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SUPREME COURT OF INDIA
H.R. KHANNA, P.K. GOSWAMI AND P.S. KAILASAM, JJ.
The Deputy Commissioner of Commercial Taxes, Appellant
Versus
M/s. H. R. Sri Ramulu, Respondent.
Civil Appeals Nos. 145-146 of 1972,
D/- 11-1-1977.
Advocates appeared
Mr. Narayana Nettar, Advocate, for Appellant; Mr. R. M. Mehta, Sr. Advocate (Amicus Curiae), for Respondent.
Indian Income-tax Act, 1922 - Section 33-B - Mysore Sales Tax Act, 1957 - Section 21 - Constitution of India, 1950 – Article 226 – Quash of order - Without jurisdiction - Respondent is an excise contractor - He was assessed under Act for the assessment years as per orders made by Commercial Tax Officer - Under those orders the taxable turnover of respondent for two years in question was determined after deducting shop rent and trees tax - For the assessment year a sum was deducted and net taxable turnover was determined - For year a sum was deducted and the net taxable turnover was determined - Commercial Tax Officer initiated proceedings under Section 12-A of Act in respect of aforesaid years because he was of view that some items of turnover had escaped assessment - As per orders dated June he made assessment by including in turnover of respondent certain amounts which had escaped assessment under original assessment orders dated March - Deduction in respect of shop rent and tree tax was however allowed to the respondent in orders dated June as it had been allowed in initial orders dated March – Held, It was held that when reassessment is made former assessment is completely reopened and in its place fresh assessment is made - What is true of assessment must also be true of reassessment because reassessment is nothing but a fresh assessment - When reassessment is made under Section 19 former assessment is completely reopened and in its place fresh assessment is made - While reassessing a dealer assessing authority does not merely assess him on escaped turnover but it assesses him on his total estimated turnover - While making assessment under S. 19 if assessing authority has no power to make best judgment assessment all that assessed need do to escape reassessment is to refuse to file a return or refuse to produce his account books - If contention taken on behalf of assessed is correct assessed can escape his liability to be reassessed by adopting an obstructive attitude - It is difficult to conceive that such could be the position in law - In International Cotton this Court held that once an assessment order had been rectified and it was sought to make a further rectification of that order period of limitation for making such further rectification would commence not from date of original assessment order but from date of earlier rectification order - Other attack that the rectification order is beyond point of time provided in Rule 38 of Mysore Sales Tax Rules is also without substance - What was sought to be rectified was the assessment order rectified as a consequence of this Courts decision in case - After such rectification the original assessment order was no longer in force and that was not the order sought to be rectified - It is admitted that all the rectification orders would be within time calculated from the original rectification order - Rule 38 itself speaks of any order and there is no doubt that rectified order is also any order which can be rectified under Rule 38 - Although the above case related to an order which had been subsequently rectified principle laid down therein would in court opinion be also applicable in cases where re-assessment is made on ground that certain amounts of turnover had escaped assessment - Court conclude court may observe that according to Section 33-B of Indian Income-tax Act, 1922 Commissioner cannot revise an order of reassessment made under provisions of Section 34 of the Act – Likewise sub-section (2) of S. 263 of the Income-tax Act, 1961 expressly prohibits the revision by the Commissioner of Income-tax of an order of reassessment made under Section 147 of that Act. No such prohibition in the provisions of the Act with which we are concerned has however been brought to our notice - Appeals allowed
Judgment
KHANNA, J. :- These two appeals by special leave are against the common judgment of the Mysore High Court whereby the High Court in two petitions under Art. 226 of the Constitution of India quashed two orders made by the Deputy Commissioner of Commercial Taxes appellant under Section 21 of the Mysore Sales Tax Act, 1957 (hereinafter referred to as the Act).
2. The respondent is an excise contractor. He was assessed under the Act for the assessment years 1959-60 and 1960-61 as per orders dated March 21, 1963 made by the Commercial Tax Officer Raichur. Under those orders the taxable turnover of the respondent for the two years in question was determined after deducting the shop rent and the trees tax. For the assessment year 1959-60, a sum of Rs. 2,10,542 was deducted and the net taxable turnover was determined to be Rs. 25,989. For the year 1960-61 a sum of Rs. 3,99,350 was deducted and the net taxable turnover was determined to be Rs. 26,657.
3. The Commercial Tax Officer initiated proceedings under Section 12-A of the Act in respect of the aforesaid years because he was of the view that some items of turnover had escaped assessment. As per orders dated June 8, 1966 he made assessment by including in the turnover of the respondent certain amounts which had escaped assessment under the original assessment orders dated March 21, 1963. The deduction in respect of shop rent and tree tax was, however, allowed to the respondent in orders dated June 8, 1966 as it had been allowed in initial orders dated March 21, 1963.
4. On June 28, 1967 the appellant, i.e. the Deputy Commissioner of Commercial Taxes, made two orders revising the orders dated June 8, 1966. In the said orders the appellant disallowed the deduction which had been allowed to the respondent in respect of the shop rent. The appellant in those orders referred to the decision of this Court in Shinde Brother v. Deputy Commr. Raichur, (1967) 1 SCR 548 and held that the amount of shop rent being not excise duty should not be deducted in computing the turnover of the respondent for the two years in question. The taxable turnover of the respondent for the two years in question was accordingly enhanced.
5. The respondent made two applications for rectification of the orders of the appellant dated June 28, 1967. It was urged on behalf of the respondent that the revision of assessments was barred by limitation under Section 21 (3) of the Act and as such there was a mistake apparent on the record. The appellant rejected those applications. The respondent then preferred two appeals to the Sales Tax Appellate Tribunal. The Tribunal too rejected those appeals on the ground that they were not maintainable. The respondent thereafter filed two petitions in the High Court under Article 226 for the issuance of writs in the nature of certiorari for quashing the orders dated June 28, 1967. The High Court, as already mentioned, allowed both the petitions and quashed orders dated June 28, 1967. In the opinion of the High Court, orders dated June 28, 1967 made by the appellant were without jurisdiction since they had been made beyond the period of four years from the date of the assessment orders dated March 21, 1963.
6. Mr. Narayan Nettar, learned counsel for the appellant, has contended in appeal before us that the period of four years mentioned in Section 21 (3) of the Act should be computed from the order dated June 8, 1966 made under Section 12-A of the Act and not from the initial order of assessment dated March 21, 1963. The above stand has been controverted by Mr. Mehta, who argued the case amicus curiae as no one appeared on behalf of the respondent. After giving the matter our consideration, we are of the view that the contention advanced on behalf of the appellant is well-founded. Before, however, dealing with the matter, we consider it appropriate to reproduce the relevant provisions of the Act. Section 12-A of the Act relates to assessment of escaped turnover. Sub-section (1) of
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