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1951 Supreme(MP) 10
IN THE MADHYA PRADESH BOARD OF REVENUE
H.S. Kamath, J.
KISANLAL RADHAKISAN
Versus
THE STATE.
Appeal No. 42/XXXIII-7 of 1950, from the order of Shri R. B. Agarwala, Sales Tax Commissioner, Madhya Pradesh, passed in his Memorandum No. 18(10)ST., dated the 5th September, 1949
Decided On: Decided On : 22-10-1951
L. M. Wakhre, for the appellant.
R. M. Hazarnavis, for the State.
The Commissioner's order granting or declining to grant exemption under Rule 25 is an administrative order, but it is subject to judicial review by the Board of Revenue.
Headnote:
SALES TAX - Exemption - Products of cottage and home industries - Conditions for exemption - Interpretation of Rule 25 and Schedule II, item 21 of the Sales Tax Rules - Appeal against order of Commissioner - Maintainability - Scope of enquiry by Board of Revenue.
Fact of the Case:
The appellant, a dealer in cloth made on hand-looms and power-looms, and jari, applied for exemption from payment of tax under Rule 25 of the Sales Tax Rules, claiming that he dealt exclusively in products of cottage and home industries. The Commissioner rejected the application.
Finding of the Court:
The Board held that the appeal was competent and that the Commissioner's order was not a judicial order but an administrative order. The Board also held that the entry in column (3) of Schedule II against item 21, which particularises the class of persons to be exempted, cannot be considered as open to challenge.
Issues: 1. Whether an appeal lies to the Board of Revenue against an order passed by the Commissioner under Rule 25 of the Sales Tax Rules? 2. Whether the Commissioner's order is a judicial order or an administrative order? 3. Whether the entry in column (3) of Schedule II against item 21, which particularises the class of persons to be exempted, is contrary to the law as stated in Section 6 of the Act?
Ratio Decidendi: 1. An appeal lies to the Board of Revenue against an order passed by the Commissioner under Rule 53(4) of the Sales Tax Rules, which provides for appeals against any order under the Act, including original assessment orders, passed by the Commissioner. 2. The Commissioner's order is an administrative order, but it is subject to judicial review by the Board of Revenue. 3. The entry in column (3) of Schedule II against item 21, which particularises the class of persons to be exempted, is not contrary to the law as stated in Section 6 of the Act, which provides for exemption for specified goods from taxation and not for persons dealing in those goods.
Final Decision: The appeal was dismissed.
H. S. KAMATH, PRESIDENT. - The appellant made an application to the Sales Tax Commissioner under the old unamended Rule 25 of the Sales Tax Rules, claiming exemption from payment of tax on the ground that he dealt exclusively in products of cottage and home industries. The Commissioner rejected the application and the result is this appeal.
2. Rule 25 reads as follows :
"25. Exemption to cottage and home industries - A dealer, who deals exclusively in products of cottage and home industries, and who claims exemption from payment of tax under item 21 of Schedule II to the Act, shall apply in writing to the Commissioner in this behalf. The Commissioner, after making such enquiry as he deems fit, shall issue to such dealer a certificate in Form VII and the provisions of Rule 24 shall then apply to his case".
Schedule II to the Act mentioned above has been amended twice so far - the first time on 11th April, 1949, and the second time on 12th December, 1949. The present case relates to the period prior to 11th April, 1949. Item 21 of Schedule II referred to in Rule 25 (as it stood before 11th April, 1949) reads as follows :
------------------------------------------------------------------------ Serial Description Conditions and exceptions subject to which No. of goods. exemption has been allowed. ------------------------------------------------------------------------ (1) (2) (3) ------------------------------------------------------------------------ * * * * * 21 Products of When sold by persons dealing exclusively cottage and in such products, on authorization made home indus- by the prescribed authority in the tries prescribed manner.
* * * * * ------------------------------------------------------------------------
Now, Schedule II has been dealt with under Section 6 of the Act, which reads as follows :
"6. (1) No tax shall be payable under this Act on the sale of goods specified in the section column of Schedule II, subject to the conditions and exceptions, if any, set out in the corresponding entry in the third column thereof.
(2) The Provincial Government may, after giving by notification not less than one month's notice of its intention so to do, by a notification after the expiry of notice mentioned in the first notification amend either Schedule, and thereupon such Schedule shall be deemed to be amended accordingly".
Apart from Section 6, the only other section dealing with exemption from taxation is Section 7, which reads as follows :
"7. The provincial Government may, subject to such restrictions and conditions and conditions as may be prescribed, by order exempt, in whole or in part, any dealer or class of dealers from the payments of tax under this Act".
3. A study of the provisions of the Act reproduced above is necessary, in order to decide the first question raised, namely, whether an appeal at all lies to the Board of Revenue in this case. The learned counsel for the State has said that, so far as item 21 of Schedule II is concerned, he would make no distinction between Sections 6 and 7. Although, in the case before us, the order has been passed by the Sales Tax Commissioner, he argues that it must be deemed to have been passed by him as an agent of the State Government under Section 7. If this view is correct, an appeal would not lie for obvious reasons. The Board of Revenue is a body created by the State Government to exercise some of its powers and discharge some of its functions (vide Section 6 of the Board of Revenue Act) and it cannot, therefore, sit in judgment over the decisions of the State Government. But, in my view, the basic premise on which the State Government's learned counsel relies cannot be accepted. The functions of sections 6 and 7 are distinct and sepa
