P. D. DESAI, J. ( 1 ) THIS reference is made by the Gujarat Sales Tax Tribunal (hereinafter referred to as the Tribunal) under sec. 34 of the Bombay Sales Tax Act 1953 (hereinafter referred to as the Act ). It raises a question as to the legality of an order passed by the Assistant Commissioner of Sales Tax in suo motu exercise of revisional powers conferred under sec. 31 of the Act and it arises in the following circumstances:- ( 2 ) THE assessee-firm is carrying on business as a dealer in cloth on wholesale and retail basis. The firm was a registered dealer under the Act and was liable to pay sales tax under the provisions of the Act on turnover of sales of goods in which it was dealing. Some time in 1954 the assessee made an application in prescribed form 7 to the appropriate authority requesting that the assessee may be permitted to pay in lieu of general sales tax leviable from it under sec. 9 of the Act on the turnover of sales of goods a lump sum by way of composition of the general sales tax. The application was made under sec. 18a of the Act read with Rule 10 of the Bombay Sales Tax (Exemption Set-off and Composition) Rules 1954 (hereinafter referred to as the Rules) The appropriate authority having found on the evidence produced before it that the assessee was eligible under the Rules to be granted such permission granted the necessary permission by its order dated August 27 1954 The permission which was granted in form D is annexed as AAnnexure4 to the statement of the case and it was granted for the period from April 1 1954 to March 31 1955 subject to certain conditions to which we shall refer a little later. As a result of the grant of permission aforesaid the assessee was liable to pay a lump sum in lieu of general sales tax computed in accordance with the provisions of sub-rule (3) of Rule 10. As a result of the grant of permission aforesaid the assessee was liable to pay a lump sum in lieu of general sales tax computed in accordance with the provisions of sub-rule (3) of Rule 10. The permission which was initially granted as aforesaid for the period of one year was thereafter renewed from year to year till the period ending with March 31 1959 It may be mentioned that in the statement of case submitted by the Tribunal to this Court it has been mentioned that the permission was renewed till the period ending with December 31 1959 but if a reference is made to the copy of the permission (Annexure 4) at the foot of which endorsements regarding renewals have been made by the appropriate authority it appears that the permission was last renewed up to the period ending with March 31 1959 and there is a factual error on this aspect of the case in the statement of the case submitted by the Tribunal to this Court. Since both parties appearing before us are agreed on this point we have proceeded on the basis that the last renewal of the permission was for the period up to March 31 1959 ( 3 ) SOME time in 1964 it came to the notice of the Sales Tax authorities that the assessee had started on a small scale the business of manufacturing and selling readymade garments in addition to the business of selling cloth. The business? according to the Sales Tax Authorities was started during the year 1956-57 and more particularly from September 10 1956 The Assistant Commissioner of Sales Tax Range V Surat thereupon issued a notice dated December 2 1964 in the prescribed form XXIV calling upon the assessee to prefer any objections which it might have against the order proposed to be passed in suo motu exercise of the powers of revision conferred under rec. 31 of the Act and the gist of the order proposed to be passed against the assessee as communicated to the assessee was that the permission dated August 27 1954 granted to the assessee under sec. 31 of the Act and the gist of the order proposed to be passed against the assessee as communicated to the assessee was that the permission dated August 27 1954 granted to the assessee under sec. 18a read with Rule 10 would be cancelled with effect from July 1 1956 since the assessee had started the business of manufacturing garments during the year 1956-57 thus disentitling it to hold the permission for payment of a lump sum by way of composition in lieu of general sales tax payable by it under sec. 9 of the Act on the turnover of sales of cloth. The assessee thereupon appeared before the Assistant Commissioner of Sales Tax in response to the notice and raised several objections against the proposed action. The Assistant Commissioner of Sales Tax however by his order dated January 22 1965 passed in the purported exercise of the power under sec. 31 of the Act read with sec. 77 (1) (a) of the Bombay Sales Tax Act 1959 negatived all the contentions raised by the assessee and cancelled the permission granted to the assessee under sec. 18a of the Act read with Rule 10 of the Rules with effect from July 1 1956 ( 4 ) THE assessee aggrieved by the decision of the Assistant Commissioner of Sales Tax preferred an appeal before the Deputy Commissioner of Sales Tax but the appeal was unsuccessful and was dismissed by the said authority by its order dated May 23 1966 ( 5 ) THE assessee thereupon preferred a revision application before the Tribunal. . . . . . . . . . . . . . . . . . . . . In view of its findings the Tribunal by its Order dated August 27 1967 dismissed the revision application preferred by the assessee. ( 6 ) THE assessee thereupon made an application to the Tribunal purporting to be an application under sec. 34 of the Act requiring the Tribunal to refer to this Court the question of law arising out of its order and the Tribunal has thereupon referred to this Court the following question of law:-WHETHER on the facts and in the circumstances of the case the order dated 22-1-1965 passed by the Assistant Commissioner of Sales Tax in exercise of power of suo motu revision under sec. 31 of the Bombay Sales Tax Act 1953 read with sec. 31 of the Bombay Sales Tax Act 1953 read with sec. 77 (1) (a) of the Bombay Sales Tax Act 1959 for canceling with effect from 1-7-1956 the permission granted by the Sales Tax Officer to the applicants under his order No 16. K. 7 2759 dated 27-8-1954 is legally tenable ?. . . . . . . . . . . . . . . . . . . . ( 7 ) BEFORE we examine the validity of the contentions raised on behalf of the assessee we may briefly refer to the relevant provisions of the Act. Sec. 3 of the Act is the charging section and provides for the incidence of tax and liability of the dealers of the categories or classes mentioned therein to pay tax under the Act on their turnover of sales or purchases of goods Sec. 6 enumerates the various taxes payable by a dealer and one of Such taxes is the general sales tax on sales levied in accordance With the provisions of sec. 9 of the Act. Sec. 9 provides for the levy of general sales tax on the turnover of sales of goods specified in column I of Schedule B at the rates if any specified against them in column 3 of the said Schedule. The imposition of the general sales tax is subject to certain exemptions and the rate thereof in respect of Certain goods is specially fixed under sec. 9. We are however not required to set out those details in this judgement because we are not concerned with them in this proceeding. Sec. 18a of the Act with which we art directly concerned reads as under:-18 Composition of tax :- -The Collector may in such circumstances and subject to such conditions as may be prescribed permit any dealer to pay in lieu of the amount of tax leviable from him under secs. 8 9 10 or 10a in respect of any period a lump sum by way of composition determined in the prescribed manner. The condition for the grant of permission and the circumstances in which the permission may be granted are Set out in Rule 10 of the Bombay Sales Tax (Exemption Set-off and Composition) Rules 1954 Sub rules (1) (2) and (4) of the said Rule 10 are set out hereunder:-10. The condition for the grant of permission and the circumstances in which the permission may be granted are Set out in Rule 10 of the Bombay Sales Tax (Exemption Set-off and Composition) Rules 1954 Sub rules (1) (2) and (4) of the said Rule 10 are set out hereunder:-10. Composition of general sales tax :- The Collector may on the application in Form (7) of any registered dealer if satisfied that the turnover of purchases of such dealer during a year is not likely to exceed Rs. 90 0 permit such dealer subject to the conditions specified in sub-rule (2) to pay in lieu of the general sales tax leviable from him under sec. 9 in respect of the period for which such permission is granted a lump sum by way of composition determined under sub-rule (3):- provided that such permission shall not be granted to any dealer who holds a licence under sec. 12 or who carries on the manufacture or processing of any goods for sale (2) The conditions subject to which such permission may be granted shall be as follows namely:- (I) Such permission shall be granted for the period from the beginning of the quarter during which it is granted to the last day of the year or till the time up to which the turnover of purchases of the dealer during the year exceeds Rs. 90 0 whichever is earlier and it shall be renewable from year to year on application made by the dealer in that behalf. Provided that in the case of a dealer applying not later than the 31st July 1954 such permission shall be granted for the period commencing from the 1st April 1954. (ii) The dealer shall pay into the appropriate treasury the full amount of lump sum payable by him by way of composition determined under sub-rule (3) in respect of each quarter within one month from the expiry thereto and shall furnish to the Sales Tax Officer within the said period a statement in From (8) :- provided that the amount of lump sum payable for the quarter commencing from 1st April 1954 may be paid in such installments and within such time as the Collector may grant to such dealer. (iii) The Collector may cancel such permission if (a) the dealer fails to pay the lump sum or to furnish a statement in Form (8) within the time specified in condition (ii) in respect of any quarter or (b) the dealer contravenes any provision of the Act or the rules made there under. (iv) The Collector shall cancel such permission if during any year the turnover of purchases of the dealer exceeds Rs. 90 0 (3) xxx xxx xxx xxx xxx (4) The Collector shall determine the amount of the lump sum payable by a dealer under this rule so far as may be in accordance with the provisions of sec. 14 as if the statement in Form (8) were returns required to be furnished under sec. 13. Sub-rule (3) of Rule 10 lays down the method of computing the lump sum in lieu of general sales tax payable in respect of any period for which the permission may have been granted under sub-rule (I) of Rule 10 and since no question of computation arises in this matter it is not necessary to set out the said sub-rule (3 ). Sec. 31 which confers revisional powers upon the Collector reads as under:-31 Revision :- (1) Subject to such rules as may be prescribed and for reasons to be recorded in writing the Collector may upon application or of his own motion revise any order passed under this Act or the rules thereunder by a person appointed under sec. 3 to assist him and subject as aforesaid the Tribunal may upon application revise any order passed by the Collector:- 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:- provided further that before rejecting any application for the revision of any such order the Collector or the Tribunal as the case may be shall record reasons for such rejection. (2) Before any order is passed under this section which is likely to affect any person adversely such person shall be given a reasonable opportunity of being heard. (3) Where a person could have appealed under sec. 30 and no appeal has been filed by him no proceedings in revision under this section shall be entertained upon the application of such person. (3) Where a person could have appealed under sec. 30 and no appeal has been filed by him no proceedings in revision under this section shall be entertained upon the application of such person. ( 8 ) THE question which arises for our determination is whether the order of cancellation of permission passed by the Assistant Commissioner of Sales Tax under sec. 31 of the Act is in the facts and circumstances of this case legally tenable. The question as regards the scope of revisional powers conferred under sec. 31 of the Act came up for consideration before the Supreme Court in Swastik Oil Mills Ltd. v. H. B. Munshi 21 S. T. C. 383. At page 395 of the report the following observations of Bhargava J. who spoke for the Court are set out:-WHENEVER a power is conferred on an authority to revise an order the authority is entitled to examine the correctness legality and propriety of the order and to pass such suitable orders as the authority may think fit in the circumstances of the particular case before it. . . . . . The proceedings for revision if started suo motu must not of course be based on a mere conjecture and there should be some ground for invoking the revisional powers. Once those powers are invoked the actual interference must be based on sufficient grounds and if it is considered necessary that some additional enquiry should be made to arrive at a proper and just decision there can be no bar to the revising authority holding a further enquiry or directing such an enquiry to be held by some other appropriate authority. Again at page 397 we find the following observation regarding the power of the revisional authority:-A revising authority necessarily has the power to make such order as in the opinion of that authority the case calls for when the authority is satisfied that it is an appropriate case for interference in exercise of revisional powers. At page 400 of the report we find that the Supreme Court has further observed as followsin fact when a revisional power is to be exercised we think that the only limitations to which that power is subject are those indicated by this Court in K. M. Cheria Abdulla and Co. s case (16 S. T. C. 875 ). At page 400 of the report we find that the Supreme Court has further observed as followsin fact when a revisional power is to be exercised we think that the only limitations to which that power is subject are those indicated by this Court in K. M. Cheria Abdulla and Co. s case (16 S. T. C. 875 ). These limitations are that the revising authority should not trench upon the powers which are expressly reserved by the Acts or by the Rules to other authorities and should not ignore the limitations inherent in the exercise of those powers. (the bracketed portion in the above citation is ours ). The Supreme Court in the said decision also negatived the contention that limitation of a reasonable time within which the revisional powers should be exercised must be implied in the Statute itself and that if an order was made in exercise of the revisional power conferred under sec. 31 of the Act by the appropriate authority not within a reasonable time the order should be set aside. The Supreme Court negatived the said contention and the relevant observations are to be found at page 402 of the report:-IN our opinion the ultimate decision in that case was perfectly correct but we are unable to affirm the view that the revisional power is governed by any period of limitation laid down in sec. 11a for the proceedings for reassessment of escaped turnover. In view of the aforesaid decision of the Supreme Court there is little doubt about the amplitude and width of the power conferred upon the appropriate authority under sec. 31 of the Act. ( 9 ) NOW it is true that the revisional power conferred under sec. 31 of the Act is in its scope and amplitude very wide and the revising authority is entitled thereunder to examine the correctness legality and propriety of any order and pass such suitable order as the authority may think fit in the circumstances of the particular case before it. At the same time there are well recognised limitations on the exercise of such power and as pointed out by the Supreme Court in State of Kerala v. K M. Cheria Abdulla and Co. 16 S. T. C. 875 one of such limitation is that it is not open to the revising authority to ignore the limitations inherent in the exercise of those powers. 16 S. T. C. 875 one of such limitation is that it is not open to the revising authority to ignore the limitations inherent in the exercise of those powers. Therefore any order passed by the revising authority under sec. 31 of the Act is always open to challenge on the ground that the concerned authority has ignored the limitations inherent in the exercise of the said power. One of the limitations inherent in the exercise of the said power is the limitation founded on the doctrine that every statutory power must be exercised reasonably a doctrine which as pointed out by Bhagwati C. J. in Valji Mulji v. State XI G. L. R. 95 at page 101 is ;too firmly entrenched in our jurisprudence to brook any refutation. The doctrine rests on the foundation that an implication must readily be made that the legislature could not have intended that a statutory authority should exercise the power conferred upon it by the statute in an unreasonable manner or else the legislature would not have conferred the power at all on such authority. Besides it is now well settled that an administrative authority created by statute and invested with the power to hear revisions performs quasi judicial functions and is under a duty to act judicially (vide:- Nagendranath Bora and Anr. v. Commissioner of Hills Divisions and Appeals A. I R. 1958 S. C. 398 ). The duty to act judicially would necessitate compliance with the rules of natural justice and the requirement that a statutory authority invested with quasi judicial power must not in the exercise of its power act arbitrarily or unreasonably is but a part of the concept of natural justice (Vide:- A. K Kripak v. Union of India. A. I. R. 1970 S. C. 150 ). An order made by the revisional authority would therefore be always open to challenge as an illegal or an invalid order on the ground that it has been made in unreasonable exercise of the power conferred upon the revising authority. We shall therefore proceed to examine whether in the facts and circumstances of the case the suo motu exercise of the revisional powers by the Assistant Commissioner of Sales Tax and the consequential order whereby the said authority cancelled the permission granted to the assessee (as renewed from year to year) with effect from July 1 1956 was reasonable. We shall therefore proceed to examine whether in the facts and circumstances of the case the suo motu exercise of the revisional powers by the Assistant Commissioner of Sales Tax and the consequential order whereby the said authority cancelled the permission granted to the assessee (as renewed from year to year) with effect from July 1 1956 was reasonable. ( 10 ) A registered dealer who wants to avail of the facility regarding composition of tax is required by sub-rule (1) of Rule 10 to make an application in the prescribed form 7. Under sub-rule (2) if the registered dealer satisfies the conditions on the fulfillment of which the permission can be granted he is given such permission from the beginning of the quarter during which it is granted to the last day of the year or till the time up to which the turnover of purchases of the dealer during the year exceeds Rs. 90 0 Under the same sub-rule permission is renewable from year to year on application made by the dealer in that behalf. The Rules however do not require the registered dealer applying for the renewal of the permission to make an application in the prescribed form nor do they cast upon the concerned dealer an express obligation to disclose to the authority renewing the licence that he has since after the grant of permission started the business of manufacturing or processing of any goods for sale. The conditions subject to which the permission contemplated by Rule 10 can be granted are set out in sub-rule (2) and the conditions broadly speaking are that the permission is available till the turnover of purchases of the concerned dealer is not likely to exceed Rs. 90 0 during a particular year and that the dealer pays into the appropriate treasury the full amount of lump sum payable by him by way of composition determined under sub-rule (3) in respect of each quarter within one month from the expiry thereto and furnishes to the Sales Tax Officer within the said period a statement in Form (8 ). The prescribed form 8 also does not require the concerned dealer to make any disclosure to the concerned authority that he has commenced the business of manufacturing or processing of any goods for sales after the permission was granted. The prescribed form 8 also does not require the concerned dealer to make any disclosure to the concerned authority that he has commenced the business of manufacturing or processing of any goods for sales after the permission was granted. The conditions subject to which the permission was granted to the assessee in the instant case are readily ascertainable from a copy of the permission which is annexed as Annexure 4 to the statement of the case and those five conditions which are as under also do not cast such an obligation on the dealer:-IT is clear therefore that neither the Act nor the Rules nor the permission granted to the assessee in the instant case impose upon the assessee any express obligation to disclose to the authority renewing the permission from year to year that it had undertaken the business of manufacturing or processing of any goods for sale after the permission was initially granted to it. It is undoubtedly true that according to the proviso to sub-rule (1) of Rule 10 the permission for composition cannot be granted to a person who carries on the business of manufacturing or processing of any goods for sale and presumably that fetter on the power would also govern the power of renewal of the permission. But whether or not in a given case in the light of aforesaid fetter on the power the permission can be granted or renewed is the subject-matter of inquiry by the authority granting the permission and also of the authority renewing the permission from year to year and if the concerned authority has failed or omitted to make requisite inquiry at the relevant time the registered dealer who has applied for renewal of the permission and in whose favour renewal has been granted despite his having started the business of manufacturing or processing goods for sale does not in the circumstances mentioned above stand to be blamed. It would be prima facie unreasonable in such a case on the part of the concerned authority who has failed or omitted to make the requisite inquiry at the appropriate time to take any action against the dealer after the lapse of nearly one decade more so when the dealer has in the meantime on the strength of the permission granted to him by the authority so adjusted his affairs that the subsequent cancellation of the permission would prejudicially affect him. ( 11 ) THE permission having been granted from year to year the assessee in the instant case was paying a lump sum in lieu of the general sales tax which was liable to be recovered from him on his turnover of sales of cloth at a different rate on regular assessment under the provisions of sec. 9 of the Act. Furthermore such permission having been granted the assessee would not be entitled to recover and according to him was in fact not recovering general sales tax at the rates specified in sec. 9 of the Act read with Schedule B from the persons to whom he sold cloth during the relevant period. The assessee had advanced this contention before the Tribunal and had stated that he had not at all recovered the tax on cloth from his purchasers for the entire period for which the permission was granted nor had he made a claim for set-off admissible under Rule 11 (1a) in respect of the cloth used by him in process of making garments. The Tribunal therefore found that the order of the revising authority would result into hardship to the applicant. The order passed by the revising authority would under the circumstances undoubtedly prejudicially affect the assessee. Besides the permission renewed during the years 1956-57 1957 and 1958-59 each being a permission for a period of one year has since long served its utility and exhausted itself at the end of each of such period. The order passed by the revising authority would under the circumstances undoubtedly prejudicially affect the assessee. Besides the permission renewed during the years 1956-57 1957 and 1958-59 each being a permission for a period of one year has since long served its utility and exhausted itself at the end of each of such period. The 1953 Act under which the permission was granted has itself been repealed and the Bombay Sales Tax Act 1959 has been enacted in its place and the levy of sales tax on cloth has also been abolished with effect from April 1 1959 It appears to us that in these circumstances the order dated January 22 1965 passed by the Assistant Commissioner of Sales Tax in exercise of the revisional powers conferred under sec. 31 of the Act canceling the permission granted to the assessee under Rule 10 with effect from July 1 1956 is grossly unreasonable in the facts of the case and more particularly having regard to the nature of consequences which ensue from the revisional order. In our opinion the revisional powers under sec. 31 were not reasonably exercised in this case having regard to the abovementioned circumstances and the order of the revising authority is therefore illegal and invalid. ( 12 ) WE wish to make it clear that our decision is not rested on the ground that the proceedings initiated by the revising authority were barred by limitation in that they were not instituted within a reasonable time; it is not open for us to take such a view having regard to the decision of the Supreme Court in Swastik Oil Mills Ltd. v. H. B. Munshi (supra ). Our decision rests on the ground that the order passed by the revising authority in suo motu exercise of the power conferred under sec. 31 of the Act is in the facts and circumstances of this case even otherwise unreasonable and since there is an inherent limitation ill the exercise of those powers to the effect that the said power could not be exercised unreasonably the impugned order must be held to be illegal and invalid. . . . . . . . . . . . . . . . . . . . . ( 13 ) IN the result our answer to the question referred to us is in the negative. . . . . . . . . . . . . . . . . . . . . ( 13 ) IN the result our answer to the question referred to us is in the negative. The respondent Commissioner of Sales Tax to pay the costs of the reference to the assessee and bear his own. Answer accordingly. .