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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE V RAMASWAMI
East Asiatic Company (India) Limited, Madras - Appellant
Versus
State of Madras - Respondent
Case No : C.S. Nos. 111 and 112 of 1951
Decided On : 05 May 1954
SALES TAX - REVISION OF ASSESSMENT - JURISDICTION OF COMMERCIAL TAX OFFICER - DEDUCTION AND REBATE - INTERPRETATION OF RELEVANT PROVISIONS.
Fact of the Case:
The plaintiff, a manufacturer of groundnut oil and cake, filed two suits for an injunction restraining the State of Madras from demanding additional sales tax for the years 1945-46 and 1946-47 on the ground that the sales in question took place outside the Province of Madras. The State contended that the sales took place within the Province and that the Commercial Tax Officer had revisional jurisdiction to revise the assessment.
Finding of the Court:
The court held that the sales in question took place within the Province of Madras and that the Commercial Tax Officer had revisional jurisdiction to impose additional assessment. However, the court also held that the levy of assessment for the year 1945-46 was hit by rule 17(1) of the Madras General Sales Tax Rules, which barred the reopening of an assessment beyond a period of one year. The court further held that the plaintiff was entitled to the deduction claimed under rule 18(2) of the Turnover Rules, but not to the rebate claimed under section 7 of the Act.
Issues: 1. Whether the Commercial Tax Officer is entitled to reopen and revise the assessment of the sales tax on the turnover of Rs. 14, 10, 234-1-0 of the plaintiff for the year 1946-47? 2. Whether the plaintiff is entitled to any deduction or rebate? 3. Whether the sale of groundnut oil was outside the Province as alleged by the plaintiff and, if so, of what quantity? 4. Whether the Commercial Tax Officer has jurisdiction to exercise powers under section 12 of the Act and rule 14 of the General Sales Tax Rules, and whether he has conformed to rule 17(1) in treating the assessment as escaped assessment? 5. To what reliefs are the parties entitled?
Ratio Decidendi: 1. The court interpreted section 12 of the Madras General Sales Tax Act, rule 14(2) of the Madras General Sales Tax Rules, and rule 17(1) of the Madras General Sales Tax Rules to hold that the Commercial Tax Officer had revisional jurisdiction to revise the assessment for the year 1946-47, but not for the year 1945-46, which was barred by rule 17(1). 2. The court interpreted rule 18(2) of the Turnover Rules and section 7 of the Act to hold that the plaintiff was entitled to the deduction claimed, but not to the rebate claimed.
Final Decision: The court decreed the plaintiff's claim for deduction and dismissed the rest of the claim. The parties were directed to take and give costs in the measure in which they had succeeded and failed.
These are two connected suits filed by the East Asiatic Company Ltd., against the State of Madras, represented by the Collector of Madras for an injunction restraining the defendant or any or its officers or servants from demanding, collecting or realising from the plaintiff the sum of Rs. 14, 102-5-4 and Rs. 18, 295-12-6 or any part thereof being the additional sales tax sought to be illegally levied on the plaintiff for the years 1945-46 and 1946-47.
2. The case for the plaintiff is : The plaintiff during the assessment years 1945-46 and 1946-47 bought and crushed groundnut kernels as manufacturer of groundnut oil and cake and effected sales and delivery of part of groundnut oil so manufactured outside the Province. The total turnover of the oil so sold and delivered outside the Province of Madras in 1945-46 was Rs. 18, 29, 578-4-1 and Rs. 14, 20, 234-1-0 for the year 1946-47. The Deputy Commercial Tax Officer, Harbour Division, Madras, did not assesss to sales tax these two turnovers relating to sale outside the Province of Madras. The Commercial Tax Officer, North Madras, on 3rd July, 1947, confirmed this order of the Deputy Commercial Tax Officer. On 4th March, 1950, the plaintiff received notices dated 24th February, 1950, from the Commercial Tax Officer, North Madras, appraising the plaintiff of his intention to revise the assessment of sales tax for the years 1945-46 and 1946-47 so as to include these two turnovers referred to above. The plaintiff thereupon submitted their objections by their letter dated 14th March, 1950, viz., (1) the plaintiff pointed out among other things that the Commercial Tax Officer having exercised his power in appeal was not competent to assess this assessee to sales tax in respect of the years ended 31st March, 1946, and 31st March, 1947; (2) that he had no jurisdiction to exercise the powers under section 12 of the Act and rule 14 of the Madras General Sales Tax Rules; (3) that his action was illegal; (4) that the Commercial Tax Officer has not conformed to rule 17(1) of the Madras General Sales Tax Rules even if he intended to treat this as a case of escaped assessment; and (5) the term of contracts in the years 1945-46 and 1946-47 in respect of the said sales of groundnut oil were such that the sales and deliver under the contract terms cannot be stated as having taken place within the Province of Madras. The plaintiff also urged for due consideration of their rights to a deduction under rule 18 of the Madras General Sales Tax (Turnover and Assessment Rules) as they are manufacturers of groundnut oil and cake. The plaintiff also claimed under section 7 of the Act a rebate of one half of the tax on the turnover after allowing for the aforesaid deduction in respect of the groundnut kernel purchased and converted into oil. The Commercial Tax Officer by his order dated 31st March, 1950, directed the Deputy Commercial Tax Officer to issue a revised B form notice of assessment and demand to the plaintiff. The plaintiff thereupon on 24th April, 1950, filed revision petitions before the Board of Revenue against the order of the Commercial Tax Officer and by an order dated 25th September, 1950, the Board of Revenue dismissed those revision petitions. These suits have thereupon been filed for the above mentioned reliefs.
3. The stand taken by the State of Madras is that these impugned sales took place within the Province of Madras and secondly, that the Commercial Tax Officer had revisional jurisdiction to revise the assessment and thirdly, that the plaintiffs are not entitled to the deduction and the rebate claimed by them.
4. On these contentions the following issues were framed :
C.S. No. 111 of 1951.
(1) Whether the Commercial Tax Officer is not entitled to reopen and revise the assessment of the sales tax on the turnover of Rs. 14, 10, 234-1-0 of the plaintiff for the year 1946-47 ?
(2) Whether the plaintiff is entitled to any deduction or rebate ?
(3) Whether the sale of groundnut oil w
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