicial powers can be made to Brooms Legal Maxims, tenth edition, at p. 571, which contains the following remarks :- "Nor can an individual, clothed with judicial functions, delegate the discharge of those functions to another, unless, as in the case of a Country Court Judge he has expressly empowered to do so. For the ordinary rule is that, although a ministerial officer may appoint a deputy, a judicial officer cannot." 24. There is nothing in the Bombay Sales Tax Act or the Rules which expressly authorises the Collector to delegate his revisional powers to subordinate officers. The Collector ought to decide the revision application himself and ought to give a hearing even in case of summery rejection to the applicant who has the right to make the application duly registered. Vide Ishwardar Kapoor Sons v. Member, Board of Revenue, Bengal, decided by Gentle and Das, JJ., and published in Sales Tax Cases, Vol. I (1938-50) pp. 153 156, Calcutta High Court, Ref. No. 21 of 1941 :- "In my opinion the dismissal of an appellants appeal or a petitioners petition for revision is an order which adversely affects the appellant or the petitioner as the case may be. I (1938-50) pp. 153 156, Calcutta High Court, Ref. No. 21 of 1941 :- "In my opinion the dismissal of an appellants appeal or a petitioners petition for revision is an order which adversely affects the appellant or the petitioner as the case may be. It may have the effect of not affecting him more adversely than the order against which the appeal or the petition is preferred, but dismissal of the appeal and the petition summarily in his absence prevents him having an opportunity of putting forward his views and also it has the effect of enforcing the order against which the appeal or revision is sought to be made." 25. As regards penalty levied by the Sales Tax Officer under Section 11(5), it is to be borne in mind that the applicant is a retail kariana dealer who had applied for registration of his own accord in 1946 and had not been granted the certificate at that time. The Sales Tax Officers discovery is only at the end of the next year 1947-48. Even in cases of late registration Government have authorised remission not exceeding 75% of the tax for pre-registration sales under their order No. 7563/33/28603-ST dated 1st September, 1949, which runs thus :- "The undersigned presents compliments to the Commissioner of Sales Tax and with reference to his letter No. 378 dated 21st May, 1949, is directed to state that Government is pleased to authorise the Commissioner and also the Deputy Commissioner of Sales Tax to set off, in suitable cases, from the amounts of sales tax payable by dealers who have failed to get registered though liable to pay tax under the Act, amounts not exceeding in each case 75% of the tax paid by them on purchases as unregistered dealers, or Rs. 5,000 whichever is less. Before granting such a set-off, the Commissioner or the Deputy Commissioner should satisfy himself that the dealer has not wilfully failed to apply for registration." 26. Such an order of Government giving discretion to the Executive ought to be made known to the public and if incorporated as a rule under the Act would have been published in the Gazette. The penalty under Section 11(5) ought, I think, to be levied in cases of wilful failure to register. The length of the period of failure would be an indication of the wilful failure in individual cases. The penalty under Section 11(5) ought, I think, to be levied in cases of wilful failure to register. The length of the period of failure would be an indication of the wilful failure in individual cases. The remission by way of set-off under the above order of Government is made by Sales Tax Officers on taxable purchases made from registered dealers only. I think this cannot be the intention of Government. The sales tax on pre-registration purchases has already gone into the price and the retention of 25% or more is itself a penalty for late registration. The Sales Tax Officer ought, I think, to allow the remission of 75% on all pre-registration taxable purchases after adding 10% to arrive at the applicants sales turnover on the line adopted in new Rule 26(A)(4)(b) of 29th April, 1948, in composition cases of small registered dealers having a gross turnover not exceeding Rs. 60,000. 27. There seems to be nothing in the findings of the Sales Tax Officer in this case justify an additional penalty under Section 11(5). ORDER 28. The application is allowed. The papers of the case should be sent to the Collector of Sales Tax with a direction that he should hear the revision application on merits and pass suitable orders. 29. No order as regards costs before this Tribunal. 30. Application allowed.