1. Revision of sales tax assessment orders under Section 23(3) of the Orissa Sales Tax Act, 1947, challenged on grounds of limitation under Section 12(6). (Para 2 , 3 , 13 , 14 )
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1963 Supreme(SC) 251
SUPREME COURT OF INDIA
29th October, 1963.
A.K. SARKAR, K.C. DAS GUPTA AND N. RAJAGOPALA AYYANGAR, JJ.
The State of Orissa (In all Appeals) Appellant
Versus
Debaki Debi and others (In C. A. Nos. 454 to 460 of 1962);
Hazi Ali Mahammad Osman
(In C. A. Nos. 461 to 463 of 1962);
Fakir Choudhury (In C. A. Nos. 464 to 465 of 1962), Respondents.
Civil Appeals Nos. 454 to 465 of 1962.
Advocates Appeared
Mr. K. N. Rajagopal Sastri, Senior Advocate (Mr. R. N. Sachthey, Advocate with him), for Appellant (in all the Appeals); M/s Santosh Chatterjee and B. Kishore, Advocates, for Respondent No. 2 (In C. A. Nos 454 to 460 of 1962) and the Respondents (in C. A. Nos. 461 to 465 of 1962).
The 36-month limitation period for passing an order assessing tax due applies to all assessment orders, including those passed by appellate or revisional authorities, as they are effectively exercising assessment powers.
Headnote:(A) Sales Tax Act - Section 12(6) second proviso and Section 23(3) - Limitation period for assessment - Whether the 36-month time limit for passing an order assessing the amount of tax due applies to revisional orders - The provision stating that no order assessing the amount of tax due shall be passed later than thirty-six months from the expiry of the period is an independent legislative provision - It applies to any order assessing the amount of tax, including those made under revisional or appellate jurisdiction, as such authorities are effectively exercising assessment powers. (Paras 21, 24, 25)
(B) Interpretation of Statutes - Limitation - Where the legislature prescribes a limitation for original assessments but remains silent on appellate or revisional assessments, it is reasonable to conclude that the general limitation for assessing tax applies to all such orders to prevent indefinite delays. (Paras 25, 26)
Facts of the case:
Respondents were assessed to sales tax. After their appeals were allowed and certain deductions were granted, the Collector exercised revisional powers to raise the taxable turnover. The respondents challenged these revisional orders on the ground that they were passed more than thirty-six months after the expiry of the quarters for which the assessments were made.
Findings of Court:
The revisional orders were barred by limitation as they were passed beyond the thirty-six-month period prescribed in the second proviso to Section 12(6) of the Act.
Issues: Whether the time limit of thirty-six months prescribed in the second proviso to Section 12(6) of the Act for passing an order assessing the amount of tax due applies to orders passed in the exercise of revisional powers under Section 23(3).
Ratio Decidendi: The court held that the second proviso to Section 12(6) is an independent legislative provision that governs any order assessing the amount of tax, regardless of the section under which it is passed. When an appellate or revisional authority enhances an assessment, it is exercising the power of assessment. Therefore, the 36-month limitation applies to original, appellate, and revisional orders alike.
Result: Appeals dismissed.
Legal Category Hierarchy
Table of Contents
2. Whether the thirty-six month limitation for orders assessing tax due under Section 12(6) applies to revisional orders passed under Section 23(3) of the Act. (Para 3 , 14 , 19 , 21 , 22 )
3. The limitation in Section 12(6) is an independent provision applying to any order assessing tax, including those passed by appellate or revisional authorities exercising Section 12 powers. (Para 20 , 21 , 23 , 24 , 25 , 26 )
4. Any order assessing the amount of tax due, whether original, appellate, or revisional, must be passed within thirty-six months from the expiry of the relevant period. (Para 21 , 24 , 25 )
5. Appeals dismissed; orders of assessment passed beyond the thirty-six month limitation period quashed. (Para 28 , 29 , 30 )
6. Does the time limit in Section 12(6) apply to revisional orders?
Yes. The court held that the second proviso to Section 12(6) is an independent legislative provision. It applies to any order assessing the amount of tax due, regardless of whether it is an original assessment or a revisional order under Section 23. (Para 21 , 24 , 25 )
7. Is a revisional order under Section 23(3) the same as an assessment under Section 12(7)?
No. The power of revision granted by Section 23(3) is a distinct and separate power from the power to assess after calling for a return in cases of under-assessment or escaped assessment under Section 12(7). (Para 20 )
8. Do appellate or revisional authorities possess independent powers of assessment?
No. Appellate and revisional authorities do not have independent powers to assess tax; when they enhance an assessment, they are exercising the assessment power conferred by Section 12 and performing the duty of an assessing authority. (Para 23 , 24 )
9. Does the potential for administrative delay in original assessments exempt revisional orders from the limitation period?
No. While original orders made late may leave little time for revision, this difficulty does not override the statutory limitation period prescribed for all orders assessing tax due. (Para 25 , 26 )
Judgment
SARKAR, J. : These appeals raise the question whether the Orissa Sales Tax Act, 1947 sets a time limit for making an order under S. 23(3) of the Act revising an order of assessment. The question depends on the interpretation of some of the provisions of the Act to which reference will be made in due course.
2. The facts are these. The respondents had been assessed to sales tax under the Act in respect of various quarters by a Sales Tax Officer. They appealed to the Assistant Collector of Sales Tax against the assessments contending that the Sales Tax Officer had wrongly rejected their claim to certain deductions from their taxable turnover. The appeals were allowed. Subsequently the Orissa High Court delivered a judgment in another case from which it appeared that the Assistant Collector was wrong in allowing the deductions. Thereupon the Collector of Sales Tax acting under S. 23(3) of the Act which provided that
"the Collector may, upon application or of his own motion, revise any order passed under this Act .... by a person appointed under S. 3 to assist him"
revised the orders of the Assistant Collector by raising the taxable turnover allowed by him to be deducted.
3. The respondents moved the High Court of Orissa under Art. 226 of the Constitution to quash the orders of the Collector in revision on the ground that they were illegal under the Act as they had been made more than thirty-six months after the expiry of the quarters in respect of which the assessments had originally been made. This contention was accepted by the High Court. Hence these appeals.
4. The High Court held that the orders in revision were illegal as they were really reassessments of turnover which had escaped assessment or been under-assessed and under sub-section (7) of S. 12 of the Act such reassessment could not be made in respect of any quarter after thirty-six months. It seems to me that the High Court was clearly in error in basing itself on sub-section (7) of S. 12. The material part of the sub-section is in these terms:
"If .... the turnover of a dealer for any period .... has escaped assessment or has been under-assessed, the Collector may at any time within thirty-six months of the end of that period call for a return .... and may proceed to assess ...."
The time limit of thirty-six months prescribed here is only for calling for a return. The sub-section prescribes no time limit for making the order of reassessment in respect of escaped or under-assessed turnover. Consequently this provision does not make the orders with which these appeals are concerned, in any way illegal.
5. We were then referred to the second proviso in sub-section (6) of S. 12 of the Act as specifying a time limit of thirty-six months for these orders. The sub-section is in these terms:
"Any assessment made under this section shall be without prejudice to any prosecution instituted for an offence under this Act:
Provided that when the Collector has imposed a penalty in addition to the amount assessed under this section, no further proceedings either revenue or criminal shall be taken against the dealer:
Provided further that no order assessing the amount of tax due from a dealer in respect of any period shall be passed later than thirty-six months from the expiry of such period." The sub-section would no doubt apply if the orders made in this case were orders "assessing the amount of tax due" contemplated by it. The question therefore is what do the words "order assessing the amount of the tax due" in the proviso mean? Of course, the whole of S. 12 has to be considered for deciding the meaning of these words and I will presently do so. In the meantime however I may observe that though S. 12 talks of assessment by a Collector it includes assessment by other officers appointed under the Act to assist the Collector for under S. 17 the Collector can delegate his powers to such officers, who are subordinate to him.
6. I now turn to S. 12. It has seven sub-sections each of which
