Commissioner of Commercial Taxes, Hyderabad vs Indo National Ltd.

I.A. for intervention

Counsel appearing for the intervenor seeks permission to withdraw the intervenor application. Permission is granted. Application is dismissed as withdrawn.

Civil Appeals

The present appeals deal with the issue of payment of sales tax by the Respondent herein for the assessment years 1981-82 to 1987-88 (except 1986-87). For the assessment years 1978-79, 1979-80 and 1980-81 in respect of the same Respondent-assessee, assessments were completed by the Commercial Tax Officer excluding the branch transfers from taxation and thereby rejecting the contention of the Appellant that it could be inter-State level.

However, the Deputy Commissioner of Commercial Tax, Nellore, issued show-cause notice on November 14, 1985, proposing to treat stock transfers of the Assessee as inter-State sale. Pursuant to the aforesaid show-cause notice issued, the Deputy Commissioner revised the orders of assessment for the years 1978-79, 1979-80 and 1980-81 levying tax on branch transfers as inter-State sale. However, subsequent thereto and pursuant to the order passed by this Court, the Respondent filed appeals to the Sales Tax Appellate Tribunal. The Tribunal entertained the said appeals and by order dated June 19, 1992 allowed the appeals holding that the aforesaid transfers shall be treated as branch transfers and not as inter-State sales. Despite the said order passed by the Tribunal, even for the subsequent years, i.e., for the assessment years 1981-82 to 1987-88 excluding the assessment year 1986-87 a show-cause notice was issued to show cause as to why the transaction should not be treated as inter-State sales instead of branch transfers.

The validity and the legality of the aforesaid notice was challenged before the Andhra Pradesh High Court by filing a writ petition. The matter was referred to a larger Bench and by the impugned judgment and order passed, the aforesaid show-cause notice issued was quashed relying on the provisions of Sub-section (2A) of Section 20 of the Andhra Pradesh General Sales Tax Act, 1957.

Counsel appearing for the State has taken us through the records and also the provisions of Sub-section (2A) of Section 20, which is the primary and principal section applicable to the facts and circumstances of the present case. The said provision reads as follows:

(2-A) The power under Sub-section (1) or Sub-section (2) shall not be exercised by the authority specified therein in respect of any issue or question which is the subject-matter of an appeal before, or which was decided on appeal, by the Appellate Tribunal u/s 21.

Section 20 deals with the power of revision vested with the Commissioner of Commercial Tax and other prescribed authorities. Sub-section (1) of Section 20 deals with the suo motu powers of revision which could be exercised by the Commissioner of Commercial Tax in an appropriate case. The aforesaid suo motu power of revision which could be exercised by the Commissioner is, however, circumscribed by the subsequent provision which is Sub-section (2A) while providing that such power of exercising suo motu revision is vested on the Commissioner of Commercial Tax but the same would be subject to the condition that such power would not be exercised in respect of any issue or question which is the subject-matter of an appeal before or which was decided in appeal by the Appellate Tribunal u/s 21. Therefore, if a similar or identical issue or question is pending for consideration in an appeal before the Appellate Tribunal or is already decided in appeal by the Appellate Tribunal, the Commissioner cannot exercise suo motu power in respect of the same issue by issuing a show-cause notice for exercising such power of revision.

In the impugned judgment the High Court after referring to various decisions of this Court came to the same conclusion. It was held by the High Court that power of revision vested in the Commissioner having been circumscribed under Sub-section (2A) of Section 20 of the Act, nothing could be read therein which would confer a wide power upon the Commissioner as a consequence of which the purport of object of Sub-section (2A) of section would be defeated.

It was also held that so far the question of the meaning and expression "issue" or "question" is concerned, they would acquire a distinct meaning as it is confined to the question as to the point in controversy between the parties rather than the time-factor.

Upon going through the records as also the aforesaid legal provision of Sub-section (2A) of Section 20, we are of the considered opinion that the High Court has not committed any error in quashing the impugned show-cause notice in the present case as ex facie by issuing the aforesaid show-cause notice, what the authority has sought to do is to reopen the question or the issue which is already decided by the Tribunal in the earlier round of litigation between the same parties but for earlier assessment years, i.e., assessment years 1978-79, 1979-80 and 1980-81. As such, the intention to reopen the issue or question by exercising the purported power under Sub-section (2A) of Section 20, in our opinion cannot be exercised as the same is prohibited by the explicit language of Sub-section (2A) of Section 20. In that view of the matter, we find no reason to interfere with the impugned judgment and order passed by the High Court.

It is pointed out to us that there was another issue which was urged by the Respondent which relates to the applicability of the principles of res judicata. It is sought to be submitted by the counsel for the Appellant that the aforesaid question of res judicata cannot be said to be applicable in the present case as, according to him, every assessment year is a fresh assessment year and, therefore, the question of res judicata would not be applicable as has been held in a number of decisions of this Court. This question, however, appears to have not been gone into and considered by the High Court and, therefore, we are not called upon to address this issue at all. The said issue is kept open for a decision in an appropriate case.

In terms of the aforesaid orders, the appeals are dismissed, but leaving the parties to bear their own costs.