Govinda Rao v. First Member, Board of Revenue — 1953 DIGILAW 93 (KER)

Judgment :- 1. These are applications presented by the petitioner (assessee) in Sales Tax Revision Nos. 74 and 75 of 1951 before the First Member, Board of Revenue, who is the Commissioner of Sales tax, and the common prayer in both is that under S.24(2) of the Cochin Sales Tax Act, XV of 1121, the Commissioner be ordered to state the case and refer the following questions to this Court for decision which are stated to be questions of law arising out of his decision in the said two Revisions. (a) Whether, in the circumstances of the case, the respondent was right in holding that the fact that the line of business of the petitioner got considerably reduced during 1123 and that the diversion of the capital employed in the business to his new business of money lending does not help to fix the turnover for the year 1123; (b) Whether, in the circumstances of the case, the respondent was right in not considering the readiness and the willingness of the petitioner to obtain the licence for the year 1123, and whether his findings are vitiated by the circumstance that he entirely ignored the aspect that the passing out of a year does not take away the jurisdiction to receive the fees and issue a licence with retrospective effect; (c) Whether, in the circumstances of the case, the respondent was right in holding that the petitioner is entitled to get the benefit of the exemption on the sale of bullion and specie only if he has obtained a licence under the rules; and (d) Whether, in the circumstances of the case, the respondent was right in holding that the plea of ignorance of the relevant provisions of the Act cannot be accepted as a valid excuse. 2. The facts as these. The assessment with reference to which the two orders of the revision were passed related to the years 1123 and 1124. The rules framed by Government under S. 38 of the said Act, XV of 1121 were amended on 4th September 1947 corresponding to 19th Chingon 1123. 2. The facts as these. The assessment with reference to which the two orders of the revision were passed related to the years 1123 and 1124. The rules framed by Government under S. 38 of the said Act, XV of 1121 were amended on 4th September 1947 corresponding to 19th Chingon 1123. R. 9 as amended provides, under the heading 'License' that: "9 (1) Every person who (a) deals in bullion and/or specie, or (b) x x x x (c) x x x x (d) x x x x shall, if he desires to avail himself of the exemption provided in the Schedule of exempted articles under S. 5 or in S. 8, obtain a licence in accordance with these rules". Sub-rr. (2) and (5) provide that: "(2) The application for licence shall be submitted in Form S.T.S. in respect of each of his places of business to the Sales Tax Officer of the area in which his principal place of business is situate, within 30 days from the commencement of the accounting year or of the business as the case may be." "(5) If an application for the grant or renewal of a licence is received after the date prescribed therefor the licence shall not ordinarily be granted or renewed with effect from a date prior to the date of receipt of the application and shall expire on the last day of the year in which it is granted or renewed: Provided that the Commissioner of Sales Tax, may in any deserving case, direct the Sales Tax Officer to accept an application for the grant or renewal of a licence received after the prescribed date and to issue the licence with retrospective effect on the appellant's paying a penalty such sum not exceeding nine times the licence fee in addition to the usual licence fee, as may be fixed by the Commissioner of Sales Tax. The petitioner is a dealer in bullion and the question relates only to the assessment on sales of that commodity. No application for licence was at all made in the years 1123 and 1124. An application for licence for 3 years, viz., 1123,1124 and 1125 with retrospective effect from the commencement of the year 1123 was made in 1125, but after the expiry of 30 days from the commencement of that year. The application was made to the Sales Tax Officer as prescribed. An application for licence for 3 years, viz., 1123,1124 and 1125 with retrospective effect from the commencement of the year 1123 was made in 1125, but after the expiry of 30 days from the commencement of that year. The application was made to the Sales Tax Officer as prescribed. That officer, however, is not given the power to deal with i.e., to grant or refuse a licence upon an application made beyond 30 days from the commencement of any year. The authority to grant licence with retrospective effect is vested in the Commissioner. The rules do not provide for the procedure for the application presented before the Sales Tax Officer to be transmitted to or brought up before the Commissioner for his consideration nor is there any provision for presenting any application to the Commissioner direct. The absence of this last may be due to the intention of the framers of the rules to constitute the Sales Tax Officer the proper or only person to receive all applications for licence whether presented within 30 days of the commencement of an year or later in that year or in any other year, irrespective of his power to deal with them. The rules do not indicate the authority to determine the question, whether the case is a fit one for the grant of licence with respective effect or not. It appears to us that this lacuna deserves to be rectified by the legislature. 3. In this case, however, the Officer forwarded the application made by the petitioner to the Commissioner who passed orders on 1.8.1950 rejecting licences for the years 1123 and 1124 and granting one for the year 1125 as in his view the retrospective effect with which a licence could be issued under the rules could not go further back than the year in which the application is made. We do not feel called upon to decide one way or the other as regards the correctness of the Commissioner's conclusion upon this point. It is sufficient to say that the Commissioner had jurisdiction to decide the question and he did decide it against the applicant and the licence applied for was refused. The circumstance that the decision is erroneous, assuming it is so, will not make it any the less binding upon the party because an authority having jurisdiction to decide can decide rightly as well as wrongly. The circumstance that the decision is erroneous, assuming it is so, will not make it any the less binding upon the party because an authority having jurisdiction to decide can decide rightly as well as wrongly. This proposition is indisputable. 4. The orders of the Commissioner dated 8.3.1952 were upon the aforesaid revision petitions which challenged the orders dated 30.3.1951 passed by the Assistant Commissioner of Agricultural Income Tax and Sales-tax Ernakulam, in appeal, affirming the order of assessment on the petitioner made by the Officer prior to the refusal of the licence. The date of the original order of assessment is not material in this case, because the questions whose reference is requested are stated to as they should arise out of the order passed by Commissioner on revision which was long after licence was refused. 5. The petitioner requested the Commissioner to refer these questions to this Court and he refused to do so by order dated 9.7.1952. In that order, however, the Commissioner says merely that "the Board is definitely of the view that there is no question of law involved in any of the points". 6. The first of the questions is stated to arise out of the order of the Commissioner because that order states as follows: "It is stated in the copy of the order of the Income Tax Officer produced by the petitioner that the turnover of the business got considerably reduced during 1123 and 1124 and he had also diverted the capital involved in the business to a new business of money lending. But this finding of the Income Tax Officer does not in any way help to fix the turnover for the year in question." These sentences appear in the order of the Commissioner in the second revision petition. If the order of assessment did contain the statement above extracted, then certainly a question of law arises because when a part of the capital used for the bullion business had been diverted to the money lending business the turnover of the bullion business must have been reduced. 2 minus 1 cannot continue to be 2. It is obvious. Confronted with this situation, the learned Advocate General turned to the order of assessment and that order was seen not to contain the above statement or anything to that effect. 2 minus 1 cannot continue to be 2. It is obvious. Confronted with this situation, the learned Advocate General turned to the order of assessment and that order was seen not to contain the above statement or anything to that effect. The Officer had taken into account the fact that a part of the capital of the bullion business had been diverted to money lending and in view of that diversion and consequent reduction in the turnover, the assessment was reduced to a certain extent in 1124 which was the only year in which there was a diversion of capital. On this fact being revealed, learned counsel for the petitioner withdrew his prayer as regards question (a). Questions (b) and (c) really form but one question and relate to the exemption claimed by the petitioner in respect of his bullion business. This claim was rejected on the ground that he was not a licensee. Learned Counsel for the petitioner says that though exemption from tax could be claimed only by a licencee, in this case the application for licence and the proceedings for assessment should be considered as forming part of the same matter as the authority to assess and to grant the licence is the same. We are unable to accept this contention. The power to issue a licence is different from the power to levy a tax. The coincidence of both the powers in the same officer or the simultaneity of their exercise does not create a coalescence of the two or constitute the grant or refusal of a licence a part of the process of assessment to sales-tax. In this case, however, as the facts show, the refusal of licence preceded affirmance of the assessment to sales-tax by the Assistant Commissioner with which the Commissioner declined to interfere in revision. Had the two proceeded simultaneously, the argument, might perhaps have had some force. The burden of proving a claim for exemption from tax is on the assessee (see (1951 SCR 1008, AIR 1951 SC 108). That onus can, in the present case, the discharged only by showing that the assessee had in fact been granted a licence. 7. Had the two proceeded simultaneously, the argument, might perhaps have had some force. The burden of proving a claim for exemption from tax is on the assessee (see (1951 SCR 1008, AIR 1951 SC 108). That onus can, in the present case, the discharged only by showing that the assessee had in fact been granted a licence. 7. Learned counsel for the petitioner then stated that the view of the Commissioner that he is not competent to grant a licence with retrospective effect for any year anterior to the year in which the application was made, is erroneous and that the limit of retrospectivity to which the competency of the Commissioner extends is a question of law which could be directed to be referred. As already stated, the Commissioner had jurisdiction to decide the question and even if he has decided wrongly, the parties are bound by his decision. Further, the view was expressed in proceedings unconnected with the order of assessment to sales tax which alone is or can be before us in these proceedings. Under the circumstances, questions (b) and (c) do not arise. 8. So far as question (d) is concerned, the counter affidavit states that the petitioner was aware of the rules which require the taking out of a licence should be a dealer claim exemption from liability to sales tax. Even otherwise, ignorance of law, at any rate, in matters of this description, cannot be a ground under which exemption from tax could be claimed. 9. The right of the petitioner to request the Commissioner to State the case and refer the questions to this Court or, on the Commissioner's refusal, to approach this Court for an order to the Commissioner to state the case and refer the questions, should arise under S. 24(1) which enacts that. 9. The right of the petitioner to request the Commissioner to State the case and refer the questions to this Court or, on the Commissioner's refusal, to approach this Court for an order to the Commissioner to state the case and refer the questions, should arise under S. 24(1) which enacts that. "24.(1) Within Sixty days of the date on which he is served with notice of an order under S. 16, or of an order under S.17 or of an order under S. 18, enhancing an assessment or penalty or otherwise prejudicial to him, the assessee in respect of whom the order was passed may, by application accompanied by a fee of one hundred rupees require the Commissioner of Sales Tax to refer to the High Court any question of law arising out of such order, and the Commissioner of Sales Tax shall, within sixty days of the receipt of such application, draw up a statement of the case and refer it with his own opinion of the question of law to the High Court". "Provided that a reference shall lie from an order under S.18 only on a question of law arising out of that order itself, and not on a question of law arising out of a previous order revised by the order under S. 18. Provided further that, if in exercise of his power of revision under S. 18, the Commissioner of Sales Tax decides the question, or if the Commissioner of Sales Tax rejects the application on the ground that it is time-barred or otherwise incompetent, or if, in exercise of his powers under sub-s. (2), the Commissioner of Sales Tax refuses to state the case, the assessee may within thirty days from the date on which he receives notice of the order passed by the Commissioner of Sales Tax withdraw his application, and if he does so, the fee paid shall be refunded". This is an order passed by the Commissioner under S. 18. There has been no enhancement of the assessment nor has there been an imposition of a penalty. Learned Counsel for the petitioner says that the case comes under the third category "otherwise prejudicial to him". It is urged that the order is prejudicial to him because the Commissioner did not consider the question of his eligibility to be the grantee of a licence. Learned Counsel for the petitioner says that the case comes under the third category "otherwise prejudicial to him". It is urged that the order is prejudicial to him because the Commissioner did not consider the question of his eligibility to be the grantee of a licence. The words "otherwise prejudicial" in S. 33 of the earlier Indian Income Tax Act corresponding to but not containing inter alia the second proviso to the second clause in S. 33A of the present Act, have been interpreted by the Privy Council in the Tribune Trust case (ILR 1947 Lahore 809 = 74 IA 306 = AIR 1948 PC 102) where their Lordships said impliedly overruling the decisions of certain High Courts that to make an order prejudicial to the assessee it should render the position of the assessee worse than what it was before, which an order declining to interfere would not do. In the present case the Commissioner merely declined to interfere and therefore in the view of the Judicial Committee there has not been an order prejudicial to the assessee. 10. Learned counsel for the petitioner submitted that as this aspect was not presented before the Court and debated at the bar but was pointed out by us, it need not be discussed or decided by us in this case which can be disposed of on the other grounds already dealt with. We accept the submission and reserve the question for decision in the future when its decision is called for. 11. In the result we find that no part of the request contained in these petitions can be granted. The petitions should, therefore, be dismissed but in the circumstances without costs. Dismissed.