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1991 DIGILAW 73 (MAD)

DUNLOP INDIA LTD. v. STATE OF TAMIL NADU.

1991-01-30

GOVINDASAMY, MISHRA

body1991
JUDGMENT MISHRA, J. - These appeals by the assessee are directed against the order of the Joint Commissioner II (Commercial Taxes), Chepauk, in a suo motu revision. On the returned turnover of the appellants for the assessment years 1969-70, 1970-71 and 1971-72 under the Central Sales Tax Act, 1956, the assessing officer made an order for payment of taxes. The assessee appealed before the Appellate Assistant Commissioner (C.T.) who dismissed the appeal. The assessee eventually went before the Appellate Tribunal. The Appellate Tribunal remanded the matter back to the assessing officer for fresh disposal. After remand, a fresh assessment order was made. The assessee however preferred an appeal. The Appellate Assistant Commissioner took the view that the assessee had established with reference to records and documents that despatches to Bombay were not with reference to the indents of the Canteen Stores Department at Bombay and that despatches were made periodically to replenish the stock at Bombay depot and that from such stocks sales were effected to canteen stores at Bombay which had no nexus with despatches made from Madras factory. The Appellate Assistant Commissioner has thus found that the goods moved only as stock transfer from Madras factory to Bombay depot and that they were not inter-State sales which had occasioned the movement of goods from Madras to Bombay as contemplated under section 3(a) of the Central Sales Tax Act, 1956. Noticing however that the order of the Appellate Assistant Commissioner was not in the interest of the Revenue, the Joint Commissioner decided to suo motu revise the same. Accordingly, he issued notice to the appellants. The appellants appeared. After contest, the Joint Commissioner however found that the order of the Appellate Assistant Commissioner was not tenable. Accordingly, exercising powers vested in him under section 9(2) of the Central Sales Tax Act, 1956, read with section 34 of the Tamil Nadu General Sales Tax Act, 1959, proposed to set aside the order of the Appellate Assistant Commissioner and thereby restore the order of the assessing officer for all the three years. Accordingly, exercising powers vested in him under section 9(2) of the Central Sales Tax Act, 1956, read with section 34 of the Tamil Nadu General Sales Tax Act, 1959, proposed to set aside the order of the Appellate Assistant Commissioner and thereby restore the order of the assessing officer for all the three years. Taking notice of the Tamil Nadu Act, which empowers the Joint Commissioner to make suo motu revision, in the case of R.V.S. Textiles v. Commissioner of Commercial Taxes (T.C. No. 605 of 1981 order dated January 21, 1991 ([1999] 116 STC 366 (Mad.) supra)) we have said : "Coming to the main contention, we cannot but take notice of the scheme of the Act under which the assessment order has been made, subjected to two appeals, one before the Appellate Assistant Commissioner under section 31 of the Act in the case of an order passed by the appropriate authority under section 4-A, section 12, section 12-A, section 14, section 15, sub-sections (1) and (2) of section 16, section 18, sub-section (2) of section 22, section 23 or section 27, other than an order passed by an Assistant Commissioner (Assessment) and before the Deputy Commissioner in the case of an order passed by the Assistant Commissioner (Assessment) as in section 31-A and before the Appellate Tribunal under section 36 of the Act. Besides the appeals, certain special power has been given to the Deputy Commissioner akin to the power of revision under section 32 of the Act and a provision has been made for revision by the Deputy Commissioner in certain cases in section 33 of the Act. Similarly, some special powers are vested in the Joint Commissioner of Commercial Taxes by section 34 of the Act and he has been given the power of revision in certain cases. The power under section 34 of the Act which has been exercised by the Board in the instant case (which has now been made the power of Joint Commissioner of Commercial Taxes by Act 22 of 1982) was spelt out in the following words : 34. Special powers of Board of Revenue. The power under section 34 of the Act which has been exercised by the Board in the instant case (which has now been made the power of Joint Commissioner of Commercial Taxes by Act 22 of 1982) was spelt out in the following words : 34. Special powers of Board of Revenue. - (1) The Board of Revenue may, of its own motion, call for and examine an order passed or proceeding recorded by the appropriate authority under section 4-A, section 12, section 14, section 15, or sub-section (1) or (2) of section 16 or an order passed by the Appellate Assistant Commissioner under sub-section (3) of section 31 or by the Deputy Commissioner under sub-section (3) of section 31-A or sub-section (1) of section 32 and may make such inquiry or cause such inquiry to be made and subject to the provisions of this Act may pass such order thereon as it thinks fit, (2) The Board of Revenue shall not pass any order under sub-section (1), if - (a) the time for appeal against that order has not expired, or (b) the order has been made the subject of an appeal to the Appellate Tribunal or of a revision in the High Court, or (c) more than five years have expired after the passing of the order." After so referring to section 34, we have said that : "This indicates that the power was conferred on the Board of Revenue (now it is conferred upon the Joint Commissioner of Commercial Taxes) to call for and examine on its own motion an order passed by one of the authorities referred to therein and after making such enquiries or causing such enquiries to be made to pass such order thereon as it thought fit. But this power was/is not intended to be exercised in a routine or casual manner but only on special occasions. But this power was/is not intended to be exercised in a routine or casual manner but only on special occasions. Otherwise, there would/shall always be a chance of the suo motu power of revision being used to defeat the course of proceedings in appeal and in revision." Thereafter, we quoted and expressed agreement with the observations of a Bench of this Court in Avon Plastics v. Stale of Tamil Nadu [1982] 49 STC 268 which are as follows : "Unless it is found in any particular case that this discretion was wrongly exercised, it would not be proper for the Board to interfere with the order of the Appellate Assistant Commissioner. Such interference is likely to simplify the appellate power." We add : "That indicates that the suo motu revisional power should be used sparingly and only when it is found that without such interference interest of Revenue will suffer." In the instant case however we find ourselves faced with a case where the appellate order is interfered with, without any opportunity afforded to the assessee to demonstrate that the assessment order was vitiated. Conceding that on the facts of the instant case there were good reasons for the Joint Commissioner to exercise his power of revision and to reverse the order of the Appellate Assistant Commissioner, it is necessary to decide how while disposing of a suo motu revision the Joint Commissioner should act. Should he just set aside the appellate order without affording opportunity to the assessee, if there is any defect in the appellate order and some serious infirmities are also there in the original assessment order to demonstrate before the Joint Commissioner that there may be infirmities in the appellate order rendering the appellate order bad, yet the assessment order also was/is not sustainable. We are of the opinion that unless it is acknowledged as a part of the role of the revisional authority to afford opportunity to the assessee to raise his objections/contentions to show that the assessment order is bad, there shall be a complete denial of a forum of appeal or revision to the assessee to question the validity of the assessment order on facts and in law. Unless such an opportunity is afforded to the assessee, it would be unjust and unfair to deny to the assessee such opportunity before the revisional authority, in the absence of a hearing on merits would be a case in which the assessing authority order shall be final and conclusive. In the instant case, when objections of the assessee were taken into consideration they were somehow confined to the objections to the revision of the Appellate Assistant Commissioner's order. Objections which were raised and were available against the assessment order, it seems, found no valid consideration by the Joint Commissioner. The Joint Commissioner disposed of the objections saying : "The objections filed are not valid. As already pointed out in the suo motu revision notice the clear mention of the prospective buyers name, viz., canteen stores in the transfer challans shows that the buyers had placed an indent with the assessee herein and that the goods moved from Madras only for the purpose of satisfying the requirements of the buyer, viz., the canteen stores, Bombay. Further, the observation of the Appellate Assistant Commissioner that the burden of proof for the period prior to April 1, 1973 in case of transfer of goods claimed otherwise than by way of sale was on the department, has no relevance at all when the department has placed reasons to prove manufacture and despatch with reference to indents placed by Bombay Canteen Stores through Bombay depot. Further the Tribunal has only remanded the case for disposal after examining the details. The assessing officer accordingly passed fresh orders in this case. The Appellate Assistant Commissioner (C.T.), Kancheepuram has set aside the assessment on an appeal filed before him. Only the order of the Appellate Assistant Commissioner, is now under revision under section 34 before me. Therefore, there is nothing illegal in having taken up the case for revision as observed by the assessee." Howsoever we read the language of section 34 of the Act, we see no inhibition of the kind indicated by the Joint Commissioner upon the jurisdiction in the revision to go into the validity or otherwise of the assessment order even though the revision is preferred against the appellate order. It is well-settled that every aspect of the case is generally accepted as open in appeal or revision. It is well-settled that every aspect of the case is generally accepted as open in appeal or revision. In the absence of any statutory inhibition the Joint Commissioner could not deny to the assessee a hearing on the validity or otherwise of the assessment order. Since we have found that the assessee was not given an adequate hearing on the validity or otherwise of the order of assessment by the Joint Commissioner, we are inclined to interfere with the impugned order with a view to remand the case back to him for a rehearing in accordance with law. The Joint Commissioner shall give to the assessee/appellants full opportunity to address him on the question of validity of the assessment order. The Joint Commissioner shall consider the objections and the contentions of the assessee/appellants with respect to the validity of the assessment order and dispose each one of them off in accordance with law. In the result, the tax cases are allowed. The impugned orders are quashed. The cases are remitted to the Joint Commissioner II (Commercial Taxes), Chepauk, Madras 5 for a rehearing and disposal in accordance with law. No costs. Appeals allowed.